On Friday evening, xAI implemented a significant workforce reduction by terminating the employment of at least five hundred individuals from its extensive data annotation division. The company formally communicated the decision through email notifications, in which affected employees were informed that xAI intended to substantially reduce the size of its group of generalist artificial intelligence tutors. Business Insider, which gained access to multiple internal communications, confirmed that these messages outlined the company’s wider restructuring plans.
According to the content of the email, management explained that after conducting a comprehensive assessment of its Human Data initiatives, leadership concluded that the company would benefit from intensifying its investment in and expansion of highly specialized AI tutor roles. In contrast, positions associated with more generalized tutoring functions would recede in importance within the overall strategy. This reorientation of priorities, described as a decisive and immediate tactical shift, inevitably resulted in the termination of the majority of generalist tutor roles. Employees were explicitly told that their tenure with xAI would therefore come to an end. Regarding compensation, departing staff were assured that they would continue to receive pay through either the formal conclusion of their contract period or, at the latest, until November 30. However, their technical access to internal company infrastructure, tools, and platforms was revoked almost instantly following the issuance of the layoff notification.
The data annotation unit, which constituted xAI’s largest workforce segment, has historically been responsible for an essential part of the company’s technological development. These employees directly contributed to the advancement of Grok, the company’s proprietary AI chatbot, by taking on the critical role of transforming massive quantities of raw, unstructured information into organized, contextualized datasets. Such work enabled the system to analyze, interpret, and respond in ways more aligned with nuanced human understanding. The magnitude of the layoffs was reflected in the employee communication channels. For instance, documentation reviewed by Business Insider showed that the primary Slack workspace used by annotation personnel hosted more than 1,500 active participants on Friday afternoon, yet by that same evening the active count had fallen to just above 1,000, and the number continued to steadily shrink thereafter.
Despite the contraction initiative, xAI simultaneously promoted new hiring. On Friday night, via its public X account, the company announced ambitious plans to strengthen and multiply its cadre of specialist AI tutors by a factor of ten, making it clear that while generalist positions were being cut, other roles tailored to niche expertise were receiving heightened attention.
These developments occurred only days after a series of high-level personnel changes had already signaled impending upheaval. Business Insider previously reported that several senior team members, including the individual who formerly led the annotation unit, had had their Slack access revoked earlier in the same week. In the immediate aftermath of those leadership changes, employees recalled being summoned into individual conversations where their responsibilities, prior achievements, and ongoing projects were carefully scrutinized. During these sessions, according to accounts from nine separate workers, they were even asked to point out colleagues who in their view deserved recognition for rigorous performance or exceptional contributions.
On Thursday evening—just one day prior to the mass termination notices—the company issued an internal team-wide announcement advising employees to prepare for an upcoming organizational reshuffle. Workers were instructed to temporarily set aside regular assignments in order to devote their attention to a series of evaluative tests designed to ascertain future placement within the company. Personnel were ordered to complete at least one of these assessments by Friday morning, California time. Screenshots of the directive reviewed by Business Insider revealed that these tests were intended to classify annotators and their supervisory staff according to both aptitudes and preferences. The message conveying this instruction reportedly originated from Diego Pasini, whom ten employees identified as the unit’s new leader.
The assessments covered a remarkably broad range of domains. In addition to conventional areas such as science, technology, engineering, and mathematics (STEM), along with coding, financial systems, and medical knowledge, the tests explored more unorthodox categories. These included evaluations related to Grok’s stylistic identity—referred to as its personality and behavioral tendencies in simulation—as well as assignments focusing on internet subcultures, specifically groups characterized as prolific in casual posting or obsessive scrolling behaviors. Other examinations concentrated on critical safety imperatives, such as adversarial testing of the chatbot, often referred to in the field as “red teaming,” alongside modules connected to the processing of audio and video data.
Pasini’s background, according to details visible on his LinkedIn profile, reveals that he joined xAI in January and is currently on academic leave from undergraduate studies at the Wharton School of Business at the University of Pennsylvania. Neither Pasini himself nor other company representatives offered immediate comments when Business Insider reached out for clarification regarding the rapidly unfolding situation.
In the internal communication, the company emphasized that these tests were specifically targeted toward generalist tutors and their managers. Structurally, xAI’s annotation workforce had been divided into specialized teams focused on subjects like STEM disciplines, software engineering, finance, law, and media, complemented by a large auxiliary group of generalists tasked with a wide assortment of responsibilities ranging from audio and video labeling to producing written content. Accounts from employees suggested that different platforms were used to administer the examinations; for instance, the STEM and programming-related evaluations were hosted on CodeSignal, a known technical assessment tool, whereas other subject tests were distributed through Google Forms.
Responses to Pasini’s directive varied widely: records from Slack indicated that more than two hundred employees marked their acknowledgment by reacting with a green check-mark emoji, while over a hundred chose instead to post further inquiries and remarks about the process. Frustration also surfaced among certain employees, particularly at the abruptness of the demand. One worker, according to a screenshot reviewed by Business Insider, expressed dissatisfaction with the unreasonable expectation of completing tests overnight, emphasizing that instructing staff after business hours was suspiciously inconsiderate. Shortly after making this comment, multiple employees observed that this individual’s Slack account was rendered inactive, suggesting swift administrative enforcement.
For those with direct knowledge of xAI’s operations or additional information about these restructuring events, Business Insider encouraged secure communication with its reporter through personal channels rather than work-related infrastructure, providing both an email address and a Signal contact number to ensure confidentiality.
Sourse: https://www.businessinsider.com/elon-musk-xai-layoffs-data-annotators-2025-9
