X (formerly Twitter) and Grok's xAI are reportedly laying off 500 people from their data annotation team

On Friday, September 12, 2025, it was reported that Elon Musk's AI startup, xAI , plans to lay off 500 members of its data annotation team.

xAI reportedly lays off 500 workers from data annotation team | TechCrunch
https://techcrunch.com/2025/09/13/xai-reportedly-lays-off-500-workers-from-data-annotation-team/

The data used to train AI is crucial in AI development. Data annotation is the process of labeling and annotating this data (detailed explanations). At the time of writing, a large amount of training data was already available online. However, with the widespread adoption of AI, a large amount of data is already being used for training. AI companies are now collecting their own training data to gather untrained data.

What is the 'data shortage problem' that will cause data used for AI training to run out by 2026? - GIGAZINE

According to an internal xAI message obtained exclusively by Business Insider, xAI plans to lay off as many as 500 employees in charge of data annotation. The internal xAI message stated, 'We are accelerating the expansion and prioritization of specialized AI tutors while reducing our focus on general AI tutor roles.' 'As part of this shift in focus, the majority of general AI tutor positions will no longer be needed and will no longer be employed at xAI.' In other words, xAI plans to reduce the number of general AI tutors and increase the number of specialized AI tutors.

According to Business Insider, the cuts will result in the layoffs of 500 employees, or one-third of the 1,500-person data annotation team, which labels and annotates data used to train xAI's chatbot, Grok.

In August 2025, Igor Babushkin, the leader of the engineering team who co-founded xAI with Musk, left the company.

Engineering team leader who co-founded xAI with Elon Musk leaves the company - GIGAZINE

When technology media TechCrunch inquired about the data annotation team cuts, xAI cited a post that stated that they would 'immediately increase the size of their expert AI tutors by 10 times,' emphasizing that the cuts were not simply to the data annotation team.

Specialist AI tutors at xAI are adding huge value. We will immediately surge our Specialist AI tutor team by 10x!

We are hiring across domains like STEM, finance, medicine, safety, and many more. Come join us to help build truth-seeking AGI! https://t.co/htpc2RijLG

— xAI (@xai) September 13, 2025

In addition, xAI states, 'xAI is hiring in a variety of fields, including STEM (science, technology, engineering, and mathematics), finance, healthcare, and security,' highlighting the company's ongoing active recruitment efforts.