Scale AI, a major data labeling company that serves tech giants like Google and OpenAI, has laid off 200 employees – 14% of its workforce – citing rapid expansion that created inefficiencies.
The job cuts, announced by CEO Jason Droege in an internal email, affect both full-time staff and 500 global contractors. The layoffs come just one month after Meta invested $14.3 billion for a 49% stake in the company and hired several key Scale AI executives.
In his message to employees, Droege explained the company had “ramped up our GenAI capacity too quickly over the past year.” He said this approach “created inefficiencies and redundancies” along with “too many layers, excessive bureaucracy, and unhelpful confusion about the team’s mission.”
Scale AI provides human workers, often based outside the US, to label and annotate data used to train artificial intelligence models for companies including Google, OpenAI, and Anthropic. The company is restructuring its generative AI business from 16 separate teams down to five key areas: code, languages, experts, experimental, and audio.
The restructuring also affects Scale’s sales operations, consolidating multiple go-to-market teams into a single “demand generation” unit with four customer-focused divisions.
Droege acknowledged that changes in market demand forced the company to reassess its strategy and win back customers who had “slowed down” their work with Scale. The company plans to reduce focus on generative AI projects with limited growth potential.
Despite the cuts, Scale AI spokesperson Joe Osborne said the company remains “well-resourced, well-funded” and plans to hire hundreds of new employees in enterprise and public sector roles during the second half of 2025.
The layoffs reflect broader turbulence in the AI industry, with frequent mergers, acquisitions, and executive moves between companies as the sector rapidly evolves.
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