Scale AI shut down a contractor team at its Dallas office this week as it moves toward more advanced and technical AI training, the startup confirmed to Business Insider. The layoffs are the latest change since Meta acquired a stake in Scale AI in a $14.3 billion deal. The team, called the New Projects Organization (NPO), had more than a dozen members who worked on general tasks like improving how AI chatbots write. But as chatbots become more advanced, the AI training industry is seeing less need for general work and more demand for experts in areas such as medicine, robotics, and finance.
Headquartered in San Francisco, Scale AI helps technology companies make their chatbots better by refining their responses.
What did the e-mail say?
According to an email from HireArt, a staffing agency that works closely with Scale AI, the company offered the laid-off workers four weeks of severance pay and healthcare coverage through October. They were also invited to join Scale’s gig-work platform, Outlier, where thousands of freelancers contribute to AI model training. According to Business Insider, the email read, “As you navigate this transition, we want to ensure you are aware of alternative opportunities.”
Scale AI spokesperson Natalia Montalvo confirmed the decision to Business Insider, saying, “Scale wound down a small experimental onsite program in Dallas staffed by a contract workforce. This reflects an industry shift toward higher skill, expert data work. It only affects a small fraction of our overall workforce and has no impact on customer delivery.”
What is Scale AI offering to laid of employees
A Scale AI spokesperson told BI that the company is continuing to grow its expert-level programs and that the recent changes have not affected its larger group of contractors still working in Dallas. Elon Musk’s AI company, xAI, has also shifted its focus toward specialized AI training and recently reduced its team of general AI tutors in September.
The Meta partnership, announced in June, led some of Scale AI’s long-term clients, such as Google and OpenAI, to suddenly pause their projects. A few weeks later, Scale AI laid off about 14% of its workforce, including 200 employees and 500 contractors. In an internal email, the company said the decision was due to overhiring and changing market conditions.
Last month, Scale AI also let go of 12 members of its Red Team, a group responsible for testing AI models for potential risks. The company said the cuts were performance-related, but two former team members told Business Insider that their workload had been declining since the Meta deal.
