News

Scale AI Cuts 14% of Workforce Amid Shifts in Data Labelling Business

Cansin Cengiz

16 Jul 2025 — 1 min read

Scale AI Announces Major Layoffs and Strategic Shift

Scale AI, a prominent player in the data labelling market, has announced a significant reduction in its workforce, letting go of approximately 200 full-time employees—about 14% of its staff—and ending contracts with 500 global contractors. This move comes on the heels of notable changes in the company’s leadership and client base.

What Prompted the Layoffs?

The decision follows a period of rapid expansion in Scale AI’s core data labelling operations, which provide crucial structured datasets for training artificial intelligence models. However, with the recent departure of CEO Alexandr Wang to Meta and a substantial $14.3 billion investment from the tech giant, the company has seen several of its largest data customers, including OpenAI, reduce or end their partnerships.

Leadership and Strategic Focus

Interim CEO Jason Droege addressed the employees in a memo, citing the need for Scale AI to "right-size" its data labelling business and focus resources on enterprise and government sales. The company’s rapid growth in its core business, while initially fueling its ascent, has now prompted a strategic pivot as the market landscape evolves.

Industry Context

This restructuring echoes similar challenges faced by other AI startups, such as Inflection, which have also undergone significant pivots after major investments or reverse acqui-hires. As larger tech players like Meta and OpenAI build internal capabilities or shift priorities, smaller AI service providers are re-evaluating their business models to stay competitive.

What’s Next for Scale AI?

Scale AI plans to invest more in its enterprise and government sales divisions.
The company will likely explore new service offerings beyond traditional data labelling.
Industry watchers will be monitoring how Scale AI navigates customer retention and product innovation in a rapidly evolving AI ecosystem.

References

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