Scale AI lays off 200 employees, ‘We ramped up our GenAI capacity too quickly’

Scale AI, the AI industry’s chief data dealer, will lay off 14 percent of the company, or about 200 employees, just one month after Meta took a multibillion-dollar stake in the company and hired its CEO and other staff.

The layoffs also include 500 of its global contractors, Scale spokesperson Joe Osborne told The Verge, adding that it’s all part of a broader restructuring as the company commits to streamlining its data business. Bloomberg was the first to report on the news of the layoffs.

Scale AI is an AI data labeling company. It uses human workers — often sourced outside the US — to annotate the data used by companies like Google, OpenAI, and Anthropic to train their AI models. The news comes amid a major shake-up in the AI industry as mergers and acquisitions, quasi acqui-hires, and defections from one startup to another run rampant.

Jason Droege, Scale AI CEO, sent an email to all Scale employees on Wednesday, which was viewed by The Verge, saying he would restructure several parts of Scale’s generative AI business and organize it from 16 pods to “the five most impactful:” code, languages, experts, experimental, and audio. The company will also reorganize its go-to-market team into a single “demand generation” team that will have four pods, each covering a specific set of customers, he wrote.

“The reasons for these changes are straightforward: we ramped up our GenAI capacity too quickly over the past year,” Droege wrote. “While that felt like the right decision at the time, it’s clear this approach created inefficiencies and redundancies. We created too many layers, excessive bureaucracy, and unhelpful confusion about the team’s mission. Shifts in market demand also required us to re-examine our plans and refine our approach.”

Droege said he believes the changes to the company will make it more able to adapt to market shifts, serve existing customers, and win back customers that have “slowed down” work with Scale. He also said the company would deprioritize generative AI projects with less growth potential.

“We remain a well-resourced, well-funded company,” he wrote. Scale’s generative AI business unit will have an all-hands meeting tomorrow, followed by a company-wide meeting on Friday.

Osborne also said that Scale plans to increase investment and hire hundreds of new employees in areas like Enterprise, Public Sector, and International Public Sector, in the second half of 2025. Severance has been paid out to impacted roles, Osborne added. “We‘re streamlining our data business to help us move faster and deliver even better data solutions to our GenAI customers,” Osborne said.