Scale AI Announces Job Cuts Affecting 14% of Staff Primarily in Data Labeling Department

In an unexpected development, data-labeling startup Scale AI has announced substantial workforce reductions and the termination of contracts for approximately 700 individuals worldwide. This announcement was made public on Wednesday following reports by Bloomberg. The layoffs constitute approximately 14% of the company’s staff and around half of its global contractor base.

In an internal communique obtained by Bloomberg, interim CEO Jason Droege acknowledged that Scale AI had overextended in scaling its core data-labeling business, which involves supplying AI labs with labeled, structured data for the training of AI models. Droege expressed plans to bolster the company’s enterprise and government sales units moving forward.

The recent turn of events bears similarities to other AI startups that have undergone reverse acqui-hiring, such as Inflection. It appears that Scale AI is now faced with the necessity of reorienting its business focus from the sector that initially propelled it into prominence. This shift comes in the wake of Meta’s substantial investment in the company last month, which saw the recruitment of Scale AI’s CEO.

Notably, several of Scale AI’s key data clients have opted to discontinue their partnerships with the startup following Meta’s investment.