Scale AI Cuts 200 Jobs, 500 Contractors in ‘Bureaucracy’ Purge

Scale AI is cutting 200 full-time jobs and ending contracts with 500 workers just weeks after a massive investment from Meta. The layoffs affect about 14% of the company’s staff and come as leadership tries to fix what it calls “excessive bureaucracy” inside the data-labeling firm. The cuts were announced in a memo from Interim CEO Jason Droege on Wednesday, signaling a sharp turn for the company.

Key Facts

• The Numbers: ~200 full-time employees (14% of staff) and 500 contractors.
• The Reason: Leadership admits they “ramped up capacity too quickly,” creating confusion and too many management layers.
• The Strategy: The company is collapsing 16 different work groups into just five focused teams.
• Source: TechCrunch, Industry Insider

Cleaning Up the ‘Mess’

Interim CEO Jason Droege did not mince words in his note to staff. He stated that the company grew its generative AI teams too fast over the last year. While the rapid hiring seemed like the right move at the time, Droege said it led to “inefficiencies and redundancies.”

“We created too many layers, excessive bureaucracy, and unhelpful confusion about the team’s mission,” Droege wrote. The company will now fix this by merging its 16 different “pods” into five simple teams: code, languages, experts, experimental, and audio. This move is designed to make the company faster and cheaper to run.

Big Money, Big Cuts

The layoffs arrive at a strange time. Meta recently invested $14.3 billion into Scale AI, taking a 49% stake in the business. Despite this huge pile of cash, the company is tightening its belt. The data-labeling business—where humans tag data to help train AI models—is changing fast as automation takes over more of the work.

Severance Details

The company is offering support to those losing their jobs. Full-time employees will stay on the payroll through mid-September. The 500 contractors, however, are seeing their work end immediately as the company moves away from generalist tasks toward more specialized work.