A pedestrian walks past the technology startup Scale AI office in San Francisco. The San Francisco artificial intelligence firm valued at nearly $14 billion reportedly laid off a significant number of contract workers with little warning this week.
Stephen Lam/The Chronicle
Scale AI, a San Francisco artificial intelligence firm valued at nearly $14 billion, laid off a significant number of contract workers this week with little warning.
The affected workers were notified via email on Monday by HireArt, the third-party human resources software vendor used by Scale. The message, obtained by Inc., stated that employees “no longer need to report to work,” and advised them to expect their final paychecks by Friday.
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Despite initial social media reports suggesting that 1,300 employees were affected, a Scale spokesperson clarified that the number is substantially lower.
“Over the past year, Scale has worked on different projects with different onboarding and oversight needs,” the spokesperson said. “Last week, less than 65 people were laid off. We built up this contracted workforce and scaled it to appropriate sizing as our operating model evolved over the past nine months, less than 500 have been laid off in the United States.”
Scale’s operations heavily rely on freelancers to refine generative AI systems — a process called “tasking” that involves annotating and classifying datasets, including images, video and text. Freelancers, who often work with Scale’s subsidiaries such as Outlier AI and Remotasks, are paid hourly.
Remotasks recently faced allegations of nonpayment to contractors in the Philippines and Africa, while Outlier AI was similarly accused of withholding payments from U.S. contractors. In May, Scale closed its Austin, Texas, office, resulting in additional job cuts.
The same month, the company took over a major portion of the San Francisco office formerly occupied by Airbnb.
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The company spokesperson said the recent reduction was due to a shift in business strategy and did not affect full-time employees. Affected contractors received severance and COBRA coverage through HireArt.
On Reddit, impacted workers expressed frustration. One user said, “I am one of the unlucky team leaders who was laid off earlier today. Everything happened so fast, and I didn’t say goodbye to my team.” Another remarked, “Absolutely abysmal how they treated us today.”
Scale’s founder, Alexandr Wang, earlier this year regained the title of “youngest self-made billionaire” on Forbes’ billionaires list, after announcing that Scale AI had raised $1 billion in investments, raising its valuation to $13.8 billion. He owns a 14% stake in the company.
“I think the entire industry expects that AI is only going to grow, the models are only gonna get bigger, the algorithms are only going to get more complex and, therefore, the requirements on data will continue growing — we want to make sure that we’re well-capitalized,” Wang, 27, told Fortune.
Meanwhile, Brave, a San Francisco company known for its web browser and search services, has cut 27 jobs across multiple departments, TechCrunch reported.
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Brave confirmed the layoffs but didn’t disclose a reason for the workforce reduction. PitchBook estimates that the company employs around 191 people, which means about 14% of workers were let go.
This follows another round of job cuts, when Brave reduced its workforce by 9% in October 2023, citing the need to manage costs.
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