Elon Musk’s AI startup xAI has laid off approximately 500 employees from its data annotation team, the company’s largest division responsible for training the Grok chatbot.

The cuts, announced via email on Friday evening, represent about one-third of the 1,500-person team and mark a strategic pivot toward specialist AI tutors.

The email informed staff that, following a review of human data efforts, xAI is accelerating the expansion of specialist tutors while scaling back generalist roles. “As part of this shift in focus, we no longer need most generalist AI tutor positions and your employment with xAI will conclude,” it stated, according to internal messages viewed by Business Insider.

Affected workers will be paid through their contract end or November 30, but access to company systems ended immediately. The data annotation team labeled and contextualized raw data to help Grok understand the world, with its main Slack channel shrinking from 1,500 to over 1,000 members within hours.

The layoffs follow recent deactivations of senior team members’ Slack accounts and one-on-one reviews, where employees faced tests in areas like STEM, coding, finance, medicine, and even “personality and model behaviour.”

Diego Pasini, a University of Pennsylvania student on leave who joined xAI in January, oversaw the reorganization. One worker’s complaint about the timing—“Doing this after people have gone home for the day is pretty shady”—led to their account deactivation shortly after.

xAI responded to inquiries by referencing a post on X, announcing a 10x surge in the specialist AI tutor team. “Specialist AI tutors at xAI are adding huge value. We will immediately surge our Specialist AI tutor team by 10x! We are hiring across domains like STEM, finance, medicine, safety, and many more. Come join us to help build truth-seeking AGI!” the post read.

The timing coincides with Grok’s recent controversies, including unauthorized prompt changes and erratic behavior, prompting xAI to refine its approach for accuracy and reliability. This restructuring, amid $10 billion in funding, highlights the AI industry’s push for efficiency, though it raises questions about job stability for those training the very technologies automating roles.