Software firm Scale AI lays off 20% of workforce

US-based software firm Scale AI, which uses software and people to label image, text, voice and video data for companies creating machine learning algorithms, has laid off 20% of its staff.

"I have made the difficult decision to reduce the size of our team by 20%, which means saying goodbye to many talented Scaliens," wrote founder and CEO Alexandr Wang in a blog post.

"We saw strong sales growth through 2021 and 2022. As a result, we increased headcount assuming the massive growth would continue. However, the macro environment has changed dramatically in recent quarters, which is something I failed to predict," he added.


Employees who are affected will receive a minimum of eight weeks of severance and three months of healthcare.

In addition, the company is waiving the one-year equity cliff for employees with less than one year of tenure and offering immigration assistance to those on visas that require continued employment.

"I take full responsibility for the decisions that have led us to this point. Over the past several years, interest from enterprises and governments in AI has grown rapidly. As a result, I made the decision to grow the team aggressively in order to take advantage of what I thought was our new normal," Wang wrote in his post.

As part of other changes, the company plans to set significant operating expense reduction targets for each function, adjust its hiring targets, and re-evaluate any new offices.

"We need everyone to do their part to stay cost-conscious and efficient when it comes to spending throughout the year," Wang said.

Tech layoffs

Major technology companies across the global, including startups, have been trimming their headcount to better fight the global macroeconomic headwinds, soaring inflation and rising interest rates.

The dwindling advertisement revenues have further weighed down the growth prospects of these firms and made their path to profitability more strenuous.

Amazon announced last week the ecommerce giant will lay off over 18,000 employees, starting January 18. Amazon CEO Andy Jassy, in an email to staff, cited "uncertain economy" and "rapid hiring" as reasons behind the job cuts.

"Between the reductions we made in November and the ones we're sharing today, we plan to eliminate just over 18,000 roles," Jassy said in the statement to his staff. The company had laid off about 10,000 staff in November.

Media company Vimeo also announced a fresh round of layoffs in the first week of 2023, which is set to affect 11% of its employees. Vimeo employed around 1,200 workers as of December 2021, according to its annual regulatory filing.

In an email to staff, Vimeo CEO Anjali Sud cited the “uncertain economic environment” for the layoffs.

Also read | ETtech layoff tracker: job cuts continue as thousands fired in first week of 2023

(Illustration by Rahul Awasthi)