Scale AI, the U.S.-based data‑labeling and generative AI company, recently laid off around 200 full-time staff (~14% of its workforce) and let go of 500 contractors as part of a major restructuring. Interim CEO Jason Droege said the company had “ramped up GenAI capacity too quickly,” creating inefficiencies, excessive bureaucracy, and blurred mission focus. The move reflects shifts in AI market demand and a renewed push toward profitability. Scale plans to consolidate its generative AI unit into five focused pods and merge go‑to‑market teams, while redirecting future hiring into enterprise, government, and international markets.

Canadian context:
The Canadian AI sector has also grappled with volatility—AI adoption fuels demand in tech hubs like Toronto and Montreal, but firms and public agencies face similar pressure to balance growth with sustainable funding. For affected workers in Canada, severance and termination rights follow provincial regulations, which often provide stronger protections than in the U.S.; resources such as Samfiru Tumarkin LLP provide guidance on navigating severance entitlements and next steps.

In Canada’s tight labour market, laid-off AI or data‑tech talent may find strong demand from both startups and established firms investing in AI, though upskilling in AI‑complementary skills like data literacy, ethics, and collaboration continues to be essential for career resilience.

Have you been laid off by Scale AI in Canada? Contact our employment lawyers today. Our legal team offers a free consultation and works on a contingency basis—there are no fees unless you win your case.

Charles Rollet’s original article, “Scale AI blames overhiring and market shifts for layoffs and says it's not profitable” was published in Business Insider News on July 16, 2025. Read the Full Business Insider News story.