Business Internet Tech 9 August 2021

Top tech company uses AI to fire 30% of workforce

Russian tech company Xsolla sparked intense debate Wednesday when it abruptly made 147 employees redundant using an algorithm appraisal system. Founder Alexander Agapitov added fuel to the fire by an aggressive email informing staff of his decision, while posting on Facebook that they should “get the fuck outta here”.

  • It’s not how redundancies usually happen. But 147 of online gaming payments company Xsolla’s approximately 500 employees received a colorful email Wednesday morning from Agapitov informing them they were being cut loose because a “big data team” had assessed them as “non-involved and unproductive”. Agapitov said an AI system (of which staff were unaware) had determined the 147 people to be culled were contributing less to internal company platforms and meetings, spending less time on their gmail accounts — and were abusing a remote working system.
  • Agapitov’s email was quickly leaked, prompting hundreds of posts on social media and a wave of news coverage. In an attempt to explain himself and calm the media storm, Agapitov called a press conference — but to little avail. Some commentators suggested Xsolla’s reputation was irreversibly damaged, others that it would find it difficult to ever again attract quality staff. That evening Agapitov posted that he was urgently seeking a PR manager, and then followed up with another Facebook post a few minutes later, doubling down on his original position. It said: “Knuckle the fuck down, or get the fuck outta here”.
  • Despite this week’s upheavals, Xsolla is one of the major success stories of the Russian tech industry. Providing an in-game payments service for online gamers, it was founded 15 years ago by Agapitov — himself a keen gamer — in the city of Perm (680 miles east of Moscow). Last year, research by Goldman Sachs and Bank of America suggested Xsolla could be worth as much as $3 billion. It currently has offices in Perm and Los Angeles, as well as a few employees in South Korea (although most of the redundancies this week were in Russia).
  • In several interviews Friday, Agapitov made another attempt to explain himself. “Of course, when I allow myself to indulge in such misbehavior it frightens people and they feel vulnerable,” he told independent outlet Meduza. “I understand only too well that emotional intelligence is something with which I struggle.” Agapitov said he decided to reduce Xsolla’s payroll because the company’s growth rate had fallen below his target of an annual 40 percent.

Why the world should care: The tech scene is one of the most dynamic areas of Russia’s economy. But rapid growth and an over-reliance on charismatic CEOs brings reputational risks.