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Xsolla lays off 150 after an algorithm ruled staff 'unengaged and unproductive'

Xsolla laid off roughly one-third of its workforce after an algorithm employed by the company decided those 150 individuals were "unengaged and unproductive employees".

Xsolla, a company that provides payment processing options for the game industry, has laid off roughly one-third of its workforce after an algorithm employed by the company decided those 150 individuals were "unengaged and unproductive employees".

Layoffs on that scale are a troubling event on their own, but in this case Xsolla has also come under fire for its cold messaging surrounding a mass layoff and the very practice of using an AI to determine if an individual is productive enough to remain employed.

News of the layoffs last week were quickly followed by the leak of an internal email sent to the laid-off staff by Xsolla CEO Aleksandr Agapitov telling them that if they were flagged by the AI system then he doesn't think they're a fit for the company.

"You received this email because my big data team analyzed your activities in Jira, Confluence, Gmail, chats, documents, dashboards and tagged you as unengaged and unproductive employees," reads the email sent by Agapitov, obtained by Game World Observer. "In other words, you were not always present at the workplace when you worked remotely. Many of you might be shocked, but I truly believe that Xsolla is not for you."

The letter goes on to note that Xsolla has partnered with multiple HR agencies to "help you find a good place where you will earn more and work even less". It also promises recommendations from members of the team, including Agapitov himself, and discloses a list of the employees affected by the algorithm-driven layoff.

In the time since those layoffs first took place, Agapitov has gone on record to defend the company's decision. In one such interview with the Russian publication Meduza (translated and summarized in full here by GWO), Agapitov argues that if an employee's "digital footprint" doesn't meet company standards that they aren't a fit for Xsolla to begin with.

He suggests that the layoffs were the result of Xsolla's slowing growth during the past six months, which he appears to blame in part on reduced productivity due to remote work measures. According to that interview, Xsolla increased its revenue by 80 percent last year (likely related to the pandemic-driven growth many game companies saw in 2020) but within the last six months, Xsolla's growth has dipped below 40 percent year-over-year.

Because of that slowed growth, Agapitov explains that he and company leadership planned to cut 10 percent of Xsolla's salary budget via algorithm-based layoffs. Later, he adds that Xsolla plans to continue to reduce its budget by 10 percent until things pick back up and the company starts seeing at least 40 percent growth. However Agapitov isn't concerned about the departing employees or if those measures will hurt morale at the company moving forward.

"To all employees who received the letter, we said that the company doesn’t value you, so we will find you a better job with a better salary,” Agapitov adds in the interview linked above. “Likewise, you aren’t interested in Xsolla’s future either. So here is your generous severance pay, good luck.”

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