In an announcement on Thursday, cloud storage company Dropbox said it plans to reduce its workforce by 16%, cutting 500 jobs.

CEO Drew Houston acknowledged that the company is facing economic headwinds that are impacting its customers and slowing growth, in addition to a maturation of its business. Dropbox aims to refocus on AI-powered products, which will require new skill sets among its employees.

Houston noted that while some staff members will be shifted to different teams, the company will need to bring in more talent for AI and early-stage product development.

The affected employees will receive severance pay and job placement services, according to a blog post.

Dropbox is consolidating its Core and Document Workflows businesses and conducting internal team restructuring as part of the broader company consolidation.

Dropbox has planned internal town halls to address employee concerns. Despite the challenges, Houston is committed to keeping Dropbox at the forefront of the AI era.

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