Cloud storage company Dropbox has revealed that it will be cutting its global workforce by roughly 16%, which translates to nearly 500 employees. This move follows the layoffs of thousands of employees by other big tech companies such as Amazon, Meta, Twitter, and more.

“I'm writing to share that I’ve made the difficult decision to reduce our global workforce by about 16 per cent, or 500 Dropboxers. First, while our business is profitable, our growth has been slowing. Part of this is due to the natural maturation of our existing businesses, but more recently, headwinds from the economic downturn have put pressure on our customers and, in turn, on our business. As a result, some investments that used to deliver positive returns are no longer sustainable,” Drew Houston wrote in an email to his employees, reported India Today. 

Dropbox CEO Drew Houston has announced the company's decision to cut around 16 per cent of its global workforce, or approximately 500 employees, due to slow growth and changes in its business model. Despite the company being profitable, economic headwinds have affected its customers, leading to pressure on the business. 

Dropbox is also shifting focus towards an AI-powered future, leading to a need for employees with AI and early-stage product development skills. As a result, the company is letting go of some employees in areas with less promising investments or inconsistent execution.

Houston expressed regret at having to make this decision and acknowledged the significant impact it would have on affected employees and their families. Impacted employees will receive a severance package that includes sixteen weeks of pay, plus an additional week for each completed year of tenure, along with Q2 equity vesting, healthcare benefits, and devices that can be used for personal purposes. The company will also provide job placement services and career coaching to impacted employees at no cost.

After closely examining its strategic priorities and organizational structure, the leadership team at Dropbox made the decision to restructure the company. As part of this, the company will consolidate its Core and Document Workflows businesses and reposition its business teams. 

Although these changes are difficult, the CEO emphasised that they are essential for the company's growth. He further added that companies have undergone technology transitions in the past, such as the shift from physical film to digital photography, and those that adapted to the new reality and took action succeeded.

Houston made it clear that Dropbox is fully dedicated to leading the way in the age of AI and wants to make sure that it is optimally positioned to unlock its complete potential. He promised to take all necessary steps to accomplish this objective. Starting from tomorrow, he will conduct regional town halls to address the queries of the employees and delve into forthcoming plans with more specifics.