The job cuts will free up investments in AI initiatives. Credit: Andrii Yalanskyi via Shutterstock.

Dropbox, the US-based cloud storage provider, has announced plans to reduce its global workforce by 16% amid slow business growth and the rise of artificial intelligence (AI).

The decision will impact around 500 staff at Dropbox, CEO Drew Houston said in a blog post.

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Houston stated that the company’s growth rate has been slowing, partly due to the maturation of the business.

The economic recession has also posed challenges for its clients, which in turn has affected the company’s operations, he added.

In addition, Dropbox aims to focus more on AI-powered products and to do that it will have to hire people with the right skill set.

The San Francisco, California-based firm is the latest to join the AI race as technology giants such as Google and Microsoft try to dominate the fast-growing industry.

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Houston said: “In an ideal world, we would simply shift people from one team to another. However, our next stage of growth requires a different mix of skill sets, particularly in AI and early-stage product development.”

Investments in some areas have limited potential now, while in others, inconsistent execution and poor management led to cuts to free up investment, the company’s chief explained.

According to the blog post, impacted staff will receive free career coaching and job placement assistance, as well as up to 16 weeks of severance compensation.

Furthermore, Houston said that the company is consolidating its Core and Document Workflows businesses and undergoing internal team restructuring, which included job cuts.

In a separate development, the social networking app Clubhouse said it is to fire 50% of its employees.

Clubhouse founders Paul Davison and Rohan Seth said their product needs to evolve to fit in the post-Covid world.

The founders said, “we need to reset the company, eliminate roles and take it down to a smaller, product-focused team.”