The San Francisco-based firm will be hiring new talent with the necessary skills to develop and deliver AI-powered products. Dropbox had 3,118 full-time employees at the end of 2022. This amounts to around 500 job cuts in the cloud storage business.

In a memo to staff, Drew Houston, CEO of Dropbox said that the company's core cloud business growth was slowing as challenges from the economic downturn put pressure on customers. This in turn made some of its profitable investments no longer sustainable.

Apart from layoffs, Dropbox is also shifting some employees from one team to another to focus on its AI projects. However, they will also hire more employees to develop AI tools.

Houston said that the opportunity in front of Dropbox is greater than ever, but so is the need to act with urgency to seize it. He also added that the AI era of computing has finally arrived, and Dropbox is keen to tap into the fast-growing market with new products and offerings.

Dropbox is the latest tech company in a long list of names to have laid off a substantial portion of its workforce. Microsoft, Meta, Google, and Amazon have all conducted layoffs since late last year. Another trend that is evident in the tech sector is the focus on artificial intelligence. Microsoft is leading the rest of the pack with massive investments in OpenAI, the organisation behind names like ChatGPT and Dall-E.

Google is also working on Bard AI which is currently being tested in select markets and is expected to be rolled out to other parts soon. On Wednesday, Meta also stated that AI was helping it boost traffic to Facebook and Instagram and earn more in ad sales.

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