Silicon Valley-based cloud storage provider Dropbox Inc. has announced a 16% reduction to its global workforce amid slowing cloud growth, and instead, hiring new talent to build its AI offerings as it looks to shift its focus towards AI technology.

The job cut will result in up to 500 employees being let go, out of a total of 3,118 full-time employees reported by the company at the end of 2022.

While this is undoubtedly a tough decision, Dropbox's chief executive officer, Drew Houston in a memo to staff, emphasized the need to cut costs amid the company's slowing core cloud business growth due to challenges from the economic downturn making some of its profitable investments no longer sustainable.

The tech company is now looking to reallocate resources into AI technology following in the direction of Big Tech players like Microsoft Corp and Meta Platforms Inc to battle for a slice of the fast-growing market with plans to bring in more great talent in the AI technology area to focus on its new AI products.

By investing in AI technology, Dropbox is positioning itself to stay competitive and stay ahead of the curve in the rapidly changing tech landscape.