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Dropbox is laying off 20% of its staff

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Top cloud storage firm Dropbox has confirmed that it will be laying off one in five workers as part of a broader cost-cutting measure to tackle an evolving landscape.

The approximately 20% reduction in headcount, or 528 employees, will take place as part of what CEO Drew Houston described as a “transitional period.” The company also terminated 500 contracts in 2023, and a further 300 in 2021, as the tech sector grappled with a tough economy.

In a blog post entitled “An update from Drew”, Houston described the challenges of “softening demand and macro headwinds” affecting its core business as well as complaints from within that the company has become too “complex.”

Dropbox layoffs

It’s unclear how the layoffs will affect different types of workers, but Houston said, “excess layers of management [are] slowing [the company] down.”

“And while I’m proud of the progress we’ve made in the last couple years, in some parts of the business, we’re still not delivering at the level our customers deserve or performing in line with industry peers,” he added.

Moving forward, Houston said Dropbox’s plan is to make “more significant cuts” in parts of the business that have either received too much investment or are not performing as well as the company had hoped.

A separate SEC filing revealed the company expects to incur between $63 and $68 million in costs relating to the layoffs, including severance and other benefits.

Houston committed to supporting workers with 16 weeks of pay, including one additional week of pay for each completed year of tenure at Dropbox, healthcare support, the possibility of keeping company-issued devices, and more.

Further details about the company’s strategy are set to be discussed in upcoming Town Halls and other meetings, but it’s likely that further investments will be given to artificial intelligence.

Houston summarized with a hopeful message: “The changes we’re making today, while difficult, come at a pivotal moment when the market is accelerating precisely where we’ve placed our biggest bets.”

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