Dropbox on Thursday announced plans to cut 500 employees, or about 16% of its workforce, according to a blog post on the company’s website.

Dropbox CEO Drew Houston wrote in the blog post that the company has been reckoning with slowing growth, in part due to a maturation of its business, but also as a result of economic headwinds that are pressuring its customers.

Houston said that the company is also facing an urgency to focus more on artificial intelligence-powered products, and doing so will require hiring workers with different skill sets.

“In an ideal world, we’d simply shift people from one team to another,” Houston wrote. “And we’ve done that wherever possible. However, our next stage of growth requires a different mix of skill sets, particularly in AI and early-stage product development. We’ve been bringing in great talent in these areas over the last couple years and we’ll need even more.”

Impacted employees will receive free job placement services and career coaching, according to the blog post, along with up to 16 weeks of severance pay and one additional week per year of Dropbox tenure.

The layoffs are part of a broader company consolidation, Houston wrote, as the company merges its Core and Document Workflows businesses and some other internal team restructuring. Dropbox plans to host internal town halls tomorrow and next week to answer employee questions.

“These transitions are never easy, but I’m determined to ensure that Dropbox is at the forefront of the AI era, just as we were at the forefront of the shift to mobile and the cloud,” Houston wrote.