A Silent Crisis.. Behind the Scenes of the Israeli Technology Market

SadaNews - Israel proudly boasts the title of "Startup Nation" and serves as a thriving hub for technology and innovation, consistently making headlines with stories of success and massive investments. However, behind this technological glow, a deep crisis in the job market is quietly forming.

The headlines don’t reveal the whole story; thousands of experienced professionals are being excluded from the sector at a time when companies are increasingly focused on efficiency and minimizing human investment. This creates a stark contrast between a flourishing image that is presented to the world and the dark reality faced by the depth of the technology industry within.

The Calm Before the Collapse.. Warning Signs of a Radical Shift

A joint report released by "CTech" and "Calcalist" unveiled shocking data indicating a worsening employment crisis in the Israeli technology sector, despite its thriving facade.

The number of job seekers in this sector has doubled by 112%, from around 7,000 in January 2019 to nearly 15,000 in April 2025, in a remarkable contrast to a 4% drop in job seekers in other sectors during the same period.

Although the official numbers do not include those who have not registered for unemployment benefits—most of whom are young and not yet qualified—the major blow has hit experienced employees, specifically those aged 36 to 45, who until recently formed the backbone of the sector.

Similarly, core technical professions have seen a notable decline, with the number of job seekers in database and network fields rising by over 223%, and in software development and application analysis by 147%. Together, these two categories make up half of the unemployed in the technology sector by April 2025.

Worse still is the significant rise in the proportion of high-salary earners (between 25,600 and 43,800 shekels monthly, roughly 7,100 to 12,200 dollars) among the unemployed, with their percentage jumping from 15% in 2022 to 40% in 2025. This indicates that what is known as the "strong middle class" of skilled professionals is no longer safe.

Data indicates that the crisis is primarily due to layoffs, not resignations, as the number of dismissed workers has multiplied by 2.5 times between the first quarter of 2022 and the first quarter of 2025.

The most significant transformation is the shift in the job market balance. In 2019, there were 1.6 jobs for each job seeker, but by 2025, the number had dropped to just 0.9, meaning supply has outstripped demand.

Although total employment in the sector grew by 22.5% during the same period, the doubling of job seekers reveals a real gap and structural imbalance threatening the stability of this vital sector.

From Chaotic Expansion to Managed Contraction

Far from the stereotype of mass layoffs or dramatic collapses, what is happening in the Israeli technology sector is closer to a silent slowdown that is reshaping the market from within.

Major companies have not experienced a collapse, but they have become more conservative and selective, only hiring when absolutely necessary and after thorough economic analysis.

The market has shifted from a phase of excessive expansion characterized by intensive talent acquisition to a phase of managed contraction where every hiring decision is strategic and well-considered.

This shift is redefining concepts of success and efficiency, leaving mid- and senior-level experiences that were once central to technical teams feeling marginalized today—not due to a lack of competence, but because market standards have changed radically, and what was an advantage yesterday is no longer valid today.

While the technology sector still retains a high percentage of job openings compared to other sectors, this percentage does not reflect actual opportunities for job seekers, as most of these positions require very precise skills or expertise in specialized fields that are only available to a few.

A Surge of Money and a Shrinking Market

Behind these grim numbers lies a paradox that is no less worrisome: unprecedented financial prosperity that does not translate into job opportunities, instead coinciding with their contraction. The first half of 2025 saw record levels of investment aggregation in the Israeli technology sector, which might suggest a renewed boom, but the reality on the ground tells a different story.

The increasing reliance on artificial intelligence technologies has resulted in a leap in worker productivity, changing the measure of success within companies.

Expansion is no longer tied to hiring more employees; rather, a smaller number of staff has come to signify technological efficiency. Major companies like Microsoft have laid off thousands, while founders of startups today dream of building a "one-person unicorn."

This deep transformation not only threatens experienced employees but also sidelines new graduates and entry-level jobs that once served as gateways for youth into the sector.

Furthermore, alongside the AI revolution, the crisis has been exacerbated by waves of layoffs executed by global companies with development centers in Israel, as well as local "unicorns" that overhired during the boom years and then had to cut back on spending with rising interest rates and reduced liquidity.

Additionally, the recruitment of nearly 20% of tech workers for prolonged reserve service has led to a decline in workforce participation, while social media platforms are filled with stories of early resignations and job burnout.

Wasted Expertise in a Market That Doesn’t Listen

On another front, the hiring process itself emerges as an additional dilemma hindering the integration of top talents. In many companies, candidates—even for managerial positions—are required to undertake exhausting home assignment evaluations, driving many to withdraw.

According to Shmuel Navon, the CEO of Israeli "Wolt Market," about 25% of candidates withdraw during the practical evaluation stage, whether for administrative roles or even introductory positions.

Many candidates see these evaluations as an unjustified drain of time and "unpaid labor" and often feel they are degrading or diminish their expertise. Experts believe that poorly considered evaluation methods can deter talents and weaken the company's image as an attractive employer for skilled professionals.

Even in a market dominated by employers, a positive candidate experience remains a critical factor in maintaining the company's professional image.

In response to this decline, some experienced professionals choose to seek opportunities outside the traditional technology sphere, working as freelancers or moving into parallel fields like biotechnology, finance, or smart energy. Recruitment companies' data indicate that some of these sectors are witnessing a rise in demand for technical skills, albeit selectively and limitedly.

Behind the façade of prosperity, the Israeli technology market is eroding from within. Between sidelining talents and companies redefining success with the fewest possible humans, recovery opportunities appear limited.

Even the defense industries, which temporarily absorb some laid-off workers, could turn into an additional burden if global demand for weapons declines, opening the door to a new wave of layoffs. Will this sector withstand while its foundation is crumbling from within?

Source: Online websites