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

SadaNews - Israel boasts globally of the title "Startup Nation" and its status as a thriving hub for technology and innovation, frequently making headlines with stories of success and massive investments. However, behind this technological glow, a profound crisis is quietly taking shape in the labor market.

The numbers that don’t make headlines reveal a different reality, as thousands of experienced professionals are being excluded from the sector, while companies appear increasingly focused on efficiency and reducing human investment. There is a stark contrast between the flourishing image promoted to the world and the dark reality faced by the depths of the technology industry internally.

The calm before the collapse.. alarming numbers signal a radical shift

A joint report released by "CTech" and "Calcalist" reveals shocking data indicating a worsening employment crisis in the Israeli technology sector, despite its flourishing 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 notable paradox, while the number of job seekers in other sectors decreased by 4% during the same period.

Although official figures do not include those who have not registered for unemployment benefits, most of whom are still unqualified youth, the major blow has impacted experienced professionals, specifically those aged between 36 and 45, who have recently formed the backbone of the sector.

In the same context, core technical professions have seen a significant decline, with the number of job seekers in the fields of databases and networks rising by over 223%, and in software development and application analysis by 147%. These two categories alone make up half of the unemployed in the technology sector as of April 2025.

What is even more alarming is the significant increase in the proportion of high-salaried individuals (earning between 25,600 and 43,800 shekels monthly, approximately $7,100 to $12,200) among the unemployed, where their share jumped 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.

The data suggests that the crisis is primarily due to layoffs rather than resignations, with the number of layoffs increasing by 2.5 times between the first quarter of 2022 and the first quarter of 2025.

An even more striking shift is the inversion of the job market balance. In 2019, there were 1.6 jobs for every job seeker, but by 2025, this number has dropped to just 0.9, indicating that supply has outstripped demand.

Despite the total employment in the sector growing 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 more akin to a silent slowdown that is reshaping the market from within.

Large companies have not experienced collapse, but have grown more cautious and selective, hiring only when necessary and after careful economic analysis.

The market has shifted from a phase of excessive expansion, where talent was intensively attracted, to a phase of managed contraction, where every hiring decision is strategic and well-considered.

This transition redefines concepts of success and efficiency, making mid-level and senior experiences, once the backbone of technical teams, feel marginalized today, not due to a lack of competency, but because market standards have changed radically, rendering what was once an advantage invalid today.

Although the technology sector still retains a high percentage of job vacancies compared to other sectors, this percentage does not reflect actual opportunities for all job seekers, as the majority of these positions require very specific skills or experience in specialized fields that are only available to a few.

A surge of funds and a shrinking market

Behind these gloomy numbers lies a paradox equally concerning: an unprecedented financial boom that does not translate into job opportunities, but coincides with a reduction in them. The first half of 2025 witnessed unprecedented levels of investment in the Israeli technology sector, which may suggest a renewed prosperity, but the reality on the ground tells a different story.

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

Expansion is no longer contingent on hiring more staff; rather, having fewer employees has become an indicator of technological efficiency. Major companies like Microsoft have laid off thousands, while startup founders today dream of building a "one-person unicorn."

This deep transformation threatens not only experienced professionals but also new graduates and entry-level jobs that were previously the gateway for youth into the sector.

Furthermore, alongside the revolution in artificial intelligence, the crisis has been exacerbated by waves of layoffs executed by global companies with development centers in Israel, in addition to local "unicorns" that over-hired during the boom years and then had to cut back on their spending as interest rates rose and liquidity contracted.

On top of all this, the conscription of about 20% of technology workers for extended reserve service has led to a decrease in workforce participation, while social media is flooded with stories of early resignations and job burnout.

Wasted experiences in a market that does not listen

On another front, the hiring process itself emerges as an additional dilemma that hinders the absorption of top talents. In many companies, candidates, even for managerial positions, are required to complete exhausting home assessment tasks, driving a significant number of them to withdraw.

According to Shmuel Navon, CEO of Israeli company "Wolt Market", about 25% of candidates withdraw during the practical assessment phase, whether for managerial roles or even entry-level positions.

Many candidates view these evaluations as an unjustified drain on time and "unpaid work," often feeling that they are degrading or diminish their experiences. Experts argue that poorly considered evaluation methods can alienate talent and weaken the company's image as an attractive firm 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 field, working as freelancers or moving to parallel fields such as biotechnology or smart finance and energy. Recruiting companies' data indicate that some of these sectors are witnessing a rise in demand for technical skills, albeit in a selective and limited manner.

Behind the facade of prosperity, the Israeli technology market is eroding from within. Between displaced talents and companies redefining success with the fewest people possible, the prospects for recovery seem limited.

Even the defense industries, which are temporarily absorbing some of the laid-off workers, may become an additional burden if global demand for weapons declines, opening the door to a new wave of layoffs. Will this sector withstand pressure while its foundation fractures from within?

Source: Websites