Large Wave of Layoffs in the Israeli Technology Sector: Companies Adapt While Employees Face the Unknown

SadaNews - Artificial intelligence is causing severe damage to companies worldwide, and specifically in "Israel," its impact is strong and painful, according to a Hebrew report published by "Yedioth Ahronoth," translated by Sada's Economy. There has been much talk about the damage caused by artificial intelligence to employees, and now "the truth is manifesting, but in a way no one expected." This massive development in artificial intelligence threatens the business models of most companies around the world, and the advanced technology that constitutes their pillars, forcing them to rebuild or vanish. Amid this, employees are the first victims. Not because AI has replaced their jobs, but because it has raised concerns among their executives. It could threaten the entire company with replacement. The sector has witnessed numerous waves of layoffs in recent years for various reasons. "But this time, the wave of layoffs is widespread, as many companies are laying off their employees in an attempt to survive, and the effects of this wave will be felt in all aspects of the economy. When the storm calms, nothing will return to its previous state. Jobs will change, workplaces will change, and the entire economy will function differently," according to Sada's Economy translation. Investor Oren Zeev, one of the leading activists in the Israeli advanced technology sector, says: "I am not worried about the sector as a whole, but I am concerned about the employees. The wave of layoffs will be very significant for them, and I truly do not know where things will end up. I have no conclusive answer other than hoping things will work out one way or another." Investor Avi Eyal, managing partner at Integra Capital, adds: "We are entering a phase where the market does not operate according to our desires. It is very difficult to change the market trajectory; these are market forces. There will be a wave of layoffs, which has already begun." **Meta: Layoff of About 8000 Employees Worldwide** Layoff announcements began in small phases in recent months, with layoffs in multinational companies that have development centers in "Israel," continuing with an increasing wave of layoffs within the Blue and White Party (a centrist liberal Israeli political coalition). Last week, Meta announced layoffs of about 8000 employees worldwide, including dozens in "Israel." Microsoft also announced voluntary retirements and layoffs of about 7% of its workforce in the United States. Snap laid off around 16% of its workforce worldwide, approximately 1000 people. American companies ZoomInfo and Shutterfly closed their development centers in "Israel," laying off hundreds of employees. Also, American fintech companies PayPal and Intuit laid off dozens of employees in "Israel." This week, Israeli company Wix announced a layoff of 20% of its workforce, around 1000 employees, 900 of whom are in "Israel." The Israeli company Lightricks, specializing in AI for videos, laid off dozens of employees. The Israeli sports platform Minute Media laid off 12% of its workforce worldwide, with 60 in "Israel." The Israeli online advertising company Taboola laid off about 100 employees. Sectors that seemed particularly strong are experiencing layoffs: the Israeli fintech company "Rapid" surprised everyone by announcing layoffs of hundreds of employees in "Israel" (without disclosing the final number). The Israeli AI company "A21" has canceled its AI model development operations, laying off 60% of its employees. The Israeli company "Amdocs," a cornerstone in the Israeli advanced technology sector, has announced a layoff wave affecting 10% of its workforce, including hundreds in "Israel." The giant cybersecurity company "SentinelOne" conducted a comprehensive reduction of 10% in its workforce, equivalent to about 70 employees in "Israel." Also included in the list are data company "Firebolt," cybersecurity company "Axonius," and the large fintech company "Nayax," each laying off dozens of employees. Layoffs are spreading like wildfire, quickly moving from one company to another nearby, and even a giant oil tanker could not extinguish them. In this case, Benjamin Netanyahu was not the first to recognize this; it seems the government is not paying any attention to the waves of layoffs and the state of the advanced technology sector, which is a cornerstone of the entire Israeli economy," as mentioned in Sada's Economy translation. **"Rising Shekel Exchange Rate".. An Excuse for Layoffs** Considering the multiple explanations provided by companies for layoffs and looking at them from a broader perspective, there is a largely unified narrative: giant technology companies announce massive investments in building AI capabilities, hiring work teams, and developing computing infrastructure, while trying to compensate for rising costs through layoffs. Many companies claim that the introduction of AI allows teams to work more efficiently, significantly reducing the need for labor. In "Israel," the rising exchange rate of the shekel significantly increases the cost of salaries for "Israeli" workers. These explanations should be approached with caution. Just this week, both Sam Altman, CEO of OpenAI, and Dario Amodei, CEO of Anthropic, separately acknowledged their error in predicting that AI would replace workers. Altman said, "I’m glad I was wrong; I thought the impact of AI would be larger." What a surprise! Many CEOs who are laying off their employees now are preoccupied with how to reframe the narrative of the layoffs, which has now been revealed by many as a "sarcastic whitewash of AI." The report added: "Behind the crocodile tears shed by CEOs lies a real fear of AI's impact on companies' business models: a company like Wix is finding that AI is making its developed website building tools unnecessary, and Fiver is discovering that AI is rendering most of its freelancers' services unnecessary. Meanwhile, other companies that have not grasped this yet may find out too late. The result is that many companies are shifting all their attention to developing capabilities that can confront this threat while simultaneously shedding activities that do not contribute to adaptation and reducing salary expenses overall in preparation for declining revenues." In many cases, investor pressure contributes to layoff decisions. Even companies with significant financial resources, which would have weathered changes under different circumstances, such as the rising shekel value, are now seeking to demonstrate continued profitability. They distribute dividends to shareholders and even buy stocks from investors to signal stability, and in the case of Rapid, they also finance basketball teams (Maccabi Tel Aviv). Meanwhile, these companies are laying off their employees, secretly worried about the future. Zeev says: "Clearly, some companies are harmed by this, but there are others that benefit significantly. Generally, I believe that its benefits outweigh the harms. This may harm companies like Wix and Fiverr; at least that's what the market worries about. On the other hand, many companies benefit greatly from it." Companies like Meta and Microsoft are allocating massive budgets for AI and then laying off employees so that their profits are not affected. "We can look at it from a different perspective: they have the opportunity to do things more efficiently thanks to AI. Generally, AI is extremely beneficial for tech companies, but some will definitely be harmed by it. I have a company that was worth $12 or $13 billion, and today it’s worth nothing because of AI. But I have now many fantastic companies because I’ve been investing for 30 years and I have never seen anything like this before. That’s why I’m very optimistic about this sector." **Avi Eyal, The Dollar Exchange Rate Will Reach 2.5 Shekels by the End of 2026, and There Is Nothing Actually Preventing This** "We need to find a solution to this issue, which is not easy. The dollar exchange rate will reach 2.5 shekels by the end of 2026, and there is nothing actually preventing it. Several measures can be taken by the government to encourage the decline in the value of the shekel. Reducing the interest rate by a quarter percent is not enough; it needs to be reduced by a full percentage point. We need to encourage small companies that can undertake larger risks and are less affected by the circumstances. We need to encourage investors through a program similar to the QSBS program in the United States, which gives investors in the advanced and defense technology sectors tax incentives, to encourage the establishment of new companies and developments," as translated by Sada's Economy.