Layoff Wave in Israeli Tech: “LinkedIn Doesn’t Really Solve the Problem”

Behind the explanations about the rise of AI lies an even more painful local problem, the strong shekel, which makes it more expensive for companies to operate in Israel. As companies keep cutting jobs, new initiatives are trying to connect thousands of laid-off workers with the positions that are still open.

The wave of layoffs in Israeli high-tech is showing no signs of easing. When we asked this week a source who has accompanied dozens of Israeli startups for years how severe the current crisis is, on a scale of 1 to 10, the quick and disappointing answer was, “between 8 and 9.” Despite our familiar tendency as Israelis to interpret reality as something that is happening mainly to us, it is important to remember that this layoff wave is part of a global trend of layoffs in tech companies, including the biggest ones. A few examples: Oracle is expected to lay off about 30,000 employees, Meta has already laid off 8,000, and Amazon, Microsoft and Salesforce have each laid off thousands of workers.

The usual culprit: AI.

In Israel, another major factor has joined the list of reasons for layoffs, the strengthening shekel. The ongoing strength of the Israeli currency against the dollar makes operations here much more expensive, mainly because employees are paid in shekels. From the perspective of foreign investors in Israeli tech companies, everything is measured in dollars, and the dollar is currently simply too weak against the shekel. The result is that every employee, every office and every expense in Israel costs far more than before. So the foreign investor applies pressure, the Israeli CEO lays off 15% of employees in Israel to meet the demands, and everyone together blames AI for it.

Although there is no government or media body in Israel that regularly provides data on layoffs in tech, one can certainly suspect that what we are seeing so far is a somewhat softened version of the reality on the ground. The figures in the media, especially when it comes to Israeli startups, are not always accurate. CEOs who lay off 50 employees may also tell reporters that they laid off 10. Many companies are carrying out aggressive rounds of layoffs, but no one is eager to admit it.

Some companies are trying to give the layoffs a positive twist, saying that AI allowed them to become more efficient, and that is true, but only partially. AI does indeed make companies more efficient, but what is pressuring Israeli companies most right now is the strong shekel, which makes operations in Israel more expensive, first and foremost in terms of employee salaries paid in shekels, but also in other costs such as rent, professional services, overhead and operations.

Some companies have even adopted a “dirty trick”, ghost jobs. They publish job postings right after a round of layoffs in order to create the appearance of “business as usual.” In many cases, these are positions that no one actually intends to fill. They are meant only to hide the fact that the company is shrinking.

Facing this wave are Israeli entrepreneurs from within the industry itself, who prefer, as they put it, “to do a little good.” The result, in one of the initiatives launched just this week on the web and on LinkedIn, is an AI-based search engine called JobFox, which aims to consolidate and display all the high-tech jobs currently open in Israel.

Behind the project are three people, Roei Sternberg, Nir Kossover and Ido Maroz, partners in the bootstrapped marketing startup Scalefox.ai. “Dozens of our friends were laid off in recent weeks, and the ground was really pulled out from under them,” Maroz says in an interview with N12 Business. “So we decided to stop everything for a moment and see how we could help them and all job seekers.” This is not the first time Maroz has stepped in to help laid-off workers. At the start of the war, he was involved in an initiative that helped reservists who were laid off find work. “This is something that has been burning in me for a long time,” he says.

Why do you think you can help in such a broad and large crisis?

“We see that there are a lot of layoffs, but at the same time companies are also hiring. On the one hand there is an almost Doomsday feeling in high-tech, but on the other hand there are about 10,000 open positions in the industry today. The problem is that until now there was no platform for this. LinkedIn doesn’t really solve the problem, because about half the jobs aren’t even there, and their search isn’t convenient enough.”

How does your database work?

“We built a database of nearly 6,000 companies in Israeli high-tech, with automatic tracking of every new company that is founded. Using AI, we sample the entire database every day. We can see there that even companies that laid off workers are hiring.”

According to Maroz, the many laid-off workers who are trying to get back into the market are now facing a particularly difficult labor market. “First of all, they couldn’t see where the open positions were, but that is what we came to solve. Beyond that, most companies today expect workers to come with a set of capabilities to work in the new world, to work properly with AI. We plan to help the laid-off workers with that too.”

How will you help?

“We will add features that make it easier for laid-off workers to get a new job. We will give them tools that tailor résumés to a position, prepare them for interviews, provide automatic filtering of jobs and alerts about new positions that seem suitable.

“On the other hand, we want to make companies more accessible to workers, and open our database to companies. The idea is to connect companies with potential workers. Companies have already started contacting us and want to cooperate.”

If you succeed, that means a full-time job for you. What will happen to your startup?

“True, but that’s for later. Right now we are busy doing a little good.”

JobFox has been online for barely two days. What are the usage levels so far?

“In the first 24 hours about 500 people came in and registered, and all of them are very, very active in their job search. Each of them entered the site several times.”

Are the laid-off workers mostly people who can be replaced by AI?

“Not necessarily. Some of them are, but this time a lot of middle managers were laid off. Large companies tend to flatten organizations and work in much larger groups under a single manager. In fact, professions like sales and account management will not be hurt by AI, and demand for them will rise.”

What happens next?

“Tech companies will keep laying people off, we are nowhere near the end of the wave. On the other hand, the companies that are hiring will benefit during this period from a particularly high-quality pool of workers who have been pushed into the market. Most of the laid-off workers worked at large companies and experienced a false sense of job security. Suddenly, in one day, they are out, and that is frightening. But they need to lift their heads, the industry is in crisis, but it is not dead, and there are many companies hiring right now.”

“Growing demand for talent from abroad”

How do you deal with a crisis of thousands of layoffs? It depends whom you ask. Yair Lerer, vice president at the startup Ubeya, belongs to a noteworthy wave of local tech companies and venture capital funds that are offering new employment opportunities in an effort to help laid-off workers return quickly to the workforce. The jobs are offered mainly in cyber, AI, cloud infrastructure and software, data and deep-tech.

Ubeya develops an AI platform used by producers of major events in stadiums and international entertainment halls. The system allows organizers to manage manpower and suppliers at large-scale cultural and sports events such as Premier League matches in England, the Champions League final, the Wimbledon tennis tournament, Formula 1 races and the major tours of Taylor Swift and Oasis.

“We currently have 55 employees, but we are always hiring more,” Lerer says. “Right now we have 8 open positions, mainly in development, product and marketing. Fortunately for us, we operate in a market that is on the rise. Most Premier League teams in England work with us, and that happened fairly quickly. Our entry into the U.S. market, which has been happening in recent months, is also very fast and very successful. The strong shekel affects everyone, but the good situation in our market allows us to hire despite the weak dollar.”

“Fortunately for us, we operate in a market that is on the rise.” Yair Lerer | Photo: Courtesy of the subject

Eddy Katz, one of the founders of the public company Group 107, предлагает a very different solution. His company offers Israeli companies the option of replacing some of their expensive Israeli employees with workers from centers in Ukraine, Poland or Argentina, who cost only $800 to $1,000 a month.

“There is growing demand for talent from abroad, but I can’t attribute that only to the weakness of the dollar against the shekel,” he says. “Companies are using the current crisis to upgrade themselves with workers who have greater understanding, knowledge and experience in AI. Employees who are not currently familiar with AI capabilities are less needed by organizations. Israeli high-tech workers also need to internalize that.”

What has actually changed?

“For the first time since 2019, there is no growth in the number of high-tech workers in Israel, there is even a slowdown. This is due to the dollar exchange rate and the AI breakthrough, but also to considerations of business stability. Israel is constantly going through crises and wars, while investors and companies want stability. In such a situation, if part of the team can be placed outside Israel as part of the organization’s risk management, why not? High-tech companies will not move the entire center of gravity and development abroad, but they clearly understand that they also need different kinds of workers in different places. Companies that are building AI teams in Israel today know that they need to include workers from abroad as well. This trend will only strengthen.”