The Tech Layoff Wave: “LinkedIn Isn’t Really Solving the Problem”

Behind the explanations about the rise of AI lies an even more painful local problem, the strong shekel, which makes operations in Israel more expensive. While companies continue to cut 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 tech shows no signs of slowing down for now. When we asked this week a person 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 discouraging answer was “between 8 and 9.” Despite our well-known tendency, as Israelis, to read reality as something that happens mainly to us, it is important to remember that this layoff wave is part of a global trend of job cuts in tech companies, including the biggest ones. A few examples, Oracle is expected to lay off about 30,000 workers, Meta has already laid off 8,000, and Amazon, Microsoft and Salesforce have each laid off thousands of employees.

The usual suspect: AI. In Israel, another heavy factor has been added to the list of causes for layoffs, the strengthening shekel. The sustained strength of the Israeli currency against the dollar makes operating here much more expensive, mainly because workers’ salaries are paid in shekels. For 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 much more than before. So the foreign investor pressures, the Israeli CEO lays off 15% of the employees in Israel to meet demands, and everyone together blames AI.

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

Some companies try to put a positive spin on the layoffs: they say AI allowed them to become more efficient, and that is true, but only partly. AI does indeed make companies more efficient, but what is pressuring Israeli companies most right now is the strong shekel, which raises the cost of operating in Israel, first and foremost in wages paid in shekels, but also in other expenses such as rent, professional services, overhead and operations. Some companies have even adopted a “dirty trick”, ghost jobs. They post job ads immediately after a round of layoffs in order to create the appearance of “business as usual.” In many cases, these are jobs 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 that went online just this week on LinkedIn, is an AI-based search engine called JobFox, which aims to aggregate and display all the tech jobs currently open in Israeli tech. Behind the project are three partners, Roee Sternberg, Nir Kosover and Idan Maroz, who are partners in a bootstrapped marketing startup called Scalefox.ai.

“Dozens of our friends were laid off in recent weeks, the ground was literally 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 beginning 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 with 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 almost a Doomsday feeling in tech, but on the other hand there are currently about 10,000 open positions in the industry. The problem is that until now there has been no platform for this. LinkedIn isn’t really solving 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 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 people off are hiring.”

According to Maroz, the many laid-off workers trying to return are currently facing a particularly difficult labor market.

“First of all, they couldn’t see where the open positions are, but that is what we came to solve. Beyond that, most companies today expect workers to come with a set of skills to operate in the new world, to work with AI properly. 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 hired for a new job. We’ll provide tools that tailor resumes to the job, prepare people for interviews, offer automatic filtering of jobs and alerts about new jobs 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 match companies with potential employees. Companies have already started contacting us to cooperate.”

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

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

JobFox has been online for barely two days. What has usage been like so far?

“In the first 24 hours about 500 people came in and signed up, and everyone is very, very active in looking for work. Each of them has visited the site several times.”

Are the laid-off workers mostly employees whom AI can replace?

“Not necessarily. Some are, but this time a lot of middle managers were laid off. Big 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 still nowhere near the end of the wave. On the other hand, companies that are hiring will benefit in this period from a particularly high-quality pool of workers who have spilled into the market. Most of the laid-off workers worked at large companies and experienced a sense of false job security. Suddenly, in one day, they are out, and that is frightening. But they need to lift their heads, the industry is in a 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 Larer, vice president at the startup Ubeya, belongs to a notable wave of local tech companies and venture capital funds that are offering new job opportunities in order to help laid-off workers return quickly to the labor market. The positions are offered mainly in cybersecurity, 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 arenas. The system enables organizers to manage staff and suppliers in 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 major tours by Taylor Swift and Oasis.

“We currently have 55 employees, but we are hiring all the time,” Larer says. “Right now we have 8 open positions, mainly in development, product and marketing. Fortunately for us, we operate in a market that is growing. Most Premier League teams in England work with us, and that happened fairly quickly. Our entry into the American market, which has been taking place in recent months, is also moving very quickly and successfully. The strong shekel affects everyone, but the good situation in our market allows us to hire workers despite the weak dollar.”

“Fortunately, we operate in a market that is growing.” Yair Larer | Photo: Courtesy of the subject

Eddie Katz, one of the founders of the public company Group 107, offers a completely different solution. His company offers Israeli companies a way to replace some of their expensive Israeli workers with employees from hubs in Ukraine, Poland or Argentina, whose cost is 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 proficient in AI capabilities are less needed by organizations. Israeli tech workers need to understand that too.”

What has actually changed?

“For the first time since 2019 there is no growth in the number of tech workers in Israel, there is even a slowdown. This is due to the dollar exchange rate and the AI breakthrough, but also to business stability considerations. Israel is going through crises and wars all the time, 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? Tech companies will not move their entire center of gravity and development abroad, but they definitely understand that they also need different kinds of workers, in other places. Companies that are building AI teams in Israel today know they also need to integrate workers from abroad. This trend will only strengthen.”