Israeli tech layoffs deepen as AI and a weak dollar squeeze companies
Israel’s tech layoff wave is intensifying, driven mainly by two market forces, a weak dollar and the rapid adoption of artificial intelligence in workplaces. According to a Globes tally, nearly 6,000 workers at Israeli tech companies lost their jobs in May alone, in Israel and the U.S., with about 3,000 cuts at Amdocs and roughly 1,000 at Wix. Since the start of the year, about 8,500 people have been laid off, or around 2% of Israel’s tech workforce, though at least half of the dismissed workers are believed to be abroad.
June is currently looking calmer, with about 600 layoffs so far, but industry estimates say the situation could worsen by month’s end, when many public companies and unicorns may launch broad cost-cutting rounds to enter the second half of the year with leaner expense structures. Israel’s tech sector employed about 390,000 people in March, according to the Central Bureau of Statistics. If the pace of several thousand layoffs a month continues, the industry could shed about 10% of its workers by December.
Economists warn that large-scale cuts at multinational development centers would reduce the taxes they pay to the state, since those taxes are tied to payroll, and could also weaken the surrounding ecosystem of accountants, lawyers and investment funds. At the same time, some experts say AI will raise productivity and profitability, and that many dismissed employees will move to industry, banking or new startups. Bank of Israel research chief Dr. Adi Brender said, “We have seen many people lose their jobs, but for now we do not see it in the macro data.”
The cuts are spreading across three fronts: foreign R&D centers such as Meta and Intuit, which are canceling projects or moving work to India; public Israeli companies and unicorns such as Wix, Taboola, Amdocs and Playtika, which are under pressure from AI and a dollar that has reduced profits by 20%; and early-stage startups, some of which have shut down entirely. Innovation Authority head Dror Bin said the layoff trend will likely continue even if the dollar recovers. VC partner Miriam Stilman said the cuts also reflect the unwinding of the pandemic-era bubble, and warned of more layoffs in software sectors including fintech, advertising, gaming and cyber. Recruiting firm CEO Shiri Wex said up to 10% of staff in every role could be at risk if they do not adopt AI tools, while noting that demand for AI and cyber talent remains strong and wages are still rising.
