Israeli Tech Sector Sees AI-Driven Layoffs Amidst Industry Shift
Translated & summarized from Globes by baba
The Israeli digital bank ONE ZERO is laying off 10% of its staff due to increased AI adoption, marking its third round of dismissals. This trend is also seen at other Israeli tech firms like Silk and HanuBook, which have recently cut jobs citing AI integration. Globally, major tech companies are also reducing their workforces. While some experts predict this is just the beginning of AI-driven job displacement, industry data suggests a more complex situation with varied impacts across different tech sectors.
The story in 6 lines · by baba
- Digital bank ONE ZERO is laying off 10% of its staff due to increased AI adoption.
- This is the third round of layoffs at ONE ZERO, despite strong revenue growth.
- Israeli startups Silk and HanuBook have also recently cut jobs citing AI integration.
- An anonymous investor warned that AI-driven R&D layoffs are likely to increase significantly.
- Industry data shows varied layoff rates across different tech sectors, with software most affected.
- Hardware and defense-tech sectors are currently experiencing a boom, contrasting with software cuts.
The Israeli tech sector is experiencing a new wave of layoffs, with the digital bank ONE ZERO announcing it will dismiss 10% of its workforce, approximately 25-30 employees. This marks the third round of layoffs at the bank, which attributes the cuts primarily to the significant adoption of artificial intelligence tools. ONE ZERO's CEO, Eyal Gafni, stated that the rapid development of generative AI is transforming how organizations operate, develop products, and serve customers. He added that the bank, built on innovative systems and automation, is well-positioned to integrate these new capabilities quickly, aiming for growth without a proportional increase in staff and expenses.
Despite the layoffs, ONE ZERO reported strong financial performance, with a 33% increase in revenue to $66 million and a 10% decrease in expenses to NIS 149 million, resulting in a reduced net loss of NIS 84 million. However, the bank has already spent NIS 1.3 billion. This move by ONE ZERO follows similar AI-related workforce reductions at other Israeli companies. Last week, the startup Silk, founded by Dani Golan, reportedly laid off over 30 employees, about 25% of its R&D staff. Additionally, HanuBook dismissed 35 out of 255 employees, citing adjustments to its structure and processes for the AI era.
These recent layoffs add to a broader trend in the global tech industry. Earlier in the summer, companies like Bizzabo, Lightricks, and PayPal's Israeli development center also conducted staff reductions. Globally, companies such as HubSpot, Amazon, Microsoft, Uber, and Oracle have announced significant layoffs. An anonymous Israeli investor warned that these cuts, particularly in R&D, are just the beginning, as AI is increasingly capable of replacing human roles, a trend expected to intensify.
However, data from Civan and the Israel Innovation Authority presents a more nuanced picture. A survey indicated a worsening outlook for hiring in the second half of the year compared to the first, with planned layoffs expected to rise. While software companies show a higher layoff rate (6.6%), hardware and pharma/medical sectors have lower rates. Medium-sized companies (50-200 employees) have experienced disproportionately high layoffs. Shir Vakz, CEO of Gotfriends, noted that layoffs are concentrated in software companies facing AI challenges, while hardware and defense-tech sectors are experiencing a boom not seen since 2021.
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