Israel’s hi-tech industry is being hit by an unsettling and concerning wave of lay-offs, with seven companies in the sector firing over 740 employees in the past week alone.
This is the result of major financial concerns fueled by economic instability and a potential impending recession hitting global markets.
Antidote Health, OrCam, Snyk, Vee, Fundbox, Cybereason and Hewlett-Packard alike have all fired a large chunk of employees.
Each firm published a supposedly sensitive statement regretfully announcing the layoffs, from messages claiming that the company had been “forced to” fire people in order to “adjust to the situation in the market” to others claiming that it is the fault of “significant market shifts” that they must “restructure” – a toned-down word for firing people.
In reality, it is a difficult industry to push through in the current state of the market. Financial care must be taken in order to prevent potentially massive losses, not only to individual companies, but to Israel’s hi-tech industry as a whole, which is extremely strong even on a global scale, and serves as the local economy’s main growth engine.
The reality is that these companies are simply trying to stay afloat. While it’s hard to blame them, this does induce a heavy wave of empathy toward the massive number of employees who have already been laid off.
Rocky predictions for the hi-tech market
Predictions for the hi-tech market in Israel have been rocky to say the least, and many analysts are concerned that this is just the beginning of a massive wave of lay-offs and cuts that could affect many Israeli hi-tech employees and companies.
Last year, the sector was positively booming. Jobs were opening up as the country crawled its way out of the harshest moments of the coronavirus pandemic, and the industry was opening its doors once again.
For example, the Israeli Innovation Authority offered NIS 30 million in August 2021 to projects offering innovative models to increase the supply of workers to the hi-tech industry. At the time, the industry was facing a massive manpower shortage.
As recently as March this year, analysts were expecting a massive hiring wave in the hi-tech industry, a stark contrast with what Israel is seeing today. The OurCrowd Hi-Tech Jobs Index, for example, predicted an incoming hiring spree that could only be negatively impacted by the Ukraine-Russia war.
In fact, at the time, the concern was that there would be a shortage of employees with the specific skill sets needed for a variety of hi-tech industry jobs.
It was just two months later, in May, that concerns began to rise specifically about start-ups in the Start-Up Nation.The State of Hi-Tech 2022 report published by the authority highlighted, among other things, that only 8% of those employed in hi-tech are at companies defined as young start-ups, a statistic which illustrates the challenge many of them face.
“Even if Israel’s hi-tech sector and the start-up industry at its heart get their hiring pool problems sorted out, the road ahead may still be especially turbulent for the latter, as there have been signs that investment in start-ups may soon become more of a risky liability than a guaranteed win,” Jerusalem Post business and tech reporter Zachy Hennessey noted at the time.
“Even if Israel’s hi-tech sector and the start-up industry at its heart get their hiring pool problems sorted out, the road ahead may still be especially turbulent for the latter, as there have been signs that investment in start-ups may soon become more of a risky liability than a guaranteed win,”
Jerusalem Post business and tech reporter Zachy Hennessey
The hi-tech slowdown
July saw the beginning of the hi-tech slowdown, with hundreds of Israeli hi-tech industry workers getting laid off and investments dropping due to the global instability fueled by a multitude of geopolitical issues.
Investments in Israeli start-ups and financing rounds alike saw a major drop, leading companies to slow their horses and wait to see where the industry is headed.
Israeli hi-tech companies and employees alike have got to keep their wits about them, and it is up to the government and public to support the sector and avoid entering a state of crisis in one of the most advanced hi-tech hubs in the world.
This is just one of the main challenges that the new government will face after the election on Tuesday. For the last 20-plus years, the tech industry has helped Israel keep positive growth even when parts of Europe were in decline. Israel needs to keep this sector safe; to do that, it will help to have a stable government.