Tech Industry Job Losses Plunge in 2023
Israel’s tech sector, often called the “startup nation,” faced an ongoing reckoning in 2023, marked by substantial job losses. A total of 1,548 jobs were cut across 28 companies during the year, representing a notable decline from the previous year’s figure of 2,734 jobs lost in 38 companies. This decrease of 43% highlights a significant shift in the industry.
Layoff in tech companies in Israel
Variability in Layoff Rates
The extent of layoffs varied widely, with examples like Wix experiencing a 6% layoff rate, resulting in the most significant number across the industry – 370 employees, while Vesttoo faced one of the highest percentages, with a staggering 75% – 150 of its employees laid off. Notably, companies such as BitSight, Quadream, and Lightico had layoff rates of 100%, indicating business closures.
Impact Across Sectors
The repercussions of layoffs extended across various sectors, affecting industries like retail, security, product development, AI, media, finance, hardware, marketing, healthcare, and transportation. Notably, the hardware, security, and finance sectors experienced significant layoffs, with marketing leading in terms of the total number of employees affected.
Number of talent layoffs during 05.01.2023 – 04.01.2024
Number of layoffs within Israel tech industry
Diverse Reasons Behind Layoffs
Layoffs were attributed to a range of factors, including technological advancements, organizational restructuring, adverse market conditions, cost reduction through outsourcing, economic considerations, regulatory changes, shifts in strategic priorities, operational challenges, and business evaluations. The closure of numerous businesses also contributed to the high layoff rate.
Tech Talent Market Dynamics
Following two years of robust growth since mid-2020, the Israeli high-tech industry transitioned from record-breaking expansion to a standstill in 2022, marked by a 70% increase in layoffs during the latter half of the year compared to the same period in 2021. This transformation shifted the industry from an “employees’ market” to an “employers’ market.”
In early 2023, the negative trend intensified, with 25% of companies planning layoffs and a quarter reporting a halt in recruitment. The situation escalated further with the outbreak of the Israel-Hamas war in October 2023. Over 70% of tech firms faced operational disruptions as a substantial portion of their employees—more than 300,000—fulfilled reserve duty obligations. With 15% to 20% of tech sector employees mobilized, the industry grappled with critical personnel shortages and financial instability.
As the high-tech sector navigates these challenging waters, industry leaders are exploring agile strategies to adapt to the evolving landscape. The sector’s significance in the Israeli economy, contributing 18% to GDP and 50% to total exports, underscores the importance of preserving its resilience amid global and local disruptions.
Adaptive Approaches and Resilience
Despite these challenges, many companies demonstrated resilience, with approximately 16% remaining unaffected and 14% experiencing limited financial setbacks. Key strategies emerged as pillars of strength:
Diversify Your Talent Strategically: Proactively diversify your talent pool beyond geographical boundaries to leverage global expertise and perspectives, enhancing innovation and problem-solving.
Implement Agile Hiring Strategies: Swiftly address workforce gaps through agile hiring models like outstaffing and accessing specialized skills while simplifying recruitment complexities.
Unlock Cost-Efficiency with Outstaffing: Emphasize the cost-efficient benefits of outstaffing, tapping into skilled professionals globally and reducing in-house hiring overheads.
Navigate Legal and Regulatory Complexities: Mitigate legal risks by precisely navigating international employment regulations. Ensure compliance and minimize hiring-related risks across different countries by partnering with trusted global workforce management experts.
Sustain Your Focus on Innovation: Prioritize innovation and product development by delegating routine hiring operations to reliable partners, enabling your teams to concentrate on core objectives.
In summary, Israel’s high-tech sector experienced a tumultuous year with layoffs and unprecedented challenges. However, adaptive strategies and resilience remain at the forefront as the industry strives to weather the storm and maintain its critical role in the nation’s economy.
Diagrams in high resolutions – here.