Layoffs exceed 6,500 as Israeli tech firms downsize

Rizak Habib-Allah, a 34 year old automation engineer was fired two weeks ago by software company OwnBackup in Tel Aviv, after just seven months in the job. “It was unexpected and I was totally unready for it,” he told “Globes.” Habib-Allah was given notice of only a week’s pay to organize his thoughts and prepare for the new situation. “Since then I’ve received several calls from placement companies but nothing has developed into a serious process. The job market is very bad – because so many companies are laying off, and on the other hand, only a few of them are hiring.”

Habib-Allah would be an ideal job candidate in normal times. A Technion graduate in Computer Science, he worked for cybersecurity company Imperva for several years. He is an entrepreneur who in the past has founded two startups that didn’t succeed and now there are few available jobs in his field. “Until now my career has been on an upward trajectory,” he laments.

“I received good evaluations and a salary increase, including recently,” he recounts. “Up until a year ago, I would receive two enquiries from recruiters every week, so that I would be interviewed by companies. I agreed to one of the offers and that’s how I ended up at the last workplace where I was employed, back in May. Now when I get calls from recruiters, it feels like it is mainly done to keep me on one list or another for better times. The companies are wrong about implementing the current wave of layoffs – after all, their biggest asset is their people. I would understand more if they cut salaries temporarily, but instead what is happening is that a mass of layoffs has been created here.”

Hila (not her real name) was recently fired by NCR’s Israel development center (formerly Retalix). She recalls, “We got a message in an unpleasant way: they brought us all together and announced that there was going to be a wave of layoffs, but then they asked us to wait for a special email that would inform everyone personally whether they had been fired. And not only that, we were then given the choice between leaving now or staying until the end of the year to transfer all the data we have accumulated to date to a development center they have set up in India.”

The market is not what it was several months ago

So far Hila has struggled to obtain job interviews. “I have never been fired for professional reasons, and I have always received excellent evaluations. But the market today is not what it was just a few months ago,” she says. “Companies are waiting on their budgets, and the feeling is that they don’t want to hire, at least not until the start of 2023. There are a lot of jobs on websites and networks – but you understand that these are ghost jobs. Those that have not been closed, or those that are always advertised, to save cvs for better times.”

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Danit Aharonov-Almadon, 28, who grew up in Silicon Valley and immigrated to Israel as a child, has been fortunate in her career. She became the first human resources manager to be laid off in the current crisis but has since successfully found a new job. Aharonov-Almadon, who lives in Yehud, was the employee experience manager in the human resources department of tdigital grocery company Avo, which guaranteed fast deliveries to the workplace, and was the first company to crash and close its doors in Israel in the current crisis. “It was surprising and happened within days,” Aharonov-Almedon tells “Globes.” “When it happened, there wasn’t a family member who didn’t send me articles about what had happened and asked how I was.” A month after the company was closed, she was found by a recruiter from cybersecurity company Semperis, where she has been employed for about six months in a similar position.

Aharonov-Almadon is an experienced employee, with English as a mother tongue, with a proven track record. The layoff was at an early stage in the crisis, which allowed her to find a job in just a month. “In retrospect, the publicity around the company benefited those laid-off. So many job recruiters approached me. I planned to be unemployed for three months, and in the end I found work within a month.”

She is critical of the decision by tech companies to impose their first cuts in human resources and hiring departments. “Each company should make the considerations that are best for it, but this is only a short-term cut, because employees who remain in the company do not want to feel like just employees, but part of a team.”

Tech executive recruitment company Ethosia CEO Eyal Solomon explains that human resources and recruitment managers at tech companies were among the first to be axed when the tech layoffs crisis broke. The number of recruiting positions in April was 550, falling to just 70 at the start of the month, according to a survey conducted by Ethosia.. The number of vacant jobs in human resources management fell from 350 to 95 over the same period.

“Recruiters and HR managers have been the first to take the hit,” Solomon tells “Globes.” “Before the crisis, the salaries of these managers increased drastically. Recruiters who had been earning NIS 13,000 would receive offers of NIS 20,000, at one time. I think it was the right thing to do because it made no sense on a moral level for a manager to offer employees a salary that was double or triple what they were earning. Unfortunately, since the outbreak of the current crisis, salaries of recruitment managers has fallen by 25%.”

6,500 tech layoffs in Israel

Since the beginning of 2022, about 6,500 employees at Israeli tech companies have lost their jobs, according to the “Lastartup” website, which monitors layoffs in the industry. In July, a record number of layoffs was recorded for a single month: 1628. It looks like November is going to exceed that number with 1,000 layoffs, as of the end of last week. The second wave of layoffs worldwide can also be seen from other sites that monitor layoffs at tech companies. According to Layoffs.fyi, 42,000 people worldwide have been laid-off in November alone so far, an all-time record, and the TrueUp website reports nearly 52,000 people. In both cases this is between double and treble the numbers in July.

According to Ethnosia, most of those being laid off are young software and hardware professionals who have yet to gain much job experience. These people are called junior in the market and there are currently about 5,000 of them in Israel looking for work, of whom about 3,200 have been laid off since September.

“Surprisingly, there is no connection to the educational institution where they studied,” says Solomon. “You can see juniors who previously attended a prestigious university, college or an accelerated course of several months before being fired. In the first and second quarter of this year, many Israeli companies took in juniors with the intention of creating a reserve of employees, and also because it seemed the right social thing to do, implementing a policy of diversity and inclusion. In practice, it backfired on them, as they tried to keep their heads above water, and now they have chosen to push most of these workers out.”

There has been a high number of tech layoffs in marketing and sales, with about 950 people in these two fields fired since September. In sales, the number of job vacancies has fallen by 64%, while in marketing, the number of vacancies has fallen by 55%. “Most of them are non-technical sales and marketing people,” explains Solomon. “There is still a demand for marketing and sales people who started their careers as technical people, for example programmers, so they can get down to deep specifications with the customer.”

The tendency of Israeli companies to lay off more in marketing, sales, support or operations is reflected in their choice of laying off mainly in overseas offices. In fact, employees of Israeli companies abroad, usually in the US and Europe – are more affected by the wave of layoffs than those in Israel. “Globes” has found that 60% of those laid off by Israeli companies are actually residents of the US, UK or EU countries who work in marketing and sales, design, customer support, building partnerships, recruiting and data analysis. Only 40% of those fired are Israelis.

The layoffs have hardly touched experienced and senior software or hardware developers, who form the core of Israeli tech. “No one touches them, and on the other hand, there is a feeling among many CEOs that the decline in the industry does not provide such engineers with many choices. Even so, managers who do not push salaries upwards next year may very quickly find themselves battling to retain high-quality and experienced employees.”

Saving share options for better times

In previous years, share options became a major salary component for employees, which doubled and tripled their income from work for a tech company. Investment house IBI Capital, which manages options for employees in most Israeli companies traded on Wall Street, has since the beginning of 2020 transferred about $1.5 billion to employees as a result of options.

IBI VP Clients Asaf Glas says that this year, because most options in these companies are “out of the money”, and the shares are trading at a lower price than last year, employees have little incentive to exercise their options. “They are saving them for better times,” he tells “Globes.”

Published by Globes, Israel business news – en.globes.co.il – on November 21, 2022.

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