A wave of layoffs has been sweeping through Israel’s tech sector since the start of 2025, affecting the industry’s robust and profitable companies. In contrast to the “emergency layoffs” last year, when the war forced companies to cut back workforces, sources say that the latest layoffs are a planned and calculated move. Leading companies are choosing to downsize and streamline from a position of strength, even though their coffers are full, revenue is at their peak, and the future looks more promising than ever.
Every year, after annual reports are published, companies begin to form strategic plans for the next year – either they embark on a very large recruitment drive or they lay off people to fit the year’s business goals,” explains tech placement firm GotFriends CEO Shiri Wax.
Up to 13% of the company’s workforce
One of the most prominent companies to announce layoffs is adtech company AppsFlyer, which has developed a platform for performance measurement and monitoring of digital campaigns. The company, which employs about 1,400 people and is headquartered in Herzliya Pituah, announced the layoffs of about 100 employees, roughly 7% of its workforce. “100 employees in a company like AppsFlyer is an unusual figure. I don’t remember layoffs on this scale,” notes Wax. “In large companies, on the other hand, this is not a very surprising move, changing or going ‘full steam ahead’ is something that is routine for them.”
AppsFlyer’s move comes precisely at a time when the company is undergoing business success. AppsFlyer became profitable in 2024, has shown positive cash flow for over two years and has met its revenue targets. According to reports, AppsFlyer generates annual revenue of $300-350 million and is in the process of examining a possible IPO on Nasdaq, with plans to raise about $300 million.
At the same time Moon Active, one of Israel’s most profitable gaming companies has embarked on a massive layoff of dozens of employees, with industry estimates ranging from 50 to 100. The company, which has about 2,500 employees worldwide, is best known for blockbuster mobile game Coinmaster, which produces an estimated $2 billion in annual revenue. Unlike other companies, Moon Active did not make significant layoffs during the war, and it appears that the current move is intended to shed ‘dead wood’ that had accumulated in the enterprise.
Another company which announced layoffs this week is auto-tech company Innoviz, which is dismissing 9% of its workforce. The company, which develops laser sensors for vehicles, explains that the move is intended to reduce unnecessary development efforts and cut annual costs by about $12 million. This is the second round of layoffs at Innoviz within a year, with 13% of employees laid of in the previous round.
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Nevertheless, the assessment in the industry is that the current wave actually contains healthy market behavior. Wax says, “I don’t see it as something significant like it was a year ago, shortly after the outbreak of the war. This is a healthy step that the market can handle. As I see the market, it is about to ‘explode’ – in the positive sense. We are already seeing this in the financial results for January. Donald Trump’s return to the White House is good for the US economy and as a result, the Israeli economy and we will feel it quite immediately.”
The layoffs are by no means unique to Israeli tech companies with many overseas companies downsizing including tech giants. Meta recently announced it is laying off 5% of its workforce or 3,600 employees, Google is seeking volunteers for early retirement and Salesforce has announced plans to let go 10% of employees. According to layoffs.fyi, which monitors the global tech industry, since the start of the year 31 companies worldwide have fired over 7,000 employees.
Different from the wave in 2024
The current wave of layoffs echoes a similar trend seen exactly a year ago. At the start of 2024, the Israeli tech industry underwent an upheaval when in the first ten days of the year, almost 3,000 employees were laid off at 17 companies. Among the most prominent companies that laid off at the time were: Unity, which had acquired Israel’s ironSource and laid off 25% of its workforce; Orca Security, which laid off 15% of its employees; and Trigo, which develops technologies for managing autonomous supermarkets, which also laid off 15% of its workforce.
However, unlike the situation today, the layoffs at that time were mainly affected by uncertainty about the ability to raise money due to the war, when many companies were forced to cut their workforce and quickly become more efficient due to the complex situation in the economy. However, while the wave of layoffs of 2024 was mainly due to the effects of the war and the economic crisis, the current wave, reflects more planned streamlining processes and strategic adjustments by companies.
Tech placement company CEO Eyal Solomon says, “Large companies like Moon Active and Appsflyer, which laid off about 7% of their workforce, chose to do so for reasons of economic efficiency in order to increase their profit margins. Likewise, many small and medium-sized companies that still depend on investments from venture capital funds are currently facing difficulties in raising capital, which has forced them to reduce their cash burn rate by cutting their workforce.”
Solomon explains that another factor is the employment costs in Israel, which many managers perceive as high compared with other countries, “So they chose at the start of the year to move their recruitment to other places, such as India and Eastern Europe. And it is also impossible to ignore the anxiety index among CEOs in Israel that led many of them to act together following the war situation.”
Published by Globes, Israel business news – en.globes.co.il – on February 6, 2025.
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2025-02-06 11:42:29