The past week has seen aggressive layoffs in Israel’s tech industry. The latest to join the trend are Amdocs, which will shed 10% of its global workforce, among them probably hundreds of employees in Israel, and cybersecurity company SentinelOne, which according to "Globes" sources will lay off about 250 people, again about 10% of the workforce.

Unlike in 2022-2023, when companies laid off employees because of rising interest rates, an investment drought, and fears of a global slowdown, this time the situation is entirely different. The companies shedding workers are not companies fighting for their existence. They are largely stable and profitable, and even growing.

More and more executives in the industry are acknowledging in calls with investors that this is not another cyclical wave of downsizing, but a deep change in the way that technology companies plan to look in the coming years.

For over a decade, the tech sector became used to working to a fairly fixed formula: aggressive hiring, large teams, broad management layers, and constant expansion of the workforce. Growth was measured not just by revenue, but also by the number of employees and the size of the enterprise.

Now, however, the artificial intelligence revolution is starting to change the formula dramatically.

Lean and fast

The message coming out of Wall Street these days is very clear. If in the past investors chiefly wanted to see growth and extensive recruitment, today they want to see leaner, faster, and more efficient companies. CEOs understand that it’s not enough to report growing revenue; they have to show that they can do the same job with fewer workers.

AI tools can now perform a large portion of the development, support, quality control, coding, data analysis, and customer service tasks. The result is that many companies are starting to examine whether they really need the huge office buildings built over the past decade.

The transition is not just happening at startups and young companies. It’s actually large, mature companies that over the years have built massive organizations with thousands of workers and many layers of management that are now making the most aggressive adjustments. Industry sources say that more and more companies are quietly freezing recruitment, cancelling jobs, reducing management layers, and trying to build flatter, more flexible structures.

In many cases, the efficiency measures are not even presented as layoffs. Companies prefer to use terms such as "transformation", "restructuring", and "adaptation to the AI age". In practice, the result is much the same: fewer people and more reliance on automation.

Alongside the AI revolution, Israeli companies are also coping with another economic pressure. The strengthening of the shekel against the US dollar considerable raises the costs of employment in Israel for companies with revenue mainly in dollars that pay salaries in shekels. The upshot is that even strong and profitable companies are looking for ways of reducing costs and of rapidly becoming more efficient.

Labor market splits

For all the talk of AI replacing workers, the reality is more complicated. In most cases, it’s not a matter of one system replacing one worker, but of a change that enables a smaller team to carry out work that previously took dozens of workers.

The result is severe polarization in the labor market. On the one hand, companies continue to fight for experts in AI, cybersecurity, data, and cloud architecture. Salaries in these areas continue to climb, and companies are prepared to pay huge sums to experienced engineers and researchers who are capable of working with advanced AI systems and building new infrastructures.

On the other hand, for juniors, support staff and peripheral jobs, the market has become much tougher. Figures both from the Innovation Authority and from job placement companies indicate a decline in general positions in high tech, alongside very high demand for people to fill positions focused on AI.

Shiri Vax, CEO of technology placement company Gotfriends, says, "We have recently seen one of the first waves explicitly connected to the impact of AI on high-tech jobs.

"In the past few years we have already experienced waves of layoffs in high-tech companies because of automation, optimization of teams, and various technological changes, but the effect of AI has often been indirect and not explicitly recognized.

"The current wave is appreciably different, because the layoffs are more focused on senior employees and clearly reflect the changes in the demands of the jobs and the enterprise structures in the wake of new AI capabilities."

Vax adds that alongside the wave of layoffs, a new wave of opportunities is starting to be created. "Although there’s a fairly large wave of changes and layoffs, it comes at the same time as the significant opening up of new jobs in existing companies, and in startups that are being formed thanks to the AI revolution. Within this change new opportunities are being born. Anyone who knows how to spot the right opportunity now can gain big time."

The outcome is that the technology market is starting to divide into two: a small, highly sought-after group of core experts in AI and infrastructures, versus many workers who are discovering that the jobs on which they built their careers for years are starting to disappear or are changing rapidly.

The algorithm and labor laws

Alongside the business and technological change, the new wave of layoffs is also starting to give rise to complicated legal questions. The more that companies speak openly about using AI for the sake of efficiency, the greater the fear of decisions about employees become too automated.

Adv. Limor Argov-Shenhav explains that the current wave is substantially different from previous waves of layoffs. "If in the past companies downsized in order to survive, today many companies are laying people off when they are profitable, with the aim of transitioning to a leaner work structure based on AI," she says, adding that this makes no difference to their obligations under Israeli labor law. "There is no exemption from the obligation to hold an individual hearing, to examine alternatives, and to avoid automatic or discriminatory decisions."

Argov-Shenhav warns that in broad layoffs the risk of mistakes grows, as companies try to carry out aggressive efficiency measures within a short time. "The more that the discourse about AI becomes more open, the more we might see legal attempts to examine whether employment decisions were made without adequate human control," she says.

High-tech 2026 looks completely different from what we knew just a few years ago. Fewer management layers, fewer large teams, and a great deal more automation. For the companies, it’s a race to stay competitive in a world in which Ai is rapidly changing the rules of the game. For the workers, it’s a new reality that demands fast adaptability, constant learning, and a realization that professions that seemed stable just a few years ago can change within a very short time.

Published by Globes, Israel business news - en.globes.co.il - on May 28, 2026.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.