As is the case at the end of every year, many Israeli tech companies, especially the longer established companies, are implementing streamlining measures that include layoffs, including in some cases even deep cuts, as part of a change of direction.
For example yesterday content recommendation company Outbrain, now called Teads (Nasdaq: TEAD) announced that 180 employees were being laid off, representing 10% of the workforce. Earlier this week Mobileye (Nasdaq: MBLY) announced that it is cutting 200 employees, representing 4% of its workforce.
These are not the only two companies announcing cutbacks. Fiverr (NYSE: FVRR), Varonis (Nasdaq: VRNS), Cellebrite (Nasdaq: CLBT) and Payoneer (Nasdaq: PAYO) have between them announced hundreds of layoffs, while Israeli unicorns like Lusha, Axonis and Lightricks have also cut their headcounts by dozens. Israeli development center of international tech giants including Applied Materials, Cisco, HP, and Sony have also shed employees.
Over the last month alone, about 1,800 employees have been laid off by Israeli tech companies in Israel and around the world and 2025 is not over yet, especially since not all layoffs have been reported, so the number may be higher. This is probably the largest wave of layoffs in Israel since the end of 2022, which was a year of crisis in global high-tech due to rising interest rates and the post Covid-period with remote working requirements fading. According to the layoff counter of the "Lastartup" website, 1,240 people were laid off in Israeli tech back then.
Many of those currently being laid off are administrative, software testing, analysis and product employees who are not necessarily close to the core of the product, but are in the layers of the organizational structure. Most of them work on products that are no longer at the heart of the company's strategy or are in outdated fields that cannot help companies cope with the upheaval brought about by AI.
Inevitable layoffs
The end of the year is a traditional time for many tech companies to carry out waves of layoffs. Closing the budget for the next year dictates a new cost structure that companies are required to adapt to, and in places where outdated projects are canceled or cut, or those that have lost their commercial justification, employee cuts are inevitable.
Earlier stage more mature startups also use the end of the year to recalibrate their course and impose cuts amid concerns about raising new capital. Sometimes they are anyway forced look for a buyer, often at lower prices than they had hoped. Among the companies sold at low returns recently were Namogoo, which was sold in exchange for shares in a private company, Infinipoint, which was sold last night for $20 million after raising a similar amount, and other companies like 8fig, Velocity, Cybereason, and Neuroblade.
Tech placement company GotFriends CEO Shiri Vax stresses that in addition to standard layoffs for streamlining towards the end of the year or changes in focus, AI has also become a significant catalyst, not just for layoffs but for deeper changes in companies. "These can be roles that AI is already actually replacing. It's not about maybe or soon, but here and now - analysts, testers, presentation writers or sales development representatives (SDRs) are being replaced in an accelerated way by AI.
"These layoffs are not happening in a vacuum, but are usually part of a broader shift that companies are undergoing, most of them are already establishing AI departments, at a much faster pace than we expected at the start of the year. Back then, only 30% of companies had such a department, and by the end of the year, that number is 70%, as the hiring rate for AI engineers reached its peak, as did the demand for roles like language modeling engineers (LLM), AI researchers, data engineers, infrastructure engineers and, of course, cyber experts in the field of AI," says Vax.
"We are seeing a sharp decline in junior positions especially in roles where AI tools are already capable of performing some of the basic work that for years was the domain of entry-level workers," says Revital Shir-Maroco of tech recruitment firm HRIT tech. "At the same time, most companies and startups expect candidates to demonstrate proven, everyday work capabilities with AI tools as a basic standard. This requirement makes the market more competitive for young candidates, but at the same time increases the value of experienced talent, who know how to integrate the tools intelligently into the development and product processes. The result is that one side of the market is shrinking, but the other side is filled with strong professionals, with a deep understanding and the ability to lead in the era of AI."
Focus on profitability
Tech placement firm Ethosia CEO Eyal Solomon says, "What we are all living in right now is ambiguity and fear on a global level. There are activities that companies are really considering moving abroad, and everyone is trying to justify their business in a difficult period. If until today and before the war, many companies were focused on growth, today many of them are shifting to focusing on profitability. This means that they are looking at cutting expenses in order to increase the bottom line.
"The process of implementing AI is also eating away at the market and creating a feeling in some companies that they need to automate and become more efficient, and some have already started implementing this," which he says is also affecting the wave of layoffs.
And why in December? Solomon explains, "Because this is the time when everyone is building plans for the coming year and receiving budgets. Once a large company presents streamlining measures, it can examine within the organization where more resources can be brought in for next year and create a work plan to allow growth. For startups, this is especially critical, because they want to show investors that they can be profitable as early as 2026."
Solomon says that especially for startups, "The end of the year is an excellent time to prepare the ground for next year and show investors that the company is focused on growth and profitability."
Published by Globes, Israel business news - en.globes.co.il - on December 11, 2025.
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