The past week brought fresh rounds of job cuts in Israel's high-tech sector. Amdocs announced plans to reduce its global staff by 10 percent, likely affecting hundreds in Israel, while cybersecurity firm SentinelOne is set to cut around 250 positions, also roughly 10 percent of its workforce, according to industry sources.

Unlike the reductions seen in 2022-2023 that stemmed from higher interest rates and weaker investment, the current moves involve firms that remain profitable and are still expanding. Executives now describe these steps as part of a lasting shift in how technology companies will operate going forward.

After years of rapid hiring, large teams, and multiple management tiers, the industry is moving toward smaller, more automated structures. Revenue growth alone no longer satisfies investors; they also expect clear gains in efficiency and lower headcounts.

Lean and fast

Artificial intelligence tools are taking over significant portions of coding, testing, data review, and customer support. As a result, many organizations are questioning the need for the large campuses and extensive teams built during the previous expansion phase.

Mature companies with thousands of employees are leading the adjustment. Recruitment freezes, canceled openings, and flatter reporting lines are becoming common as firms seek more agile operations without public fanfare.

Companies often frame these actions as restructuring or adaptation to new technology rather than outright layoffs, yet the outcome is fewer staff members and greater use of automated systems. At the same time, the stronger shekel raises salary costs for firms earning revenue in dollars, adding pressure to cut expenses quickly.

Labor market splits

While AI reduces the need for some roles, demand remains high for specialists in artificial intelligence, cybersecurity, and cloud systems. Pay for these experts continues to rise. In contrast, junior positions and support functions face a tougher market, with placement data showing fewer openings outside core AI-related work.

Shiri Vax, CEO of Gotfriends, notes that recent cuts target senior staff more directly and reflect new job requirements driven by AI capabilities. At the same time, fresh roles are appearing in both established firms and new AI-focused startups, offering chances for those who adapt quickly.

The algorithm and labor laws

The increased openness about using AI for workforce decisions raises legal concerns. Adv. Limor Argov-Shenhav stresses that profitable companies must still follow Israeli labor rules, including individual hearings and review of alternatives, even when pursuing leaner AI-based models. Broad, rapid changes heighten the risk of insufficient human oversight in employment choices.

High-tech operations in 2026 feature fewer management layers, smaller teams, and heavier reliance on automation. Firms race to remain competitive as AI rewrites established practices, while employees must adjust through ongoing skill development in a fast-evolving environment.