Over half of high-tech service companies downsized this year
Over half of high-tech service companies downsized this year
A new report shows that in the first half of 2023, 52% of the surveyed high-tech companies in Israel stated that they downsized their workforce, compared to 22% in the first half of 2022
A report by the Central Bureau of Statistics reveals a sharp increase in the number of Israeli high-tech companies in the service sectors reducing their workforce. The report surveyed approximately 4,200 high-tech service companies with five or more employees, along with around 14,000 non-high-tech service companies.
According to the report, in the first half of 2023, 52% of the surveyed high-tech companies stated that they were downsizing their workforce, compared to 22% in the first half of 2022. The high-tech service industries appear to be more affected by the global situation, rising interest rates, and uncertainty when compared to other service sectors.
Even non-high-tech service companies reported an increase in downsizing, although the figure (around 21% in the first half of 2023) remains significantly lower than in high-tech. The survey indicates that most of the affected high-tech companies are small and medium-sized, while larger companies in the high-tech sector experienced fewer effects from the crisis. Interestingly, approximately 33% of the companies reported no financial damage over the last six months.
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The reduction in employee numbers is primarily driven by companies exercising caution and aiming to significantly reduce their cash burn rate. Financially affected managers highlighted two main reasons for the cutbacks: a decrease in product demand and challenges in raising capital and obtaining credit.
Furthermore, the report highlights that most high-tech company managers observed a significant decrease in voluntary employee turnover. In contrast, non-high-tech service companies maintained a consistent departure rate.
First published: 12:12, 10.07.23
