Software giant Amdocs is laying off about 1,000 employees due to severe damage to the company’s business in the wake of the coronavirus outbreak. On the other side of the Israeli tech scene, startups were able to raise an incredible $ 2.3 billion in the second quarter according to IVC data, a sum equal to the record achieved during the same period in 2019.
The increases show the resilience of the Israeli startup industry and the ability of companies to rally investors even in the midst of the worst crisis in its history. Startups exist in a parallel world, where companies depend on funds. Amdocs exist in the same world as the rest of humanity, in which people do business, in which there is a pandemic, and in which American companies, which provide most of the revenue from the Israeli technology scene, are dealing with a huge economic and health crisis and have been paralyzed for many months.
Amdocs’ quarterly earnings reach approximately $ 1 billion and a large portion of it comes from the United States. Company executives have been warning about uncertainty in the US market for months. Now, the lack of success is being replaced by too harsh and clear a reality, expressed in extreme measures that may allow the company to reduce the blow it suffered as a result of COVID-19.
Amdocs is a painful warning to other Israeli software companies operating in the bruised American market. It is a market that is currently focused on survival, not growth, and everything that is not at the center of the companies’ commercial strategy will be discarded. Good luck to the Israeli company trying to renew a contract with an American client.
The long party of Israeli startups may be temporarily muffled, but not by much. They sell dreams of future profits in exchange for current losses. Global investors are sitting on large amounts of cash and want to expand it by investing in tomorrow’s technologies. That dream is still relevant. Sadly, the same can’t be said for many of the mature tech companies during these tough times.