Amdocs, IBM slashing thousands of square meters of office space

Amdocs, which develops software and services for customer billing systems, and the computer giant IBM, intend to reduce their office space in Israel, each for different reasons, Calcalist has learned. Amdocs intends to offer for rent approximately 6,000 square meters in its new campus in Ra'anana, while IBM is currently considering moving the company's headquarters from Petah Tikva.

Amdocs moved to its new campus in Ra'anana in the past summer after years of construction and planning. The complex includes four buildings and covers about 43 dunams (10 acres), including 60,000 square meters of building space. Planning for the move began in 2017, before the Coronavirus pandemic and the transition to hybrid work, and like many companies, Amdocs has also reduced the number of working days from the offices. A few days ago, months before the move, the company leased one of the buildings with an area of 7,000 square meters to coworking company Mixer. Amdocs is now also seeking to lease an additional 6,000 square meters so that a total of 20% of its office space will be leased to subtenants.

Amdocs in Raanana

Amdocs stated in response that "the campus in Ra'anana was designed while allowing flexibility and adaptation to changing work models. Now that the hybrid work system has become permanent, and our employees are expected to come to the campus 3 days a week, there is room for optimization in the operation of the complex and several floors of a certain building are offered for rent."

As far as IBM is concerned, this is a more significant move, even if it is in more preliminary stages. The company has offices in several different centers across the country, including in Be'er Sheva, Tel Aviv, Jerusalem and Haifa, but the company's headquarters in Israel are mainly located in Petah Tikva in Park Ofer (formerly Azorim) of the Melisron real estate company. In addition, the company has rented around 7 floors (about 11,000 square meters) In Migdal HaShahar in Givatayim, mainly for R&D activities.

A combination of two reasons led the company to consider reducing its office space in Park Ofer. The first is the separation from Kyndryl, the consulting division that separated from IBM Global in 2021 and became a large public company. It has already vacated its offices at the IBM headquarters in Petah Tikva, which amounts to approximately 15,000 square meters. A second reason is that the company's contract with Melisron is expected to end during 2024. In this case, the transition - if it does happen - will be caused by the organizational changes and not due to a transition to hybrid work, but it appears that IBM is seriously considering reducing its office space to about 5,000 square meters - about 75% of the curret office space in Petah Tikva.

Both companies have also made cuts in the past year, and whether they are directly related to the reduction in office space or not, it is clear that any cutbacks may also affect required office space. In July 2023, Amdocs reported cuts in the workforce of approximately 2,000 employees, accounting for around 6.5% of the company, of which approximately 200 employees were based in Israel. At the same time, the company, which employs around 5,000 people in total in Israel, also reported a double-digit growth rate in revenues, but also reduced the the company's growth forecast for 2024.

IBM Israel employs approximately 3,000 people in five centers in Israel, and last July it was announced that the company was laying off dozens of development workers in the field of software-based storage. IBM has yet to respond to requests for comment.