Approximately six months after LinkedIn's acquisition of Oribi and its announcement regarding the opening of an Israeli development center, several developments have occurred that could harm the rapid progress that has characterized LinkedIn in recent years.
In February, LinkedIn announced that it would purchase Oribi for approximately $90 million and establish a research and development center in Tel Aviv. There was good reason to think that the development center would be completed at record speed and that Oribi would double or even triple the number of its employees. Unfortunately, that did not happen.
Since that time, Israeli and high-tech companies around the world, including major corporations such as Google and Microsoft, have instituted hiring freezes and have even laid off workers. Oribi, the latest LinkedIn acquisition, has reduced its workforce by a third.
The managers of LinkedIn and other giant companies are now facing an additional challenge. Employees are looking for work opportunities that do not have the constant threat of redundancy. LinkedIn also knows that had the timing of the Oribi acquisition been smoother, there would have been fewer queries regarding the continuation of the development center project.
The LinkedIn Dilemma
The current situation raises a new dilemma. Since Oribi's workforce has been reduced by a third, could the remaining employees be transferred to a remote working format? Could relocation of the development center from Tel Aviv to a less expensive location aid the company? In the end, LinkedIn needs to answer one simple question. How important is the development center in Israel?
What can we expect from LinkedIn?
Since its founding in 2003, almost 20 years ago, LinkedIn has shown that it can make changes and reverse decisions it has already taken. Initially, LinkedIn decided that its platform would be a business one. Today it has not only changed to a social business platform, but within six months of launching Stories, company managers saw that it was not a feasible addition to the platform and shut it down.
The good news is that Microsoft saw business potential in the long-term acquisition of LinkedIn and its purchase of Oribi is also a long-term investment. Since the establishment of the LinkedIn development center in Israel was part of the acquisition deal, and given that LinkedIn, is, in fact, backed by Microsoft, we can expect that the development center will be created in Israel regardless of current problems and delays.