Xwise, a subsidiary of Playtech Cyprus Ltd. (LSE:PTEC), whose largest shareholder is Israeli billionaire Teddy Sagi, is laying off 140-150 of its 200 employees in Israel, sources inform "Globes." Playtech, the world's leading developer of software-based platforms for online gambling websites, has a market cap of $3.9 billion. Playtech itself has 5,500 employees worldwide, so the layoffs are only a small percentage of its total staff, although they constitute a large majority of the employees at Xwise, which will be left with 60 employees. As far as is known, Playtech does not intend to close the company down, or to merge it with another company.
Xwise is part of the PT turnkey services (PTTS) that Playtech acquired from Sagi himself in 2011 for €280 million, an enormous sum in terms of transactions with a party at interest. Sagi has sold quite a few of his private assets to Playtech. Xwise provides support services, marketing and sales services, customer services, and customer relations management services for Playtech's customers - operators of online gambling websites. Xwise does not develop software like Playtech; it provides supplementary services to customers who have purchased Playtech software.
The layoffs are part of Playtech's reorganization, inspired by increasingly strict regulation in the online gambling industry. The trend is increasingly towards issuing licenses only for local online gambling, i.e. only to local operators. This is generating very intense competition in the industry, and a large proportion of Playtech's customers the ones who used Xwise's services have chosen to focus on a smaller number of countries in which they have a stronger brand name. As part of this process, Playtech has elected to move some of Xwise's business to Playtech.
Playtech said in response, "Following the changes taking place in the online gambling industry, Playtech has begun a process of reorganization in all the countries in all of the countries in which it operates. This process is also reflected in the activity of Xwise, which has made no changes since it was acquired by Playtech in 2011. Xwise will grant extra retirement benefits to its discharged workers."
Published by Globes [online], Israel business news - www.globes-online.com - on May 18, 2016
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