A glance at the Israel Innovation Authority’s 2021 Innovation Report is enough to show the centrality of Israel’s tech industry to the country’s economy.
A quarter of the country’s income tax is paid by tech workers, which constitute 10% of the country’s workforce, according to the report. Some 15% of Israel’s gross domestic product derives from its booming tech hub, and 43% of its exported products are generated by the industry.
Despite this, Israeli companies face a constant struggle in one key area: recruitment. According to the 2020 Israel Innovation Authority’s Human Capital Report, there are 13,000 openings in the tech sector, all waiting for a suitable candidate.
While this is an improvement over recent years, the difficulty – a threat to the country’s tech sector – persists, and with it prevails the companies’ present solution, recruiting abroad.
Now, Science, Technology and Space Minister Orit Farkash-Hacohen is pushing to create a program that will attract foreign tech workers to Israel and ease the sector’s distress.
In a letter sent on Monday to the Tax and Innovation authorities, Farkash-Hacohen asked that a plan be drafted on short notice, one that will focus on tax benefits, along with other measures, to encourage programmers and engineers globally to look to fill positions in Israel.
The plan, the letter says, will put an emphasis on candidates eligible for citizenship according to the Law of Return, as well as other suitable professionals who are not citizens of the country.
Inbal Bruchim, Farkash-Hacohen’s spokesperson, explained that the shortage is creating a dangerous imbalance of supply and demand.
“Because of it,” she says, “many firms have started to outsource some of their activities.”
Bruchim says that this causes Israel to lose tax revenue, as programmers employed remotely in countries such as India and Ukraine pay taxes locally.
It also carries with it the danger that entrepreneurs “would say ‘I should just up and leave and run my company wholly from India, where it’s easier, where there’s a larger workforce,’ and that creates a brain drain danger,” she says.
This also happens in fields such as agriculture and caretaking, Bruchim says.
“Workers come here for a set period, to carry out a job and return.”
The intention of the new plan is to motivate tech professionals in countries to which Israeli firms have already turned to supplement the short local supply and motivate them to emigrate for a limited time and enjoy tax benefits.
Jews who could immigrate to Israel and be naturalized under the Law of Return, as part of Israel’s encouragement of Jewish immigration to the country, are preferred candidates, the spokesperson said. The focus, however, appears to be mostly on filling the empty positions and ensuring the tech industry continues to flourish.
Bruchim acknowledges that this is only one aspect of combating the long-term issue of ensuring that Israel’s key industry has the manpower it requires. This step is set to work in tandem with educational efforts to introduce computers and technology from kindergarten, as well as a program to encourage integration into the tech sector in Israel’s Arab sector.
At present the situation is lose-lose for Israel, she explained, with job openings migrating elsewhere along with the tax revenue which accompanies them. The minister’s plan will help prevent the loss of tax revenue, as well as keep the companies operating locally.
Demi Ben-Ari, a co-founder and chief technology officer of Israeli cyber company Panorays, views the new initiative very positively, and pointed out an additional advantage.
Israel is especially short on experienced programmers – senior developers, in industry lingo, Ben-Ari says. Bringing 5,000 developers, likely senior developers, who can train and “give an extra layer” of knowledge to junior developers, he said, would be very beneficial.
With a shortage of senior developers, Ben-Ari’s company cannot afford to devote its developers’ valuable time to training new employees. This, however, creates an inescapable but vicious cycle of shortage in experienced programmers throughout the industry.
Opening the door to foreign professionals also will make it easier for smaller companies, that turn to outsourcing because of the difficulty in recruiting workers locally, but then have to face the additional difficulties of working with programmers remotely. The current situation “raises more barriers” in the way of startups making their early steps, he explained, but this new plan may help to ease their growth.
Yotam Tzuker is head of business development at CQ Global, an Israeli headhunting firm that works with Israeli tech companies to recruit suitable candidates globally. CQ Global works with Israel’s Innovation Authority on Back2Tech, a project created to encourage Israeli tech professionals working around the world to return to the country.
“Recruiting foreign professionals for the tech industry is almost unheard of in Israel,” Tzuker says.
“Legally, it isn’t simple to get permits,” he says, suggesting that Israel also lacks the cosmopolitan reputation that would make it a sought-after relocation destination. This new plan may change all that, however.
“I am truly excited,” he says of Farkash-Hacohen’s initiative.
“It could open up opportunities for Israeli companies to truly widen … their talent pool, and reach experts that don’t exist locally,” he says.
The headhunting expert explains that there is a dire need for highly trained specialists in a variety of fields, and companies will likely value the new path to filling those positions, when it materializes. Others may simply be glad to be able to have their developers work from their headquarters, instead of managing a remote development center.
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A yoga class for employees of the ClickTale software company in Ramat Gan
(Photo: ClickTale)
In addition, Tzuker says, “As an Israeli ecosystem, we are competing with the world’s strongest industries, right? So, let’s see how we can find the tools – and those tools are specialists many times, or technological professionals of every branch – so that this ecosystem blooms and grows, and stands up to the competition.”
“It would be wonderful to have people coming, working, contributing their expertise, [creating] business connections, [bringing] different cultures. It could contribute a lot” to the local industry, he says.