The Israel Innovation Authority tech job report published last week depicts a worrying picture in Israel's tech industry. The most alarming figure shows that 8,300 tech employees - about 2.1% of the workforce in Israel - left the country between October 2023 and July 2024. The report also shows that for the first time in at least a decade, there was a decline in the number of tech employees in Israel in 2024 - a fall of about 5,000.
Israel Innovation Authority CEO Dror Bin, did not hide his concern and said that the report "Reinforces the need for continued focused investment in the industry, which is the main growth engine of the economy." He added that the data indicate, "Challenges that require immediate attention: stagnation in employment, a change in the mix of jobs, and an increase in the scale of relocation."
Not just money: Why are Israeli tech employees leaving?
Behind the dry figures is a complex situation. Eden Ofer, a 33-year-old senior product manager, will leave Israel for London in the coming weeks, becoming part of the alarming statistics. "When the war started, I went on a long reserve tour of duty, and I still had hope that Israel would recover and emerge from the war with zero casualties. As soon as I finished the second stint, I realized that wasn't going to happen." After the company he worked for went out of business, Ofer decided to look for work abroad and found his way to a London company. "There is currently a higher demand for talent in the European markets, and they are willing to pay a lot of money for it," he says, adding that in the global perception, Israelis are considered a quality workforce that increases their "value."
But the war is not the only factor. A 37-year-old product manager who has already made the move to Barcelona says that he had been thinking about relocating even before October 7. "The judicial reform shifted it up a gear." The war only constituted a "strong reason" for him to officially request relocation from the company.
The cost of living is also a significant factor. M., who relocated to Portugal two months ago with her high-tech husband and their two daughters says: "We earn a lot of money, more than many other Israelis, and yet we can't sit back and say we have no worries. Even though we earn good salaries, if I end up having to look at how much strawberries or pineapples cost in the supermarket - there's a problem." The education system is also at the top of the concerns of parents who are leaving: "If, alongside everything that's happening in the country, the education my daughters receive is also less good, and I have to supplement with private lessons that cost at least NIS 250 (per hour), and even then the level of education is inferior - it's clear that the situation here is not good."
The trend is not just confined to the tech industry. "From our neighborhood in Tel Aviv alone, 12 families left, some are tech workers, and there are also doctors and accountants - good people," says M.
For CEOs and entrepreneurs, pure business considerations also come into play. A senior market official describes a growing trend of entrepreneurs moving to New York, "Close to underwriters, bankers, all the parties related to mergers and acquisitions, and the IPO players." According to him, "Entrepreneurs understand that it is unrealistic to aim for an IPO under current market conditions, and since the potential buyers are abroad, they are relocating to try and increase the chances that they will acquire them."
Israeli companies employ more workers abroad
The Israel Innovation Authority report reveals a surprising statistic. Israeli tech companies employ 440,000 workers abroad, and 400,000 in Israel. Privately-held Israeli tech companies have 190,000 employees in Israel and 240,000 abroad, while publicly traded companies have 260,000 employees in total, of which only 60,000 are in Israel. According to the report, private companies employ 50% of their R&D staff abroad, even though Israel has a major comparative advantage in this field. A particularly worrying figure is that 75% of business activity staff in these companies are employed abroad. However, not all the data is bleak: according to the report, 59% of personnel recruitment by private tech companies in 2024 was in Israel, which indicates the potential for a change in trend.
So how can the tide be turned?
Israel's challenging economic situation poses difficulties in bringing talent back to the country. The solutions, according to experts, require systemic thinking. The Israel Innovation Authority's report stresses the need to implement the recommendations of the Perlmutter Committee, which was set up in 2021 and headed by former Intel VP Dedi Perlmutter. The committee recently raised a "red flag," not only due to the situation in Israel but also because of the increasing level of global economic and technological uncertainty.
The report points to the need to focus on addressing factors that discourage workers from staying in Israel, especially in head office and business operations. For example, strengthening the skills of workers in non-technological fields, with an emphasis on improving spoken English, can help create a competitive alternative to jobs abroad. A positive sign can also be seen in the increase in the number of vacant jobs, which reached 17,000 in December 2024, indicating a return to growth and may provide opportunities for workers considering returning.
M. from Portugal painfully summarizes the dilemma facing many: "We love the country, and in our experience we fought for it, but if a couple who earn well ends up in overdraft in the bank, and food is expensive, there is no security, and the education system is poor - the feeling is that the state does not see us."
Innovation Authority CEO Dror Bin concludes, "To ensure the future of Israeli high-tech, a combined effort by the government and industry is required - investment in human capital, in improving skills and in expanding business activity specifically here, in Israel." As the Perlmutter report published in December notes, without rapid and thorough treatment of the factors driving the outflow abroad, Israel is likely to lose its competitive advantage in the tech sector.
Published by Globes, Israel business news - en.globes.co.il - on April 14, 2025.
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