Israel’s tech entrepreneurs struggle to lure overseas talent

Human Resources

2018-07-04 /

Visa problems, concerns about safety and lower salaries deter foreign engineers.

Liad Agmon has run and sold two Israeli technology start-ups and is expanding his third one, Dynamic Yield. This provides services to at least half a billion customers of global retailers including Ocado, a British online supermarket, and Under Armour, the US sports and clothing company.
But as a skills shortage squeezes Israeli high-tech firms and pushes up salaries, Mr Agmon is now wondering if his next start-up might be best based outside his country.

"There is no edge here anymore," he said. "If I start my company, say, in Portugal, I can get extremely talented engineers for a third of the price. From an economic perspective, there's no advantage at all to being in Israel."
The tech sector has been one of Israel's fastest-growing industries and an object of national pride as it has become an incubator for internationally renowned brands such as Waze, the GPS app sold to Google for about $1bn in 2013, and Mobileye, the dash-cam-based car safety system sold to Intel for $15.3bn last year.
But with nearly 270,000 out of about 4m working-age Israelis already in tech, industry executives are warning that the sector risks running short of its crucial ingredient - skilled Israelis.

Talent shortages plague high-tech sectors globally, but Mr Agmon and his peers are running up against a particularly Israeli twist to the problem: the struggle to secure work and residency visas for non-Jewish foreign talent.
"I am not aware of any way for me as a CEO to bring in talented non-Jewish people to work here for a long period of time," Mr Agmon said. "For 20 years, we have been begging the government for just such a programme."
Indian and Chinese engineers, who make up the bulk of high-tech immigration to the US and UK, rarely consider Israel as an option, turned off either by the difficult visa process, misplaced perceptions of safety or by salaries that lag behind western standards, Israeli executives say.
Senior Israeli engineers can earn about $11,500 a month, four times the average national wage, and some experienced, older workers take home more than double that, executives say. Average annual wages across the sector have gone up from about $61,000 in 2012 to about $72,000, according to the Central Bureau of Statistics.
"For us to really graduate to the next level, we need to attract talent at the Silicon Valley level," said Jon Medved, the chief executive of OurCrowd, a $750m crowd-funded investment vehicle. "The next wave of growth could be an inexorable thing, but we are running out of people, and we can't produce enough people to support this thing."

To overcome the shortage, Israeli companies have hired at least 20,000 engineers in low-cost outsourcing markets such as Ukraine and India, spending about $1bn on overseas salaries, according to a survey by Ethosia, a recruiting firm.
Eran Shir, chief executive of Nexar, which uses smartphones, dashcams and artificial intelligence to help make driving safer, said the solution to the skills shortage was multi-faceted. The government needed to make it easier for businesses to attract quality engineers in the short term and encourage students to study science. Companies, meanwhile, needed to try to recruit from under-represented sections of society, including ultra-orthodox Jews, Arab citizens and women, he added.
"There is a high-tech ecosystem of about 250,000 people," he said. "With 8m people in Israel, that's too little. We need more to be part of this industry. "

Nexar is part of a programme called "Be In Tel Aviv", which was launched this year and promotes the nightlife and beaches of the country's tech hub to foreign engineers. The seven companies involved in the initiative also promise up to $20,000 in relocation costs, Hebrew lessons, a free cell phone and help with the difficult immigration process.
The shortage is most acute when it comes to senior engineers, said Nir Zohar, the president of Wix, a $4.8bn company that helps people produce websites for businesses.