Facing worker squeeze, Israeli startups set their sights overseas

Facing worker squeeze, Israeli startups set their sights overseas

An alliance of entrepreneurs calls on engineers, researchers, programmers to pitch in to tackle meaningful tech missions in Israel – and enjoy Tel Aviv’s beaches

Illustrative woman using laptop on beach (Poike, iStock by Getty Images)
Illustrative woman using laptop on beach (Poike, iStock by Getty Images)

Faced with an acute shortage of skilled workers and growing competition for staff from tech giants like Amazon and Microsoft, who have set up R&D centers locally, Israeli startup entrepreneurs are thinking out of the box and taking the manpower battle overseas.

They have banded together and are calling on tech professionals — engineers, researchers and designers — from the US to Australia to Ukraine to come join the fun in Tel Aviv’s thriving tech scene.

“We have a great tech scene. Tel Aviv is one of the top two to three tech hubs today. The startups are amazing and what is better than coding on the beach with your laptop. What more could you want?” said Eran Shir, the CEO and co-founder of Nexar in a phone interview. Nexar has developed an artificial intelligence-based road safety app.

Shir and Nexar are part of BETA — Be in Tel Aviv — a relocation program wooing senior tech talent to “Beta test Israel and see if there is a fit,” the website says. The program is defined as “an alliance of Israeli tech companies who are tackling hard tech challenges for very meaningful missions,” like saving lives on the road and bringing artificial intelligence insights to healthcare and transportation.

Israelis enjoy the beach in Tel Aviv as a heatwave hits Israel. May 16, 2016. (Miriam Alster/FLASH90)

Israeli entrepreneurs have found themselves at their wits’ end as they see the best minds snapped up by giant multinationals that have started operating locally, offering salaries way above the market.

This competition reached new heights earlier this year, when the co-founder of insurance technology firm Lemonade took the battle to his Facebook page, accusing online shopping giant Amazon of trying to poach his workers.

Israel’s high-tech sector, which has been a growth engine for the economy, is facing an acute shortage of engineers and programmers as students shy away from studying computer science, math and statistics.This lack of skilled workers is highlighted even more by the burst of activity in the sector, which has almost doubled the number of companies operating locally in the past decade. There are about 1,000 new startups set up in Israel every year. In addition, more than 300 international companies, including Google, Apple, Deutsche Telecom and Bosch, have set up research and development centers in Israel. They are all competing for talent.

Eran Shir, the CEO of Nexar (Courtesy)

BETA members, which include startups like Nexar; WeWork; Any.do, which builds personal assistant services to take care of everyday tasks; and Twiggle, which uses natural language processing to for e-commerce purposes, make a strong case for Israel.

The website lists Tel Aviv’s beach and weather, family friendly atmosphere, culture and food, and wild nightlife along with Israel’s diverse terrain, from forested regions in the north to the arid deserts of the south and the Dead Sea, as strong reasons for relocating to Israel.

Working at a startup in Israel exposes people to a wide variety of important technologies that are in development, said Shir. And working for a startup in general is more challenging than working for tech giants, because people feel they can make a greater impact.

But why would someone from Silicon Valley want to come and live in Israel? “The tech scene is healthier here — the activity and the missions,” said Shir, an Israeli who has lived in San Francisco. “There is too much money today in Silicon Valley and too much focus on things that are not important. The culture is one-dimensional, and the cost of living is crazy. Besides, there are a lot of people not in Silicon Valley who are amazing, who live in Ukraine, France, China, India and South Africa. They may want to be part of our thriving tech scene.”

In the weeks since BETA was set up, the eight to 10 companies that have joined have received responses from all over, said Shir. Nexar, which is looking to expand its workforce of 60 by 10-15 employees in the short term, has received “dozens of applications” from locations as diverse as San Francisco to Australia, he said.

Companies in BETA pledge to provide workers with a relocation package that includes a relocation bonus of up to $20,000, a yearly round-trip flight home, a quick visa process, help finding an apartment, housing for the first six weeks in Tel Aviv, help finding a good school and assistance in Hebrew language classes and help finding an accountant with international tax and law skills.

Over the past two years Israel has made a massive effort to make it easier for foreign tech workers to get a work visa to Israel, Shir said. Today “it takes as little as six days to get a visa, and you can get it online,” he said. All you need is for the tech company employing you to say you have the expertise needed. Salaries in Israel are also pretty close to global salaries, Shir asserted.

Tel Aviv’s Rothschild Blvd. holds innovation events in 2015 (Courtesy: Municipality of Tel Aviv Yafo)

Israel has become one of the most expensive countries for those employing programmers and engineers, with salaries for these skills almost 25 percent higher than in Germany, and 20% higher than in the UK, according to the Israel Innovation Authority.  Between 2005 and 2015, the average wage in high-tech rose by 38%, the Innovation Authority said in its 2017 annual report.

Israel would benefit from an injection of diversity into its ecosystem, said Shir.

“We need expertise. Not all experts are born in Israel,” Shir said. “We have built a magnificent and attractive ecosystem and we should leverage that to get the talent we need.”

Israel should also intensify efforts to bring more Arab Israelis, ultra-Orthodox Jews and women into the workforce, he said.

“In a country as small as Israel, the concept of having a periphery is ludicrous,” he said. “It is a huge failure that such a small percentage of the population in Israel is taking part in the tech ecosystem. It should be double that.  We are definitely also investing a lot of time and effort in promoting that.”

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