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Israeli startups foresee hiring slowdown

OurCrowd High-Tech Jobs Index for Q1 2022 reveals increased adoption of hybrid working, near-zero effect of political uncertainty

As Israel braces itself for a fifth election in less than three years, a recent survey shows that Israel’s high-tech startups are largely unaffected by domestic and international political upheavals.

Meanwhile, Israeli high-tech recruitment has rebounded from pandemic lows despite economic and political turbulence, but companies see a hiring slowdown looming this year, according to the latest OurCrowd High-Tech Jobs Index for Q1 2022.

“The new, post-pandemic reality in the tech sector is coming into focus,” said Yakir Machluf, VP and Head of Business Development at OurCrowd.

“While some startups are now shutting down due to the markets and troubled geopolitical arenas, many Israeli startups are seizing the opportunity to gain access to new talent. Hybrid work is here to stay, and anyone who thought that boots on the ground is the only way to close a deal, should perhaps rethink their strategy.”

“The new, post-pandemic reality in the tech sector is coming into focus,” says Yakir Machluf, VP and Head of Business Development at OurCrowd. (OurCrowd)

Turmoil gripped the world in the early part of the year, with global economies churning, Russia attacking Ukraine, and the Israeli government in danger of collapsing. Even so, most startups surveyed in Q1 said these developments didn’t hurt their businesses.

Sixty-nine percent reported that global economic uncertainty, inflation and major currency fluctuations had either a neutral or positive impact on their companies.

Eighty-six percent said the war in Ukraine didn’t affect their hiring plans, and the same proportion said they weren’t concerned that political instability in Israel would affect them.

“Seems like all governments – center, right or left – support high tech as a growth engine,” said the CEO of one mobility startup.

Robust hiring trends of recent quarters continued into the first quarter of this year. Nearly 70% of portfolio startups surveyed for the index reported hiring more than a year earlier.

As the search for recruits continues to pose tough challenges, several respondents said they are paying closer attention to human resources and see it as a business priority.

“HR is not something you can do on the fly. In any company, the employees are THE most important assets, and thus I recommend any CEO from small companies and bigger to have a professional HR recruited as part of the main hires,” said Eran Atlas, Co-Founder and CEO of DreaMed Diabetes.

Yet nearly half said they will be cautious in their recruitment the rest of this year, an increase from 38% in the previous quarter. And while 45% said they still plan “strong hiring” in 2022, it was a sharp decline from 62% in the last quarter of 2021. For the first time, several respondents predicted a hiring freeze.

Software developers and research and development recruits are the most sought-after hires, and companies are having a hard time finding them. Pandemic-spurred shifts to hybrid office/home work models remain hugely popular, and the related pivot to remote sales operations was successful.

A vast majority of the startups, 86%, said they were looking for software developers and research and development recruits. That was twice as many as in product, which ranked second.

The stiff competition for employees has created a strong job-seeker’s market, with three quarters of respondents saying candidates have the upper hand – a proportion that has held steady since mid-2021. OurCrowd portfolio companies showed a very clear preference for hiring employees with experience.

The talent shortage overlapped with a steady growth in hybrid work arrangements. Eighty-six percent of companies forecast that most employees will be working hybrid by the end of 2022 – a big jump from two thirds in the previous quarter, and a return to the level seen at the end of 2020 at the height of the pandemic.

After two years of pandemic-related restrictions, a majority of companies were bullish on conducting remote sales, with 62% reporting they work well or even very well.

The OurCrowd High-Tech Jobs Index is a quarterly survey and data series tracking vacancies and hiring patterns at high-tech companies in Israel and abroad. The Q1 2022 survey was prepared under the guidance of Dr. Dahlia Scheindlin of Independent Opinion Research & Strategy, who helped to design it and analyzed the findings.

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