War spurs brain drain, outflow of Israeli high-tech employees, report finds
Israel Innovation Authority’s snapshot of employment trends shows 8,300 high-tech workers left Israel from Oct. 2023 to July 2024, with intent to stay away for at least a year
Sharon Wrobel is a tech reporter for The Times of Israel
In the aftermath of the brutal October 7, 2023, onslaught and in the following nine months of Israel’s war with the Hamas terror group, 8,300 tech employees left the country and relocated for a year or more, according to a report released Monday by the Israel Innovation Authority.
Meanwhile, the number of workers in the local tech workforce, also known as the high-tech industry, declined last year for the first time in at least a decade, as uncertainty over the end of prolonged fighting continued to take a toll on the economy.
From the beginning of the war, and until July 2024, the number of high-tech employees who departed Israel for long-term relocation increased and stood at about 8,300 people, or about 2.1 percent of the local high-tech workforce, underscoring deeper concerns about one of the country’s most important sources of tax income, the Israel Innovation Authority cautioned in its 2025 High-Tech Employment report.
“At a period where we’re facing security, political, and economic challenges, the data points to challenges that require immediate attention: stagnation in employment, a change in the mix of positions, and an increase in the volume of relocation,” said Israel Innovation Authority CEO Dror Bin. “To ensure the future of Israeli high-tech, a combined effort of the government and industry is required – investment in human capital, improving skills, returning employees who left Israel, and expanding business activities here in Israel.”
The high-tech sector’s main contribution to the Israeli economy stems in large part from taxes paid by the workers in the sector, and hence trends in high-tech employment will affect state revenues and the entire Israeli economy, the Israel Innovation Authority warned.
The tech sector accounts for about a fifth of Israel’s gross domestic product (GDP), more than half of exports, and about a quarter of total state revenues generated from salaried employee income taxes and company taxation. High-tech employees account for about 11.4% of the Israeli workforce, according to the report.
Over the past 18 months, Israeli startups have been grappling with the ongoing callup of employees to perform reserve duty, staff shortage, and funding woes amid the continued uncertainty about the duration and extent of the war, which broke out after Hamas terrorists invaded Israeli southern communities near the Gaza border on October 7, 2023, massacring some 1,200 people and kidnapping 251.
During this challenging period, many Israeli companies in the high-tech industry continued to prefer to invest in technology and reduce investment in the fields of management and operations in the country. As foreign airlines’ halt of service to Israel during most of the war months last year made it difficult to do business and raise capital, many Israeli startups and tech firms encouraged their employees to relocate to their target markets in the US and Europe.
“To stop the ‘brain drain’ of high-tech employees from Israel, it is important to stabilize the uncertain business environment stemming from the current security and political situation in Israel,” the Israel Innovation Authority said. “Moreover, there is also room to look into updating the structure of tax benefits and incentives for returning Israelis, which currently provides incentives for them to remain overseas for prolonged periods.”
The Israel Innovation Authority report showed that more than half of the workforce of Israeli high-tech companies is currently based outside of Israel. While management, R&D, and product positions are still filled primarily in Israel, in areas such as sales, marketing, and customer service, most employees are employed outside Israel.
The analysis of the report based on Population and Immigration Authority data on departures of working-age Israelis (25-64) found that in the immediate aftermath of the October 7 onslaught, the number of tech employees relocating doubled and reached a peak of 1,207 individuals per month before moderating to an average of 826 a month last year.
The migration trend of Israeli tech workers predates the war, with departures increasing to 571 high-tech employees on long-term relocation per month in the months leading up to October 7, 2023. The outflow was spurred by widespread protests against the government’s controversial judicial overhaul and fears that it would hurt Israel’s standing as a stable democracy and a hub for investments and doing business. In comparison, from May to December 2022, the average number of tech employees who left for long-term relocation was 479 per month.
The Israel Innovation Authority raised concerns that in 2024, the number of Israeli high-tech workers declined, by about 5,000, for the first time in at least a decade after employment in the sector stagnated in 2022 and came to a halt.
In 2024, the number of high-tech employees in Israel fell by 1.2%, which is about 5,000 employees, to 390,000 compared to the previous year. As of December 2024, the number of job vacancies in high-tech reached about 17,000, marking a potential return to growth, the Israel Innovation Authority said.
The Israel Innovation Authority called on the government to invest in the provision of education needed to acquire tech skills, including math, computer science, and English.
“It is imperative to invest in education in these fields for all population groups and all ages, throughout all areas of Israel,” the Israel Innovation Authority emphasized. “This need becomes ever clearer in view of the increasing demand for employees in technological companies, as reflected in the number of open positions in Israeli high-tech [and as] Israeli high-tech companies are ‘relocating’ R&D positions abroad.”
Of the 390,000 employed in the high-tech industry in Israel, about 250,000 work in Israeli tech companies – private and public – and about 90,000 work in multinational companies. The remaining 50,000 workers are employed in IT companies, providing technological services.
Overall, private and public Israeli tech companies employ about 440,000 additional employees overseas. Private Israeli tech companies employ a total of about 430,000 employees, of which about 190,000 are based in Israel and 240,000 overseas, while publicly listed companies employ about 260,000 workers, only about 60,000 of them in Israel.
An analysis of the roles held by employees in private Israeli companies indicated that there is a higher representation of senior management – VP and higher – in Israel compared to overseas. In addition, about 57% of employees in product-related roles are employed in Israel.
However, in marketing, sales, and customer relations, about 75% of private Israeli companies’ employees are located abroad, the data showed. Furthermore, private Israeli companies employ about half of their R&D personnel abroad. Only last year, these companies recruited about 4,500 R&D employees and over 2,000 business operations employees abroad.
The report also found that the wage gap between tech employees and the rest of the economy continued to widen last year. In 2024, the average salary in the high-tech industry was NIS 32,300 ($8,723), which is 2.8 times the average salary in the economy.
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