A new comprehensive report on human capital in Israel by the Israel Innovation Authority and Startup Nation Central found there’s a shortage of tech employees for Israeli startups and scale ups. What about the solutions? the reports offers a few suggestions, mainly incorporating Arabs and Orthodox jews in the high tech economy.
Israel’s high tech sector employed 321,000 people in 2019, representing 9.2% of overall employees in the Israeli economy. According to the report, there are over 18,400 unfilled positions in tech in 2019. In a way, this is a story about success – Israeli high tech did phenomenally in the past decade, with over $39 billion raised and Israeli tech M&A and IPOs reaching $111.29 billion between 2010-2019, with $21.74 billion in exits in 2019 alone.
This is a multi dimensional problem, described below.
Challenges:
- Competition on top talent – Israeli high tech employees are in high demand from corporates (over 380 multinational R&D centres) and scale ups. Their ability to pay (above market) has the potential to starve startups from access to top talent
- Increase of demand for talent – It’s important not to conflate demand with shortage. The study addresses this point by comparing actual recruitments with open positions.
- High churn/voluntary departures – the shortage in talent causes employees to leave for wage premiums, ultimately hurting startups who can’t afford to pay as much.
Solutions:
- Outsourcing – while more of a consequence rather than a solution, a large percentage of companies use outsourcing to address the talent shortage. Mainly to Eastern Europe, which is now almost an integral part of Israeli startups and scale ups.
- Training is needed – the larger the company the more open it is to hire inexperienced employees as it has the resources to train them.
- Diversification and inclusion of under represented minorities is needed – Numerous government entities and nonprofit organizations offer various training programs designed to facilitate entry to the high-tech industry, in particular for populations that are currently under-represented in this sector, but more action is needed.
Read the full report here.
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
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