Israeli Tech Firms Increase Overseas Hiring Amid Local Talent Shortages and AI Impact
Amid a wave of layoffs in Israel's high-tech sector, a new trend is emerging as Israeli companies increasingly recruit employees from abroad. A recent report by Aman Group, analyzing about 440 open positions across 200 companies in various sectors including high-tech, finance, public sector, industry, and retail, reveals a 23% rise in overseas hiring. The primary recruitment targets are Serbia, Poland, Romania, and Portugal. This shift is driven by factors such as wage cost considerations, global expansion, the falling dollar exchange rate, and difficulties in sourcing local talent. Additionally, the growing influence of artificial intelligence (AI) is reducing the need to fill certain roles.
The report highlights a transition in the high-tech labor market from a candidate-driven to an employer-driven market, with more applicants per position and longer hiring times, extending from 30 days two years ago to 45-60 days currently. Despite high demand for data and AI roles, salaries in these fields have not increased over the past two years due to an oversupply of candidates, organizational efficiencies, and promoting existing employees rather than hiring new ones.
Alon Reiter, Aman Group's Vice President of Human Resources, explains that the drop in the dollar's value has significantly increased Israeli companies' demand for overseas hires, especially startups that raise funds in dollars and prefer to pay employees in foreign currencies. Eastern Europe offers cost savings of 40%-50%. While offshore and nearshore hiring is not new, geopolitical issues like the Russia-Ukraine war have shifted focus away from Ukraine to other countries. India has also declined as a preferred destination due to employee loyalty concerns.
Reiter notes that attempts to train local junior developers, including Technion graduates, have largely failed as many seek higher pay after two years. To address this, Aman launched the "Warriors to High-Tech" program in partnership with the Atidim Foundation, training former combat soldiers as developers and securing job placements. However, the trend toward overseas hiring continues to impact the local job market.
Regarding AI's impact, Reiter states that while the number of job openings remains stable, the composition has changed significantly. Demand has shifted away from manual QA testers and traditional developers toward AI-related roles such as prompt engineers and data engineers. Companies now expect candidates to demonstrate AI proficiency during interviews. Reiter expresses concern about the rapid pace of AI development and its transformative effect on the tech labor market, suggesting that many current software tools may soon be replaced by AI-driven solutions.
