Israeli tech is facing a severe talent crunch. Here’s what can be done

Photo credit: rafaelbenari / 123RF Stock Photo

2017 was a record year for Israeli tech, with over US$24 billion worth of acquisitions. 2018 is expected to bring similar results. However, these seem to mask the fact that Israel’s tech industry is suffering from a severe talent crunch.

The crisis

As early as 2012, an Israeli government committee found a shortage of highly skilled personnel in computer science and R&D. The committee warned that, if the trend continues, it may significantly hinder growth.

This crisis affects not just the tech industry but the country’s entire economy, as homegrown businesses need to compete with international conglomerates over employees. This causes wages for a selected few to skyrocket and widen already significant socio-economic gaps.

A recent report estimated the human capital shortage in the local innovation hub at 8,000 to 13,000 professionals, as of Q2 2017.

The report also showed that talent supply keeps falling, as the number of skilled workers coming to the market is less than half of the demand. The report does not take into account the positions that have already gone overseas due to recruitment difficulties in Israel.

The implications

The excess demand for workers combined with the short talent supply means some tech professionals get more, broadening already existing social gaps in the long term. Combined with the underrepresentation of certain populations in the local tech industry, these changes may have a dire impact.

Seventy-five percent of tech employees in Israel are Jewish secular or non-Haredi men. Further inclusion of women, Haredi (ultra-orthodox) Jews, and Arabs can unleash a massive currently untapped potential.

What  the government is doing

In early 2017, Israel launched a national program to increase the pool of skilled personnel for the industry.

The program includes long-term efforts, namely policies to increase undergraduate students that major in tech-related fields by 40 percent, and short-term actions aimed to tap more of the existing talent. We at the Israel Innovation Authority also conduct local training programs for unskilled workers and for people looking for a career change.

According to recent Israeli government reports, the number of students accepted to tech-relevant degrees is increasing, but these changes will only bear fruit three to four years from now. An industry dealing with ever-growing global competition cannot wait that long.

What companies are doing

Israel-based tech companies have begun to realize that there is more than one possible profile for potential hires. Companies no longer rely solely on graduates of advanced academic programs, approaching less advantaged populations instead.

Employers use computerized assigning tests as a way to filter potential workers. In reality, this model does not necessarily allow candidates to truly stand out and cannot accurately predict a candidate’s potential success.

This model creates an industry that offers training specifically for aptitude tests and gives an edge to those with more financial resources.

Education is the way