With Israel's high-tech sector once again the main motor of the economy, a company has told The Jerusalem Post that many start-ups are scaling up their teams by hiring offshore personnel.
“One of the main concerns for start-ups when they are in their first stages is getting a strong team. And while artificial intelligence helps improve what each employee can do individually, many companies still need to contract people fast and know that they are capable of performing,” Ami Goren, Israel Offshore country manager for ONE Offshore, told the Post.
Goren works in the offshore division of One Technologies Group that specializes in connecting talented teams abroad with local companies looking to expand their workforce, and has been solving this.
This is reflected in the sector's need for more employees: more than 400,000 Israelis (11% of the workforce) work in high-tech companies, according to the authority's estimates.
ONE Offshore provides high-tech companies and startups with solutions to establish and expand development teams in Eastern Europe. And while reducing costs is one reason to push for this service, Goren explained that most companies seek outsourcing to expand their teams.
“For example, many companies hire people outside of Israel in order to continue work even on Fridays, something that most Israelis wouldn’t do. Of course, lower prices are a reason, but not the main one why companies contact us,” Goren said.
A solution to Israel’s exchange rate situation?
One of the key problems for startups nowadays is the strong shekel, as its rise against the dollar has caused many startups holding funds in foreign currencies to face liquidity problems.
The situation in Israel became critical in the last couple of months, with the dollar falling below NIS 3 for the first time in 30 years in April, followed by declines in May and June.
For companies that have funding or income in dollars, this was a direct hit. Israeli tech giant Wix announced in May that it would lay off 20% of its Israeli workforce, citing the dollar-shekel exchange rate as a contributing factor.
Elementor, an open-source website-building platform installed on 13% of websites worldwide, announced in June that it would reduce its operations by 30%.
And while outsourcing might be a temporary solution, as it stabilizes some of the salaries paid by startups by using the same currency for the funding and paying salaries, it’s not a permanent solution, as the devaluation of the dollar is happening worldwide.
“Even if they are paid in dollars, the American currency is devaluing worldwide. So the outsourced employees would eventually also ask for higher salaries in dollars, because it's a problem that also affects them,” he said.
Maintaining the Israeli work culture
Another topic discussed with Goren during his interview with the Post was that the company offers Israeli firms the option to stop relying on Israeli employees, even though that is usually a selling point for many Israeli companies.
“If you have strong Israelis and can access more to hire, keep hiring them. That’s what I tell anyone who wants to outsource. We offer the possibility of getting employees fast, when that's needed in order to keep working,” Goren said.
“That being said, we also work with people from Eastern Europe. Countries like Poland, Ukraine, or Moldova that have a similar work ethic to Israelis and are capable of adapting to the Israeli work culture really fast,” he added.
“People in these countries know how to improvise, how to adapt. They know how to be devoted to work. These aspects of personality are closer to those of Israelis than to those of other nations,” he concluded.
Regarding how the company operates, Goren explained that they manage the connection and the hiring process, while their clients only need to provide a detailed description of the role they are looking for.
“The division operates through international R&D centers and offers access to hundreds of developers and technology experts in the fields of software development, AI, DevOps, QA, Data, Cloud and Integration,” the company added in a statement.