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High-tech escape? Companies are moving jobs to the US because of the reform - voila! money


A survey by Kroll Consulting, a global head hunting company, brings up alarming findings: "The economic crisis and the fear of the expected changes in the legal system in Israel are pushing the acceleration of transfers"

Evacuation of protesters against the legal revolution at the Azrieli intersection in Tel Aviv.

February 20, 2023 (Kirin Sagi)

"The economic crisis of the high-tech industry, combined with the uncertainty arising from the discussions on the changes in the legal system in Israel, are pushing Israeli startup companies to accelerate the establishment of operations outside of Israel. The driving force behind this trend is mainly pressure coming mainly from the boards of the companies and from the side of the venture capital funds that have control over the companies" .

These are the words of

Ronit Kroll, CEO of Kroll Consulting

, a global recruitment company specializing in high-tech. Kroll assists Israeli high-tech companies in building global teams and recruits officials in the US and Europe.

Between the dates of February 12-15, Kroll Consulting reviewed the number of new jobs from the past month, which were published in job ads by high-tech and startup companies employing 100 to tens of thousands of employees.

105 high-tech companies were surveyed in the sample, including most of the leading high-tech and startup companies in Israel, including startup companies defined as "unicorns".

The analysis of the data shows that 90% of the hi-tech companies that were surveyed opened new jobs for employees in the United States and Europe in the last month, 75% of them opened new jobs in the United States in the last month, most of them in the field of sales, marketing and positions with a high interface with the customer and 68% opened jobs in the last month New jobs in Europe.

On average 10 new jobs per company in the United States, and nine new jobs per company in Europe.

91% of the new jobs opened in the last month in Israel are in the field of development and only 9% in the field of sales, marketing and positions with a high interface with customers.

It does not look good.

The high-tech protest in January (photo: Yanon Shalom Yathach)

Among the companies surveyed, over 90% of the companies that did not open jobs in the news in the last month for workers in the United States or Europe are in a total recruitment freeze and are not recruiting workers in Israel either, and are mainly from more "traditional" industries, the electronics and telecom industry.

Of the companies that opened new jobs in the last month, most of them are from the software and SaaS field, 91% are recruiting in the United States and Europe.

Among the large and medium-sized companies surveyed that employ approximately 250 employees or more, including companies defined as "unicorns", the volume of employee recruitment in the United States and Europe is at higher rates.

Among the companies that opened new jobs in the last month, 96% opened new jobs in the United States in the last month.

A total of 642 new jobs for employees in the United States and 530 new jobs for employees in Europe.

Of all the companies surveyed, among those recruiting new employees, about 40% of the new facilities that opened in the last month are in the United States and Europe.

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"Keeping away from Israeli branding"

According to Carol, "Today we are noticing a growing trend of Israeli hi-tech companies relocating some of the senior management, especially positions in the field of marketing and sales and positions that have a direct interface with the customer outside of Israel. The move is mainly to the US, but also to Europe.

With the preferred location for the European headquarters usually being London, England.

This is an existing trend, but since the beginning of the year with the political instability following the legal revolution, which is widely covered by the international media, a distinct acceleration of these processes can be seen."

Carol adds that "Many of the companies are supported by American venture capital funds, and CEOs and VPs of human resources share with us that they are required to move jobs out of Israel due to pressure exerted by the board of directors who demand that the commercial activity be moved to the US, which constitutes the market The largest global while getting closer to the companies' customers and main competitors.

The strategy is to brand the company "as an American company", with an American sales and marketing team, while distancing the company from the branding of an "Israeli company" and belonging to Israel.

This trend is increasing with a desire to disconnect from the existing political complexity in relation to Israel and a growing negative global public opinion regarding the issues of maintaining human rights and democratic values ​​in Israel."

According to Carol, "As part of the efforts to attract potential global candidates to work in Israeli companies, we first describe our clients to the candidates as a "European company" that includes a head office in the USA, since the description is in line with the strategy and global branding desired by most of our clients, and also serves the interest To distance the company from the branding of an 'Israeli company'.

We have found that this strategy is particularly important in some European countries, such as France and Belgium where the news regarding the political trends in Israel create an increasingly negative public opinion, but also in the United States and other European countries.

The ability to globally recruit strong sales teams is critical to the survival of any startup, but it is very challenging for young startups that do not yet have a global footprint, as employees in the US and Europe are looking for stability and are hesitant to join a young and unknown Israeli startup." .

Hesitating to join Israeli startups.

Ronit Kroll (Photo: Public Relations)

The current difficulties in the ability to raise capital affect startups at all stages of recruitment, when older startups and even startups that have been crowned as "unicorns" have taken a bigger hit - as larger investments have been made in them and as a result they have expanded and recruited employees at an accelerated rate in 2022 and 2021 in order to Expand the scope of activity quickly, to meet the goals of the boards of directors.

In light of the new economic reality, they are now forced to streamline, and reorganize the teams and the global organizational structure when they are currently in "Survival Mode" when a board that has already invested money in the company increases the pressure, control and involvement due to the increase in the company's risk level.

The American market has the greatest revenue potential for most Israeli technology companies, and is the center of the main global competitors and customers.

By the end of 2022, global technology industry revenues are expected to exceed $5.3 trillion, with over 585,000 technology companies, the US has the largest technology sector in the world by revenue. As market profits are on the decline, venture capital firms and investors are looking at ways to cope With the increasing competition in the market and require focus on the largest potential market - the USA.

As you can see, even the technology giants are no longer immune to economic changes as they have been in recent years.

It seems that Israeli startups are at a critical stage right now.

According to the high-tech report recently published by venture capital funds (IVC, LeumiTech), it appears that there is a 42% decrease in high-tech investments in Israel in 2022 compared to 2021. The difficulty in fundraising on behalf of venture capital funds may endanger the existence of some Israeli startups.

Kroll Consulting is a global recruitment company specializing in the high-tech sector with operations in Israel, the USA and Europe, which assists Israeli high-tech companies in building global teams in the USA and Europe.

Amot campus in Givatayim.

Fear of legal coercion also at the yielding real estate company (photo: Eyal Tager)

Concern in real estate as well, Amot joins the warnings

The annual report of the Hamaniv Amot real estate company, published this morning, indicates that the fear of the following is no longer the property of the high-tech industry alone: ​​"

During January 2023, the government began to promote a plan to make fundamental changes in the legal system in Israel; the proposed changes arouse widespread controversy and criticism, which according to publications in the media, their strength, as well as the conduct of the various parties in connection with them, may be known by economic bodies, senior economists in the economy, heads of academia and experts in the fields of law, society and the economy in Israel, to affect the stability of the economy and the economy in Israel. Further, according to the aforementioned publications, the


plan And the disputes that emerged as a result, could lead to a lowering of the credit rating of the State of Israel, damage to investments in the Israeli economy and withdrawal of funds and investments from Israel, including in the high-tech sector, to an increase in the cost of sources of recruitment in the Israeli economy and damage to the activity of the economic sector in general and the high-tech sector in particular.

Since, in the opinion of the company's management, Israeli real estate companies are the future of the Israeli economy, to the extent that the assessments described above or some of them materialize, the company's economic performance may also be affected."

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Source: walla

All business articles on 2023-02-22

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