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Report aims at untapped workforce for Israel’s growing high-tech sector (ladies?)

Women in general are under-represented, the report said, without detailing the reasons.
It said that while they account for 30 percent of high-tech workers, women hold just 23 percent of “core tech” jobs such as software engineers and only 16 percent of managerial positions.
“The potential of women in tech is probably double these numbers, as girls comprise almost half of all students studying advanced math in high school,”
it said.
Israel needs to “tap into the unrealised potential in women”

Report aims at untapped workforce for Israel’s growing high-tech sector

The growth of Israel’s powerful high-tech sector is not being matched by adequate increases in employee numbers, a report said Sunday, with recruitment of more women, and Arabs and ultra-Orthodox Jewish men needed.

Israel’s high-tech sector—an industry that has earned it the nickname “start-up nation”—is seen as a global leader.

Its 7,000 local high-tech firms and dozens of research and development centres of foreign companies employ 280,000 Israelis and make up 12 percent of the business sector GDP and a whopping 43 percent of exports, according to the economy ministry.

But while the absolute number of Israelis working in high-tech has grown over the past five years, their proportion of the labour force remains around the eight percent mark, putting the Jewish state at potential disadvantage in the competitive global market.

The report by the Israel Innovation Authority and Start-Up Nation Central, an NGO based in Tel Aviv, showed there were 15,300 vacant positions in the local industry, a shortage that could be preventing the high-tech sector from growing even faster.

“The tech sector is the main potential driver of the growth of the Israeli economy,” Eugene Kandel, head of Start-Up Nation Central and former head of Israel’s national economic council said.

“The required growth will not be possible if the country’s supply of tech workers is inadequate.”

Israel has in recent years found ways to compensate for its lack of local employees, setting up intensive “boot camps” to provide technological training, outsourcing work to cheaper countries, supplying visas to skilled foreign workers, and increasing investment in higher technological education.

The overwhelming majority of Israelis employed in the sector are Jewish men, excluding the ultra-Orthodox who tend to be educated mainly in religious studies, and not in English, maths or other subjects necessary for a tech career.

Like Israeli Arabs, few ultra-Orthodox men or women serve in Israel’s army, a hothouse for forging high-tech skills, putting them at a significant disadvantage.

As a result, Arabs make up 1.4 percent of the high-tech workforce and ultra-Orthodox men and women just 0.7 percent.

‘Unrealised potential’

Women in general are under-represented, the report said, without detailing the reasons.
It said that while they account for 30 percent of high-tech workers, women hold just 23 percent of “core tech” jobs such as software engineers and only 16 percent of managerial positions.

“The potential of women in tech is probably double these numbers, as girls comprise almost half of all students studying advanced math in high school,” it said.
Israel needs to “tap into the unrealised potential in women, the Arab population and the ultra-Orthodox community”, said Aharon Aharon, head of the Israel Innovation Authority (IIA), noting that the state had indeed launched a number of programmes aimed at just that.

The need to increase the numbers of employees was “truly a national issue,” said Naomi Krieger Carmy, head of the IIA’s societal challenges division.
“There’s no one silver bullet,” she said, rather there are joined solutions.

The report, based on a survey of 40 percent of the industry, did not constitute a “complaint”, Kandel said, but an indication of where things stood and how to find solutions.

“If we had more people that would fill these jobs, the country would grow faster and the industry would go much faster,” he said.

15,000 tech worker shortfall pushing firms to seek talent offshore

Percentage of Israelis employed in the tech sector has remained stagnant at around 8% over the past five years, even as the industry has blossomed

Israel’s tech innovation sector is lacking some 15,000 skilled workers, mainly software engineers and data scientists. This shortage is causing local salaries to surge and is also pushing firms to seek workers abroad, a new report by Start-Up Nation Central and the Israel Innovation Authority shows.
The 2018 Israeli Innovation Industry Human Capital Report shows that as of July 2018, there were an estimated 15,000 open tech positions. The figure does not include demand for tech workers stemming from IT services firms, telecommunications firms, government offices or the military industry, Eugene Kandel, the CEO of Start-Up Nation Central, a nonprofit that tracks Israel’s tech industry, said at a press conference in Tel Aviv presenting the figures.

The largest number of open positions (31%) are in software engineering specialties like DevOps, front-end and back-end, and there are also shortages in data science, machine learning, and AI.

The demand for skilled workers is most pressing in growing companies, those that employ 11-50 employees, and in the largest companies, of over 500 employees, the report said.

WhatsApp-Image-2018-12-13-at-16.48.15-e1544713080995-640x400
Eugene Kandel, CEO of the Start-Up Nation Central, a nonprofit that tracks Israel’s tech industry, at a press conference in Tel Aviv, presenting the 2018 Israeli Innovation Industry Human Capital Report; December 12, 2018 (Start-Up Nation Central)
The report polled 362 companies, which together employ over 82,000 people. This accounts for almost 40% of the Israeli tech innovation sector, the report said.
Over the past five years, the number of people employed in the tech sector has grown from 240,000 to 280,000, but their percentage in the labor force is stagnant at around 8% of the total workforce.

This figure shows that the increase in the number of employees has not kept up with the growth of the tech industry, and there is a “a clear imbalance” between supply and demand in the market. Indeed, investment in the high-tech sector in the five-year period has grown three-fold, and is expected to reach some $6.5 billion in 2018, Kandel said. This shortage of workers has been rendered even more acute by the record numbers of multinational corporations hiring local talent.
Israel’s ecosystem needs to keep growing if it wants to remain of interest to investors, clients, and communities around the world, Kandel said. “Ecosystems compete on size and innovation. If you don’t have size, you are going to lose interest of a lot of people. Therefore we have to grow.”

The reason for this shortage of workers stems from the fact that for about a decade, until 2016, the number of computer science and engineering university graduates remained nearly flat.
“There is a huge growth in demand for people, but the supply of people the ecosystem generates is falling behind,” Kandel said.
That may be set to change. In 2017, Israel’s Council for Higher Education (CHE) launched a new program to increase these graduates by 40% within 5 years.
“In the next two to three years we will see a sharp increase in the number of graduates” stemming from this program, Kandel said. “But even so, it is not enough, and much more is needed to be done.”
The worker squeeze has created a surge in wages in the tech sector: wages rose 157% between 2003 and 2016, compared to a 140% jump in the wider economy.

offshore-e1544712701545-640x400
Israeli tech firms are starting to set up offshore research and development centers: Ukraine is the most favorite location, accounting for 45% of the offshore R&D centers set up by the companies in the survey; this was followed by the US, 16%, and Russia and India with 10% each (Startup Nation Central)

“Salaries in Israel are on par with the US, outside Silicon Valley,” Kandel said. Besides costing companies more, these high salaries and their divergence from payments in other sectors of the economy create an “inherent inequality,” he said.
To tackle the shortage of workers, Israeli tech companies are scouting for talent by setting up offshore R&D facilities in locations that offer quality talent at a reasonable cost.
Every fourth company in the survey reported having an overseas development team, with the companies employing some 20% of their entire workforce overseas. Ukraine is the most popular location, accounting for 45% of the offshore R&D centers set up by the companies in the survey; this was followed by the US at 16%, and Russia and India with 10% each.
This phenomenon is relatively new — half of the companies in the survey established their offshore operations in the last two years.
This offshore activity is good in the short term, said Kandel, because it allows Israeli startups to grow, stay in Israel, and keep costs in check. “Without this offshore option, they may move altogether,” he said. But in the long term, it would be better for the economy if these jobs remained in Israel, he added.
An alternative to setting up offshore operations is to bring foreign experts to Israel. On this front the government did “an amazing job this year,” Kandel said, making it simple for a tech firm registered with the Israel Innovation Authority to apply for foreign experts online, and establishing a rapid process – within six days – for obtaining a special tech visa. Several dozen companies have already taken advantage of this new procedure.
“There will be a couple of hundred” of these experts arriving in Israel, Kandel said. This avenue, he emphasized, is however not an answer to the massive shortage.
“It is an important part, and it is going to grow,” but it will be used mainly to import to Israel the expertise that is not available locally. So, it is “not going to bring hundreds of engineers to Israel,” he said.
The last option is tap into populations, such as women, ultra-Orthodox Jews and Arabs, who have been at the sidelines of the tech boom.
Women in Israel account for some half of the population, but the total female headcount in the Israeli tech industry is just at 30%, with women accounting for only 23% of core tech professions, like software engineering, and just 16% of tech management positions, the survey showed.

“This is a gap that must be filled,” Kandel said. “This is not a stable situation. We need more women in tech professions and tech management.”
If the representation of women in tech is not good, it is “abysmal” for Arab Israelis, who account for some 20% of the Israeli population but accounted for just 1.4% of the high-tech workforce in 2014, the report showed.
Two-thirds of Israeli tech companies in the survey — most of them very young startups with fewer than 50 employees — reported not having a single Arab tech employee. When Israeli tech companies do employ Arab Israelis, they make up just around an average of 3% of their headcount.
Larger firms, those that have diversity programs in place, such as multinational corporations, employ significantly more Arab Israelis — an average of about 8% of their total headcount.
However, “there has been a dramatic trend reversal in recent years,” the report said. In 2016 alone, there were more Arab tech-relevant students than over the previous 30 years. And today, Arab Israelis comprise about 11% of all high-tech related degrees in academia, “thus indicating a substantial potential for further growth as their share of the population is almost double,” the report said.
Some 18% of all computer science students in universities are Arab Israelis, the report said.

The government has taken steps to help curb the worker shortage. In January 2017 the government launched a national plan to address the shortage of high-tech engineers and programmers. The plan envisions academia increasing the number of high-tech students by 40% while the Israel Innovation Authority has launched a pilot program to support coding boot camps, four to seven-month training programs for people who want to make a career change or for people without degrees who want to be engineers.
In the last two years the number of coding boot camps has grown fourfold, Aharon Aharon, the CEO of the Israel Innovation Authority, said at the event on Thursday.
The authority has also set up a “Back to Tech” program, to help experienced Israeli high-tech employees return from abroad to work in Israel. In addition, in cooperation with the Ministry of Labor and Social Services, the authority has set up programs to support the integration of Arab graduates in the high-tech sector, set up coding programs for women, and boost entrepreneurship programs for the Arab and ultra-Orthodox populations.
The Innovation Authority is also readying to launch two new programs: one to build an innovation ecosystem in the country’s geographic periphery, and the other to encourage multinationals to set up R&D centers in the periphery.
“These programs have been approved already,” Aharon said, and he hopes they will be launched in the first quarter of next year.

 

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