Israel’s tech exodus: Is emigration the enemy from within?

After a decade of consistent expansion, Israel’s high-tech sector is experiencing a contraction in its workforce, marking a significant shift for a sector that constitutes a substantial portion of the nation’s economy. The decline is attributed to multiple factors, including global economic challenges, domestic judicial reforms and ongoing conflicts.

A new workforce report indicates that tech firms are reducing roles in marketing, sales, HR and non-academic positions amid political upheaval and war, according to a report in the Times of Israel.

First drop in a decade

Israel’s hi-tech sector saw a 1.2 per cent decrease in employment during 2024, representing the first workforce decline in a decade. The 2025 High-Tech Employment Status Report indicated that the number of employees in the sector totaled 390,847 in 2024. This contraction reflects a loss of approximately 5,000 jobs.

The tech sector is a crucial component of Israel’s economy, accounting for about a fifth of the country’s GDP and more than half of its exports. It employs approximately 12 per cent of Israel’s workforce. The sector has been a significant driver of economic growth, with the number of tech jobs growing at an average annual rate of about 3.3 per cent between 2014 and 2020. After a pause during the Covid‑19 pandemic, hiring rebounded expanding by about 10 per cent per year in 2021 and 2022.

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The decline is primarily affecting business roles, which have seen a 6.6 per cent drop, and administrative and operational positions, which are down by about 4 per cent. Sales and marketing roles have fallen by 7 per cent, while human resources jobs have decreased by 8 per cent, signalling a reluctance among companies to hire in the near term. This suggests a shift in priorities for tech companies as they navigate current challenges.

Several factors have contributed to the decrease in high-tech employment, including multiple rounds of layoffs. The global economic crisis in 2022 led to a decline in startup investments, while judicial reforms and the conflict that started in October 2023 have also played a role. These combined factors have created a challenging environment for the tech sector.

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The paradox: shrinking employment, sectoral growth

Data indicates that between October 2023 and July 2024, approximately 8,300 high-tech workers, or about 2.1 per cent of the workforce, left Israel for a year or more. This emigration trend exacerbates the challenges facing the sector, potentially leading to a shortage of skilled workers and a loss of expertise.

The Israeli tech sector now employs 440,000 workers abroad, compared to 400,000 in Israel. Private Israeli high-tech companies employ approximately half of their R&D personnel overseas. These companies employ about 430,000 employees in total, with approximately 190,000 in Israel and 240,000 overseas, while public companies employ about 260,000 employees, with only about 60,000 of them in Israel.

Despite the employment drop, the high-tech sector’s GDP grew by 11.8 per cent in the first quarter of 2025, according to the Aaron Institute. This indicates that while the workforce is shrinking, the sector is still experiencing economic growth, possibly due to increased efficiency or a shift towards higher-value activities

Reversing the brain drain

In response to the challenges, the Innovation Authority is proposing measures to reverse the trend of tech employees leaving Israel. These measures aim to support workforce development by expanding training programs to bridge skill gaps and ensure a steady supply of talent for the evolving tech landscape. Increasing the number of skilled personnel in the high-tech industry is considered a national objective for Israel.

Despite international and local challenges, the Israeli hi-tech sector demonstrates resilience and continues to attract global investments. However, addressing the challenges related to workforce retention and development will be crucial for sustaining its long-term growth and competitiveness.