Jerusalem, 17 September, 2025 (TPS-IL) — Israel’s once-booming high-tech sector recorded its first employment decline in at least a decade, according to a comprehensive report released Wednesday by the Israel Innovation Authority. The industry, which contributes 20% of Israel’s GDP and accounts for more than half of the country’s exports, employed approximately 391,000 people in 2024—a decrease of 5,000 employees compared to the previous year.
The report highlighted a dramatic shift from the sector’s previous trajectory. Between 2017 and 2022, Israeli high-tech experienced rapid growth, with the ratio of high-tech workers among all employees climbing from 7.9% in 2012 to 11.5% by 2021. However, this percentage has remained stagnant for the past three years, marking the end of an era of exceptional expansion.
“The most prominent conclusion is that since 2022, there has been stagnation in high-tech employment,” the report stated. The slowdown was attributed to several converging factors: the global economic crisis of 2022 that reduced startup investments, the judicial reform debate, and the war that erupted on October 7, 2023.
The global economic crisis of 2022 primarily impacted the Israeli high-tech by causing a sharp decline in startup investments and venture capital funding, which directly reduced companies’ ability to hire and expand their workforce. The judicial reform controversy, which began in January 2023, created domestic political uncertainty that shook investor confidence, further dampening the flow of investment capital. Two years of war accelerated the sector’s brain drain as approximately 8,300 high-tech workers relocated abroad between October 2023 and July 2024.
Despite the overall employment decline, the Israeli high-tech sector’s composition has undergone significant changes. Research and development roles now comprise approximately 51% of all high-tech positions, up from 37.4% in 2012. This shift toward R&D has contributed to rising wages, with the average high-tech salary reaching NIS 32,341 monthly in 2024—2.8 times higher than other industries, compared to a 2.3 times multiple in 2012.
The report also examined a phenomenon that has dominated public discourse: the relocation of high-tech workers abroad. Using immigration data and census information, researchers estimated that approximately 8,300 high-tech employees departed Israel for long-term relocation between October 2023 and July 2024, representing about 2.1% of the sector’s workforce.
Further analysis revealed that Israeli high-tech companies employ substantial workforces overseas. Private Israeli high-tech companies employ approximately 431,000 people total, with only 44% based in Israel. While Israeli offices maintain most senior management positions (64% of VP-level and above), about 75% of sales, marketing, and customer success roles are located abroad.
Looking ahead, the report identifies early signs of recovery. The number of open positions in high-tech reached 17,000 by December 2024, approaching early 2023 levels, with software companies leading the rebound.
The Innovation Authority recommended several measures to address these challenges, including enhanced education in mathematics, computer science, and English across all population groups. The report emphasizes the need to improve client-oriented skills, particularly English proficiency, to enable Israeli companies to retain more business development roles domestically.
“To stop the ‘brain drain’ of high-tech employees from Israel, it is important to stabilize the uncertain business environment,” the report concludes, calling for updated tax incentives for returning Israelis and preparations for the impact of artificial intelligence technologies.
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