Israel's tech sector says more staff seek relocation abroad-report

• 53% of multinationals saw increased Israeli employee relocation requests, with some firms finding alternative supply chains outside Israel that may permanently replace local operations
• Tech sector showed resilience with 57% maintaining stable business and 21% expanding Israeli operations, while 22% reported damage during the war period
• Major tech giants including Microsoft, Intel, Nvidia, Amazon, Meta and Apple operate in Israel, employing 15% of the country's workforce

Israeli Tech Sector Faces Brain Drain Amid Gaza Conflict

A new report from the Israel Advanced Technology Industries Association (IATI) reveals that 53% of multinational companies in Israel experienced increased employee relocation requests following the October 2023 Hamas conflict. This trend threatens Israel's position as a global tech hub, with the sector comprising 20% of GDP, 15% of jobs, and over 50% of exports.

Major tech giants including Microsoft, Intel, Nvidia, Amazon, Meta, and Apple maintain operations in Israel. However, some multinationals are exploring shifting investments and activities to other countries due to supply chain disruptions during the conflict. Companies that found efficient alternatives abroad during wartime may not fully return operations to Israel.

Despite challenges, the sector demonstrated resilience: 57% of companies maintained stable operations throughout the conflict, while 21% actually expanded Israeli operations. However, 22% reported business damage during the war, which ended with a U.S.-led ceasefire after approximately 14 months.

IATI warns that without government action to ensure regulatory and geopolitical stability, the local tech ecosystem faces potential "gradual erosion." The association emphasizes the urgency of addressing these concerns to maintain Israel's attractiveness as a multinational tech hub.

The report highlights a concerning trend of senior executives and families seeking positions outside Israel, reflecting broader workforce anxieties about regional stability. This brain drain could significantly impact Israel's technological leadership and innovation capacity if left unchecked.

Market implications suggest potential long-term risks to Israel's economic stability given the tech sector's substantial contribution to national output and exports. Investors should monitor multinational companies' commitment levels to Israeli operations and potential shifts in regional tech investment patterns.