Senior execs: Huge shortage of high-tech engineers


Executives disagree with the Finance Ministry's claim that high-tech is not the Israeli economy's growth engine but agree there aren't enough skilled employees.

The Ministry of Finance yesterday published a review stating, "The high-tech sector is no longer the growth engine of the Israeli economy." The review pointed to slower growth in the sector, which suffers from a shortage of trained personnel. Top Israeli executives reacted critically to the report but did admit that there is a lack of skilled high-tech professionals.

Israel Advanced Technology Industries (IATI) co-chairmen Erez Tsur and Yaky Yanay said, "Despite what the Ministry of Finance report says, it is important to note that this does not involve venture capital-supported companies, and there is therefore no real reason to say that the high-tech and life sciences industry is no longer a growth engine for the Israeli economy. Entrepreneurship and innovation are flourishing in Israel. The industry accounts for 40% of Israel's exports, with exits and investment in high-tech companies hitting a peak in 2015. The local ecosystem currently has an unprecedented number of startups, together with large multinational firms. There is no doubt that the human capital and the entrepreneurial spirit are our real natural resources.

"As a policy-leading organization involved in legislation and regulation in the field, we find the government willing to listen to the industry's needs. At the same time, there is no doubt - there are many challenges before us. In order to maintain our status as a global leader in knowledge-intensive industry, we need to devise a long-term policy for addressing the sector's core problems, including encouragement of technological education, attracting multinational companies, encouraging investments by institutions, an attractive taxation policy, etc. We are encouraging the founding of a new authority for innovation, and are continuing our involvement in regulation, education, and business for the sake of making sure that our industry continues to power the entire Israeli economy as a whole in the coming decades."

Carmel Ventures, which is part of the Viola Group, expressed similar views. Senior partner Daniel Cohen said, "We believe that Israel is still a global leader in technological innovation, and it is evident that most global high-tech companies come here to look for brilliant technologies and excellent development teams. As far as the future is concerned, there is no doubt that the pool of personnel must be enlarged by investing in education and incentives for technological education. There is definitely room for improvement in these aspects."

Cohen added, "2016 is emerging as a slow year in global high tech, with a downturn in the value of public companies and unicorns in Silicon Valley. We should prepare for this slowdown, but without panic. Israel has already been through high-tech crises (2001 and 2008), and emerged stronger than ever. Even if 2016 is a bad year, good investment opportunities will be created that will lead to the rise of excellent companies."

Erez Shachar, a managing partners in the Qumra Capital growth fund, said, "The Ministry of Finance's report is a final warning of what we have already known for a decade: the startup nation is plowing ahead, but the state support system is not keeping pace. On the one hand, the Office of the Chief Scientist in the Ministry of the Economy and Industry is providing an excellent support platform, with a new incubators program and assistance for startups. On the other hand, the Ministry of Education and the government are not formulating a productive policy or encouraging personnel to support the accelerated development of the startup nation.

"The technology sector has used up the technological personnel that came to Israel from Russia in the 1980s and 1990s, and we are now left with an enormous shortage of engineers. The state must devise an immediate emergency program for accelerated training in technological subjects for haredim (Ultraorthodox Jews) and Arabs through special scholarships and an accelerated training program, explanatory campaigns in schools, and technological education programs in elementary schools. As for a possible blow to investments in startups as a result of the crisis in the markets, I believe that Israeli startups will continue raising money, both in Israel and overseas, but there is no doubt that if the crisis persists and becomes worse, the startup nation will have to development financial creativity to match its technological creativity."

Terra Venture Partners and Terra Labs incubator partner Barak Goldstein added, "A number of parameters indicate that there is no need for pessimism. It can be seen that in recent years, there has been a steady rise in both the quantity of investments by overseas companies and in the number of new Israeli startups, as well as in the volume of personnel choosing the entrepreneurship track, instead of the classic work track.

"In addition, exits over the past year were a source of revenue for the country, while the successful entrepreneurs who have made exits serve as private investors and advisors for beginning startups, therefore encouraging innovation. Furthermore, in recent years, foreign companies have opened dozens of R&D centers in Israel, headed by Apple Computers and Facebook, so Israel is definitely a global leader.

"At the same time, the government is encouraging innovation in many ways, among other things by hitching new population groups to the high-tech locomotive through many programs, including programs appealing to the sectors like the haredim.

"The bottom line is that you have to filter out the background noise and focus on the important things. High tech is still Israel's number one export, and we see a clear proof of this in both the figures and the projected rise in investment from Asia and international corporations. We have to remain optimistic, and to continue encouraging entrepreneurship industry through the means at our disposal: education at a young age, higher education, the government, and industry, of course."

Published by Globes [online], Israel business news - - on February 15, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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