With manpower tight, Israeli tech leans on offshore and hybrid workforces
Faced with prolonged workforce disruptions and reserve duty call-ups, Startup Nation’s tech companies are turning to global teams and offshore vendors to maintain business continuity and scale operations.
Now standing at a ceasefire following the height of the Israel-Iran conflict, Startup Nation has been grappling with the compounded effects of years of conflict and uncertainty that began with the October 7 Hamas attacks. Among the most pressing challenges are prolonged manpower shortages. This strain has pushed Israeli tech companies to rely on their global workforce and, in many cases, pivot toward offshore services to fill critical gaps and redefine what ‘business continuity’ means.
High-tech professionals make up roughly 20 % of all IDF reservists, though they account for just 10% of Israel’s workforce. This imbalance, evident since October 7, has intensified in recent weeks, leaving startups and enterprise players scrambling for workarounds.
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Rinat Buchholz, Sarit Asulin, Hadas Hermon
(Credit: Rami Zarnegar, Shai Ashkenazi, Diana Wolf)
Israeli companies are facing bifold pressures: a drop in available personnel due to ongoing reserve call-ups, alongside stringent demands from international clients to deliver on business continuity plans.
Across Israel’s high-tech sector, a growing reliance is emerging on development hubs abroad, remote team members, and offshore vendors stepping in to fill urgent gaps in the talent pool.
One Israeli vendor cited a 35% increase in demand for offshore recruitment following the Israel-Iran conflict that began after Operation Rising Lion. This surge reflects a broader trend, with companies turning outward to safeguard their operations and preserve, if not bolster, their momentum amid the extraordinary circumstances which have come to define resilience in the Israeli tech sector.
Global teams are stepping up during manpower shortages
Sela, an Israeli-founded global cloud and AI services provider, has leaned heavily on its teams in India and the U.S. to compensate for staffing gaps throughout the conflict and the past year. As employees were called up for reserve duty and defense-sector clients faced their own shortages, the company activated its international teams to quietly fill those gaps.
“Several months during war feel like a year,” said Carmit Shiffer, VP of HR. “One of our customers, a startup, had to launch a new product, but several of their employees were recruited for the army. We stepped in to support the launch, which made a big difference for them as they lacked enough working hands.”
In another case, a U.S.-based enterprise client (typically supported by Israeli staff) was handed over to Sela’s India team. “The client didn’t even notice the change,” Shiffer said.
The company continues to rely on DevOps, QA, cloud engineers, and software developers across time zones. While the move has been a net positive, Shiffer describes the challenges of managing a dispersed, tag-team workforce as “communication, different working hours, and sometimes different mentalities.”
Like Sela, Cyolo, an Israeli cybersecurity startup, has found that flexibility in leveraging its global workforce (with its largest offshore presence in the US and some in Europe) has been key to sustaining business throughout the Israel-Iran conflict.
Cyolo’s VP People, Hadas Hermon, explained to CTech that reduced capacity wasn’t solely the result of reservists being called up. Iran’s tactics of nightly missile barrages combined with the abrupt shift to full-time parenting as schools closed, significantly impacted the output of the average worker.
“There are people that need to work, they even work more, and some people react differently,” she said. “They are stressed. They need to take a few days off. They need to reduce the pressure a little bit.”
To offset the disruption, global support efforts were “immediate,” according to Hermon. Employees located or stranded abroad due to the situation were called upon to support the company’s core Israeli team, including an R&D team lead who had been stuck in Japan and has since relocated to Miami.
“Now he's more in touch with the States team,” Hermon continued. “Our VP of sales was super excited that he can use him to talk with customers and bring his value over there.”
Moreover, Hermon shared that international support flows both ways. In the past, for example, when the team in the US experienced power outages, “we moved things more into Israel and we supported them. So this is something that you just do, like family.”
Vendors rise to meet growing demand for hybrid solutions
While global agility has helped some companies manage during this period, Israeli vendors such as Aman Group and Aidey, along with partners like Global Teams (a major offshore staffing partner with a large Israeli clientele) have seen wartime conditions translate into concrete demand for hybrid work solutions.
Aman Group, an IT solutions provider, which operates seven global service centers primarily across Europe, reports that startups comprise the majority of their incoming offshoring inquiries, although enterprise companies ultimately represent the larger share of hires. Developers continue to drive the bulk of offshore demand, with companies often seeking rapid turnaround times, sometimes within 24 hours, to fill mission-critical roles.
“Companies seek continuity, resilience and smarter cost structures,” said Sarit Asulin, Head of Hi-Tech Sector and Global Professional Services. “We do have employees who were called to Miluim, so we need to find a replacement in no time, just to replace their knowledge in critical cases.”
In some cases, companies seek full continuity plans to ensure that supplementary operations can function outside Israel, if necessary. Portugal, Serbia, and Poland have emerged as top destinations, with Portugal regarded as particularly compatible with Israeli company culture.
Still, offshoring is not without challenges. “Israeli people are different: very demanding, very upfront [and] direct. So it’s quite different to work with us, and it takes time,” Asulin added.
“Portugal offers strong cultural alignment with Israeli companies, which is especially important to large enterprise organizations.”
Aidey, a global BPO provider that builds remote teams for customer and technical support, has also experienced a rise in demand from Israeli startups seeking reliable offshore alternatives. Clients are asking for “good people fast,” said Founder and CEO Yaniv Varochik.
“Israeli clients are currently increasing the size of their teams,” he explained. “Some have just remote teams, and some work in a hybrid setup. But recently, we’ve seen demand grow for outsourced teams because they just want to be more secure when it comes to providing dependable service for their clients.”
Global Teams, meanwhile, has also helped Startup Nation companies build hybrid teams across Europe and Asia to reduce dependence on local availability.
Since October 7, Founder and CEO, Rinat Buchholz has similarly seen an increased demand for their services. “There is this instability in trying to manage a company in very unstable, very unpredictable circumstances.
“There is a very high correlation between Israeli tech and reserve soldiers,” she continued. “Companies have to find a way to support their employees, and think of a way to retain them... They needed to create a backup system for them. We started building hybrid teams... basically backing up the reserve soldiers.”
The lasting impact of offshore staffing
While some companies view the swing to offshore staffing as a temporary measure, others argue it now carries more permanent implications.
“I definitely think this is a long-term strategy,” affirmed Asulin. For one, she noted that even in Israel’s high-tech sector, “there are some technologies that are very hard to find in Israel.”
However, Hermon at Cyolo views the cross-border model slightly differently. “We're going to be more efficient with the support system that we have abroad… but we are not going to make changes or recruit more in the States because of that,” she maintained.
Further, she argued that for startups, there’s little need to formalize such changes as permanent when adaptability is already built into the culture: “Every plan that we are making is for this quarter, this month, even this week… We're agile. We're changing all the time.”
While Sela already had a globally distributed model in place, especially over the past year, the Israel-Iran conflict helped crystallize its long-term value. “It's not a new business. It's something that [we’ve done] for a lot of years, but in the last year it became much more focused,” said Shiffer.
She added that cross-border flexibility is not just about replacing the workforce during emergencies. “It’s not only about the war,” she said. It’s a broader strategy that enables scalability at full throttle, “because Israeli companies have a bigger demand.”
Similar to other vendors, Aidey observes that the outward turn is not only about operational agility, but also about cost-effectiveness and sustainable growth. “It’s become a situation where it’s very costly to hire people in Israel,” said Varochik, pointing to rising expenses around office space, taxes, and retention challenges.
In his view, the offshore trend is further propelled by the normalization of remote work in recent years. “The psychological barrier of outsourcing all sorts of functions was significantly breached by COVID in 2020,” he said.
“Since then, more and more companies are becoming aware of this option… cheaper, way more flexible [and] dependable, because it’s not being affected by any war or situation here that is becoming more and more often.”
For Global Teams, the aftermath of the Israel-Iran conflict could further accelerate the shift toward offshore and hybrid workforce models. Buchholz predicts a “massive boom in tech” from Israel, as the world has seen the country’s innovation “rule the war” across sectors, from DefenseTech to cyber. If so, hybrid work models would be expected to play an even greater role.
Buchholz believes, “Israel as a country is too small to support Israeli tech innovation.” Thus, rather than replace the “brain” of Startup Nation, the goal, she said, is to help fully realize its potential by strengthening execution.
“[Offshoring] starts with flexibility in mind, but then it becomes a way to scale in a way that allows companies to support their reserve team members… Even if we take the conflict aside, [offshoring] allows you to create a workflow based on different locations, and it definitely helps productivity.”
Ultimately, Buchholz said, “It’s not only that we see that this model has been implemented as a long-term strategy, we don’t see another way to manage tech without it.”
