OpinionIsrael's high-tech industry is sure to overcome the challenges of the current war
Opinion
Israel's high-tech industry is sure to overcome the challenges of the current war
“The unique DNA of the Israeli high-tech and its vast history of coping with challenges and crises in recent years, are key to its capability to prevail in such a complex period,” writes Maya Eisen Zafrir, CEO of LeumiTech
The current war being waged in Israel has further impacted an economy that has already suffered the effect of the global macro-economic crisis in the wake of the war in Ukraine, rising global and domestic interest rates, not to mention the social unrest that has severely shaken up the Israeli economy over the last year.
The extensive recruitment of tens of thousands of reservists from the high-tech sector, the economic slowdown and the need to address the current trend of considerable negativity against Israel are only some of the thorny challenges that have had a profound impact on the high-tech industry in Israel. If we look at the high-tech industry in the United States, we can see the initial signs of recovery already appearing on the horizon. This is based on indications by senior officials at the US Federal Reserve Bank, more commonly known as the ‘Fed’, of possible interest cuts in 2024, which should bolster the high-tech sector there. During routine times we would also expect to see the same indications here in Israel too, but the current situation is much more complex.
We are concluding a year in which the volume of financing rounds is the lowest since 2018 amounting to less than $7 billion. Having said that, it is clear to us all that we cannot be that far away from the day on which the burgeoning economic recovery will also embrace the domestic high-tech industry too, which will then be much better prepared for it.
The high-tech industry boasts much greater flexibility than other economic sectors and this enables it to rapidly effect substantial changes and to take advantage of new opportunities. When we take a closer look at the processes that the high-tech industry has undergone over the last two years, it is not difficult to notice the strong points which will enable the Israeli high-tech sector to catch up and to overcome this current major crisis:
• Correct implementation of streamlining processes: For the reconstruction of a much slimmer and healthier company in order to substantially reduce costs.
• Improved product focus: A more accurately tailored product offered by the company will have a corresponding impact on its target audiences, together with the derivative actions such as marketing and sales, enabling more focused efforts in order to increase revenues.
• Establishing or expanding markets: Focusing the business effort on income-generating markets can readily lead to expansion of the product, or alternatively a change in the product might open up additional markets for the company that had previously not been in its sights.
• Capital management: In the age of high interest rates in Israel and globally, companies that begin to manage their capital and to generate a return from it, will actually succeed in extending their financing rounds.
• Leveraging both personal and national strengths for business success: This is essentially the ‘X-factor’ of the Israeli entrepreneurs compared with their international competitors. The current war is an excellent reminder of the tremendous innate strengths we Israelis are endowed with: our rapid reset capability, our ability to recover, along with the gift of developing and implementing creative solutions. The “tough, macho Israeli”, the seasoned survivor who overcomes all challenges, has once again been presented with the opportunity to prove that there is no crisis that he cannot work his way out of, and then emerge even stronger from it.
All these constitute a key component in the local industry's tenacity when facing global challenges. It is precisely this difference and the unique nature of our high-tech industry - both in comparison with the Israeli economy as a whole and in relation to global tech companies - that are the key to its success at such a complex time. These strengths, coupled with the burning desire of the high-tech industry to continue to lead the economy, will surely restore it to pride of place at the forefront of global technology, and as a leading engine to pull the Israeli economy forward.
Maya Eisen Zafrir is the CEO of LeumiTech
