“Today it's cheaper to hire in the U.S. than in Israel”
A weaker dollar, AI, and lower labor costs abroad are driving Israeli tech companies to recruit overseas at a record pace.
Alongside the wave of layoffs sweeping the tech industry, another trend is emerging that could reshape employment in Israel's high-tech sector: companies are increasingly hiring workers outside Israel.
A new report by the Aman Group, based on a cross-sectional analysis of Israel's technology labor market and approximately 440 open positions across 200 companies in sectors including high-tech, finance, the public sector, industry, and retail, points to a 23% increase in overseas recruitment. The leading destinations are Serbia, Poland, Romania, and Portugal.
The shift is being driven by a combination of lower labor costs, the expansion of global operations, fluctuations in the dollar exchange rate, and difficulties recruiting local talent. These factors are being reinforced by the growing impact of artificial intelligence, which is making some roles redundant and reducing the need to refill certain positions.
The report also shows that Israel's technology job market has shifted from an employee-driven market to an employer-driven one, with more candidates competing for each opening and companies becoming increasingly selective. At the same time, the average time required to fill a technology role has increased from about 30 days two years ago to between 45 and 60 days today.
Despite strong demand for AI and data professionals, salaries in those fields have remained largely unchanged over the past two years. According to the report, the combination of a larger talent pool, corporate cost-cutting, and companies choosing to upskill existing employees instead of hiring new ones has kept wage growth in check.
Alon Reiter, Vice President of Human Resources at Aman Group, explained the forces behind the trend, including the impact of the weaker U.S. dollar and the growing influence of AI on hiring decisions.
"Since the decline in the dollar exchange rate, we've seen a significant increase in demand from Israeli companies to recruit employees abroad," Reiter said. "Among startups, the trend is even stronger because they raise capital in dollars and prefer not to pay salaries in shekels. That naturally pushes them to recruit overseas. In Eastern Europe, employment costs can be 40% to 50% lower."
Aman is headquartered in Israel and operates branches in nine locations worldwide. It recruits employees for companies both in Israel and abroad, with Israeli clients showing the strongest preference for Poland, Serbia, Romania, and Portugal.
"The idea of recruiting employees abroad isn't new," Reiter said. "Israeli companies have been using offshore and nearshore hiring models for years. It started in India and later expanded significantly in Ukraine. Since the Russia-Ukraine war, however, Ukraine has become a much less attractive destination. India also became less appealing after the COVID-19 pandemic, mainly because of low employee retention. Workers there could leave for another company over a relatively small salary increase. As India and Ukraine became less viable, companies began looking for new alternatives."
Although the current job market is going through one of its most difficult periods in years, Aman began exploring overseas hiring well before the recent downturn, when certain skills became increasingly difficult to find in Israel.
"For example, finding experienced full-stack developers with five years of experience became extremely difficult," Reiter said. "Each one expected a salary of 40,000 to 50,000 shekels, and after a year would receive an offer from a global company and leave. So the original idea was simply to give our clients another option."
"We have a client, a large non-tech company, that decided to build a major development team across Europe through us," Reiter continued. "We recruited employees through our international branches. They hired excellent developers who have now been working there for four years, maintaining their systems and increasing the company's value as its technology evolved. It's not just about cost. It's also about having access to a much larger pool of qualified candidates than exists in Israel."
Ultimately, did the increase in overseas recruitment come at the expense of the Israeli labor market?
"Yes, it did, and that hurts," Reiter acknowledged. "That's why we also pursued other initiatives. We recruited junior graduates from the Technion and trained them for several months, but that didn't work because after two years they wanted significantly higher salaries. We also established the Hi-Tech Fighters project. Together with the Atidim Association, we train veterans of combat units for six months, turn them into software developers, and commit to placing them in jobs. We try to offset the impact in other ways, but ultimately it does affect the local market."
Reiter also addressed the sharp decline in the dollar's exchange rate in recent months.
"As the HR vice president of a global company with employees around the world, the recent exchange-rate changes have created a reality we simply can't ignore," he said. "Today, in some cases, it's actually cheaper for us to employ someone in the United States than in Israel, not only because of the weaker dollar, but also because employer costs in the U.S. are lower due to fewer mandatory employment benefits."
How much is the AI revolution affecting recruitment?
"AI has reshuffled the deck completely and accelerated the changes," Reiter said. "We haven't seen a decline in the total number of jobs, but we've seen a dramatic shift in the types of roles companies are hiring for. I'm not even talking about junior positions, that trend started before AI. Today, companies rarely recruit software testers or general software developers unless they're looking for expertise in a very specific technology. At the same time, demand for AI- and data-related roles has surged, fundamentally changing the composition of the job market."
According to the report, the five areas experiencing the strongest demand are data and AI, cloud and DevOps, cybersecurity and information security, systems integration, and product, CRM, and digital roles.
What jobs are most in demand today?
"Today, almost every position requires AI knowledge and experience," Reiter said. "Job interviews and technical assessments increasingly test whether candidates know how to work alongside AI tools. The hardest positions to fill are prompt engineers, data engineers, and AI developers. On the other hand, demand for manual QA engineers, .NET developers, and Java developers has dropped significantly. There are very few openings for those roles."
Do you think that will change?
"Unfortunately, I'm not optimistic," Reiter said. "Everything is becoming more technology-driven. I've lived through many economic cycles over the past 20 years, but this feels like a much bigger transformation. The pace of AI development is extraordinary, and it's not slowing down. Competition is enormous, trillions of dollars are being invested, and no one really knows where it's heading. We already use software that costs us a great deal of money today, and I believe much of it will eventually be replaced by AI."
