Tech salaries surge 20% for top AI talent amid market cooling
iTalent-iLeadX report shows that as companies pivot from rapid scaling to "engineering stability," demand for AI-proficient leaders and backend experts hits record highs, while manual roles face a sharp 40% decline.
Integration of artificial intelligence into the corporate mainstream reached a critical tipping point In 2025: 43% of organizations globally utilized AI within their recruitment processes, nearly doubling the 26% figure recorded in 2024. This 65% year-over-year increase serves as a primary indicator of a broader shift revealed in the 2025 market analysis by iTalent and iLeadX. The data suggests that the high-tech sector has moved beyond viewing AI as a theoretical trend, establishing it instead as a fundamental managerial and economic infrastructure.
The data from 2025 portrays an Israeli tech industry that is maturing and stabilizing. Organizations are prioritizing certainty, deep professional expertise, and the integration of AI into decision-making processes. While hiring volumes have moderated, the competition for high-value talent - particularly those capable of bridging technology and business strategy - remains intense, driving wages upward despite the broader market caution. iTalent and iLeadX report is based on a survey conducted among 300 executives in the Israeli high-tech sector, and on data from the recruitment of over 100 managers in 2025.
The financial landscape of the Israeli high-tech sector in 2025 was characterized by significant capital concentration. According to the report, the Israeli tech market displayed a clear preference for maturity and scale over volume. The trend shifted toward "fewer deals, but larger ones," with a decline in mid-sized transactions in favor of mega-deals and substantial exits,. Investment capital focused heavily on core sectors, specifically Cybersecurity, AI, and DeepTech. This consolidation reflects a market that has "cleaned out the fat," focusing on companies with proven global leadership potential.
A central finding of the report is an "economic paradox" within the labor market. While organizations exhibited a general slowdown in recruitment volume and activity, compensation for key positions continued to rise. The average salary for in-demand roles increased by 6.5%, driven primarily by R&D positions.
This wage inflation was most pronounced in strategic roles carrying direct business responsibility. Positions in Product, Growth, and senior AI management saw average salary increases of approximately 20%. Executive wages also rose by 8-10%, while 75% of senior executives surveyed expressed expectations for improved compensation or flexibility.
The demand for AI proficiency has expanded beyond pure engineering roles. The market recorded a 50% increase in non-technological jobs requiring AI literacy. Furthermore, there was a 28% rise in demand for senior AI positions focused on decision-making rather than development.
Specific shifts in demand highlight the impact of automation. While requests for "Prompt/LLM Specialists" jumped by over 80%, demand for manual support roles like "Data Annotators" dropped by 40% due to the introduction of automated tools and outsourcing. Among executives, 72% reported that integrating AI is currently their central management challenge.
Despite the focus on new technologies, foundational engineering remains critical. Backend roles accounted for 19% of all placements in 2025, with a strong demand for Go and Python developers. This trend signals a shift from a "rapid scaling and experimentation" mindset to one prioritizing the stability of engineering cores capable of handling regulation and security.
Simultaneously, the Product domain is becoming a significant economic engine. The number of Product jobs increased by 10%. The definition of these roles has evolved; Product Managers are increasingly viewed as business leaders connecting R&D, Finance, and Sales, rather than just feature managers. Consequently, 57% of Product personnel in Israel work for companies with global operations.
The hybrid work model has stabilized as the market standard. In Israel, the norm is two days of remote work per week. Flexibility remains a critical factor for senior talent and individual contributors (ICs), often serving as a "deal breaker" in negotiations. Conversely, senior management (VP and above) faces different expectations, with organizations requiring 4 or more days of office presence to ensure leadership and crisis management.
In the executive search domain, active sourcing has become the dominant method of hiring. The majority of senior placements in 2025 were executed through proactive headhunting and networking rather than passive applications. This sector also saw high efficiency, with a 97% success rate in VP R&D placements and a 100% success rate in VP Data and VP HR placements.
