“If I could, I’d recruit everyone abroad”: Israeli tech feels currency squeeze
Startup founders say strong shekel is undermining competitiveness.
“At the recruitment meeting we had this week, I asked the team to look for employees outside Israel because I no longer want, and can no longer afford, to pay salaries in shekels,” Liad Agmon, a serial entrepreneur and former partner at Insight Partners who is now leading a new startup called Sunsay, which is developing an AI-based emotional support platform, told Calcalist. Agmon previously sold Dynamic Yield to McDonald's for $300 million. “We are now growing from eight employees to 11, which is still small and doesn’t justify paying Israeli salaries. In Israel, the expected annual salary is currently around $170,000 in dollar terms. In a country like Portugal, for example, I can recruit an employee with the same skill set for $100,000 a year.”
Until recently, discussions among startups about recruiting developers outside Israel were almost taboo. Such moves were mainly associated with larger companies that were already profitable and had international customer bases. Younger startups, by contrast, built their core teams through “friend brings friend” networks originating from elite IDF technology units, and for years the prevailing perception was that Israeli developers were indispensable. But the dramatic strengthening of the shekel is now forcing the tech industry to make difficult decisions. Beyond being complex to implement, these decisions could ultimately damage Israel’s startup ecosystem and future growth prospects. In 2025, the high-tech sector accounted for a quarter of Israel’s tax revenues and roughly a fifth of GDP.
“It’s obviously better and easier to be close to your employees. I live here and my network is here, but the reality is that, outside areas like cybersecurity, Israel may no longer have a unique advantage. At the current exchange rate, if I could, I would recruit everyone abroad. Israeli workers have long been expensive, but now the shekel is making things even harder. If I built an annual budget assuming an exchange rate of 3.3 shekels to the dollar, my expenses at the current rate have increased by 17%,” Agmon explained. “That means I either have to hire fewer employees or raise more money.”
Agmon warned of the longer-term implications of the trend: “The shekel is also becoming a factor for large international companies. If I were a manager deciding where to recruit employees today, I wouldn’t choose Israel. We’re already talking about R&D leaving Israel, but the next stage, which is harder to measure, is how much R&D simply won’t come here in the first place because of the shekel, especially when the political situation is also in the background. Over time, this could affect exits as well, because companies considering acquiring an Israeli startup will look at its cost structure, realize profitability is lower compared to peers abroad, and demand a lower valuation.”
Agmon, who sparked a minor storm this week after posting about the issue on X, said he hopes some form of solution will come from Jerusalem, including possible intervention by the Bank of Israel. “If the dollar climbs back above 3 shekels, the damage to the industry will be temporary, like holding your head underwater briefly and then pulling it back out. But if this situation continues, it’s like someone trying to drown you and not letting you raise your head above water for more than 10 minutes. In that case, the damage will become long-term and perhaps irreversible,” he said.
Ronen Nir, managing partner at international venture capital fund PSG and a researcher at the Aaron Institute for Economic Policy, warned that the shekel’s strength against the dollar may not be temporary, but rather the “new normal.”
“Over the past decade, fluctuations in the shekel-dollar exchange rate were usually driven by geopolitical developments involving Israel,” Nir said. “This time, however, the causes are different and relate both to the behavior of institutional investors in the pension market and to the Trump administration’s desire to weaken the dollar in order to reduce the U.S. debt burden.”
According to a study conducted by Nir, the additional cost imposed on Israel’s high-tech sector by the dollar’s decline from its historical average of 3.53 shekels to around 3 shekels amounts to NIS 21 billion annually. The calculation assumes employment of approximately 40,000 high-tech workers earning an average monthly salary of NIS 30,000. In practice, Nir argues, this represents the number of jobs that could gradually move abroad. Data published last week by the Aaron Institute already pointed to this trend, showing the first decline in the history of Israel’s high-tech sector in the number of local development employees.
“These are enormous numbers, and nearly every part of the industry will be affected, except perhaps areas with unique expertise such as hardware or missile development. Even the giant multinational companies are beginning to reconsider whether to recruit workers here. Ultimately, this hurts profitability and impacts everyone’s bank account, both in public and private companies,” Nir said.
Historically, Israel’s tech industry has resisted government intervention, with the prevailing attitude being: “Don’t interfere.” But according to Nir, even the industry itself now feels the problem has grown beyond what companies can solve alone.
“High-tech isn’t shouting or panicking because it knows how to adapt, mainly by shifting personnel abroad to reduce costs. But if high-tech is truly important to Israel as a growth engine, then the state needs to think about how to prevent that transition. This is not my area of expertise, but possible measures include addressing interest-rate gaps, slowing institutional activity in foreign exchange markets, and lowering import barriers to reduce the export surplus.”
Across the industry, regardless of political affiliation, there is broad recognition that the solutions are far from simple. The forces driving currency markets are vast, and even significant policy interventions by individual countries often have limited impact. Measures that might produce immediate results quickly veer into exchange-rate controls more commonly associated with centralized economies rather than advanced Western markets.
“You can’t simply say there’s nothing to be done,” Nir said. “If a dollar worth less than 3 shekels becomes the new normal, the free market will eventually find a new equilibrium, but there’s no guarantee that equilibrium will be good for the State of Israel.”
