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2016/17
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High-Tech & Technology -
DUN’S
100
5
I
n spite of the many turbulences expe-
rienced by the industry in recent years,
encouraging figures were entered (in
comparison to previous years). These mainly
concerned investments, exits and employment
options. The outlook for 2017 is still uncertain,
but the data indicates moderate optimism.
The global and local tech industries experienced
many changes and transformations during the
past year. In the two first quarters of the year,
it was notable that the market was in a static
trend, in contrast to the trend in 2015, which
was a successful year in the industry with ex-
tensive workforce recruitments.
The high-tech placement companies estimate
that 2016 was a positive year for the industry,
with an average salary increase of approx. 5%,
compared to 6.1% in the previous year. However,
10% of the industry’s recruiting weren’t aimed
to man an existing position in the company, but
rather to recruit to newly opened positioned in
various tech companies.
According to data by Ethosia, a company special-
izing in tech recruitment, the average salary of
non-executive employees in start-ups was about
NIS 20,000 per month in 2015, an increase of
32% since 2010, and x2.3 times faster than the
average increase per non-executive jobs at the
same period for the entire economy.
Women are Still Waiting
From a gender point of view, 2016 was still
a year with a higher percentage of employed
men than employed women. In spite of the in-
creased in female presence in tech companies,
Ethosia’s data indicate that still only 15% of
women hold managerial positions. The salary
gaps also remained intact. A review by Globes
found, for example, that the average monthly
salary for men software testers is an average
of about NIS 18,400, while a woman in the
same position would earn an average of NIS
17,900.
According to data from the Central Bureau of
Statistics, women represent only 26% of the
employees in core tech roles, in light of the
fact that more women employees in the tech
industries work in administration and HR posi-
tions, and not in core position such as software
and hardware development.
However, in spite of the data, there is optimism
in the industry. This results from the fact that
at the end of 2016, tech placement compa-
nies reported a 2% increase in the number of
women that hold engineering positions. There
is hope in the industry that the trend would
further improve in the upcoming 2017.
From an economic perspective, the tech indus-
try continues to grow and foreign tech compa-
nies recently announced that they are expected
to invest billions of dollars in Israel. This is not
surprising since Israel is considered to be a
high-tech powerhouse.
Tax Benefits
In last August it was reported that the Minister
of Finance, Moshe Kachlon proposed tax reduc-
tions for tech companies operating in Israel, as
well as foreign companies which would be inter-
ested in operating in Israel. Kachlon’s goal was
to ease the regulation concerning mergers. His
vision was to reduce the company tax in 2017 by
about 2%, from the 25% it stood on, in August
2016. In recent months a stability clause was
also added to the tax relief bill, and this means
that the benefits are guaranteed for tech com-
panies throughout the next decade.
“It is time for the Israeli Government to take its
place under the stretcher and become a partner
that pushes you to new achievements”, said
the Minister of Finance. The chairman of the In-
novation Authority (formerly The Chief Scientist)
urged the government to take immediate steps
for promoting the scientific education in schools
in order to prevent future shortage of engineers
and programmers.
Dr. Shlomo Merkel, VP of Broadcom, responded
to the tax relief bill by saying:
“The global tax reform is more an opportunity
than a threat for Israel. I truly hope that the leg-
islation won’t be ruined by the Knesset”.
On the other hand, Ze’evi Bergman, former CEO
of Nice, opposed a tax benefits for global tech
companies, and said that there is no difference
between the small and the large companies in
the economy, from a tax planning perspective,
and therefore the bill isn’t egalitarian, and
said:
“I was involved in purchasing companies
abroad, mainly in the USA. In many cases, we
made an economic review of transferring the
IP to Israel, and eventually we didn’t transfer
it because of the amount of tax we would have
had to pay abroad. The dramatic reduction of
dividend tax from 20% to 4% and the reduction
of company tax significantly reduces the cost of
such a transaction and might lead to IP drain
away from Israel, a result which is completely
opposite to the goal of the bill” (from a post in
Bergman’s Facebook account).
All Beginnings are Difficult
In spite of the industry’s growth, 2016 was
also characterized by significant difficulties in
The High-Tech Industry – Sector Review for 2016
By Rinat Pollack
2.2
2.3
1.9
2.1
2.1
2
1.3
1.1
1.8
1.6
1.3
1.5
1
0
2014E
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
Foreign & Other
Israeli VC funds
Source: IVC Research Center
An Increase in Capital Raisings made by both Foreign VC Funds and
Investors
55%
51%
60%
61%
62%
63%
63%
71%
74%
78%
77%
45% 49% 40% 39% 38% 37% 37% 29% 26% 22% 23%