Israel’s Tech Talent Shortage and Solutions for IT

Quick Summary - Israel’s more than doubled the percentage of its tech workers since 2000, but still needs to boost it from 9.6% to 15% to be self-sufficient.

Israel’s IT staff shortage

Israel’s tech talent shortage

As THE Startup Nation, Israel has a voracious demand for software developers and IT specialists. This has been the case since at least 1990. Both the supply AND demand for skilled IT staff have steadily grown since 2002.

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This warrants taking a look back at the IT skill forecast 20 years ago:

The shortage of high-tech employees in 2000 and 2001, estimated to number anywhere from 5000 to 25,000, has other sources as well. Many Israeli engineers are moving to the United States in search of higher salaries. Despite the fact that engineers located in Israel are paid almost eighty percent of their U.S. counterparts, rising salaries in the United States often prove too tempting to turn down.”
The Promised Land: An Examination of the Israeli High-Tech Industry, by Lesha R. Chaifetz, 2002

Israel has supported a variety of initiatives that have increased both the absolute number and ratio of IT workers. While Israel’s population has steadily grown, so has the relative proportion of software developers and other tech workers. It’s more than doubled in 20 years.

Even so, according to Israel’s Innovation Authority (IIA), there is still a shortage of between 12.5k and 18.5k IT specialists. So, despite every effort over 20 years, the median shortage is exactly the same: ~15k tech workers. The long-term (5-10 year) goal now is to increase Israel’s percentage of high-tech workers from 9.6% to 15% of the workforce.

An issue of qualifications

Even in 2019, Gartner cited 63% of the senior executives they surveyed as indicating a talent shortage as a key concern for their organization. Similarly, in the State of Software Development 2021 by Coding Sans, hiring talent has become the #1 challenge for 21.42% of their 600 survey participants – a jump of 5.54% over 2020. To be clear, the shortage of talent isn’t with the total number of candidates, but qualified candidates.

Will a 50% increase in “local” Israeli tech developers be enough?

That deserves a solid “Hell No” – for at least three good reasons.

1. Big Tech demand for talent

The first is that the tech giants have several advantages when it comes to accessing tech talent, higher wages, better benefits, more opportunities, and in some cases, higher prestige.

These force the discussion on the competition for hiring skilled developers and that these giants will continue to gobble up a sizeable share of Israel’s tech workforce.

Israel has a workforce of 4.1 million; 9.6% or 393k are classified as tech workers. Dun’s 100 provides statistics for Israel’s top 112 tech companies. Together, they employ over 211,000 people – but the top 20 by size employ 158,000 of them (~75%). Not all of these individuals are IT personnel, so we might estimate that 70% of them are tech workers. Together, they are employing about 38% of Israel’s total tech workforce.

This leaves 183,000 or so tech workers distributed among Israel’s 6,000 startups and its other 560,000 other (mostly small) businesses. Not all of them are tech companies, but many non-tech companies are steadily expanding their tech capabilities to reach an increasingly tech-savvy audience or to make use of Big Data.

2. It’s a global tech shortage

The second good reason why Israel will likely always have a tech worker shortage is that the shortage of skilled IT personnel is a global issue. The United States has a shortage of 1.4 million software developers, alone. And, according to the IMF, by 2030, there’ll be a global shortage of 85 million IT workers. As the Big Tech presence in Israel goes to show, if they can’t get developers to come to them – they’ll go to where the developers are.

3. The Law of Accelerating Returns

Some may find this reason debatable. If you haven’t read Ray Kurzweil’s books, you really should. The Law of Accelerating Returns is basically, “The faster technology evolves, the faster technology will continue to evolve.” It’s not just an issue for processing power, but really everything associated with tech. There’s a tie in somewhere with “The more money you have, the easier it is to make more.” And with Big Tech, “The larger you get, the easier it is to get larger.”

Days could be spent just on this one point. Instead of rambling on, if you’re keen on issues like this, you might check out Singularity University. It’s a vehicle for executives and startup founders to find solutions to problems that can help a billion people. Well, Google and NASA are behind it. It also has its own social network.

Functionally, the more demand for tech increases, the more it will continue to increase. At least part of this weighs in relation to a competitive (mostly free) market. Small companies will need to adapt (and adopt more technology) to remain competitive with Big Tech.

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Core personnel and resource prioritization

Prioritizing staffing in a skill shortage is not all that different than prioritizing your spending when creating a budget. Or just like when you’re at the grocery store and realize there’s ₪120 in your cart and only ₪100 in your wallet. Odds are, you’ll set aside the least vital item. It’s also likely that if the store doesn’t have something you need, you’ll try to find it at another store. But, if you were a mobile shopper, you’d check prices and availability before you got to the store.

Israel’s shortage of tech talent presents a good chance that you’ll face one or both of these situations. If you find candidates with the skills you need may be asking for more than you can budget for them.

But, do you need software developers on-site to develop your software? Not unless you’re working on some kind of top-secret government program. In at least 95% of other software development projects, it doesn’t matter much if the developer is at the office, at home, at an internet cafe, or sitting on the beach with their laptop.

Nearly none of what a software developer does requires their physical presence unlike a cashier at a store, a warehouse worker stocking shelves, or the like. Meetings, though always best conducted in person, can be handled online – just like many investor companies are doing to speed up processes with startups.

The only four things a software developer needs to do their job are:

  1. A computer
  2. Requisite software
  3. An internet connection
  4. The software specification – or task
  5. Skills that match the software project’s requirements

Many companies are finding that #5 (developer skills) are themselves enough of a bottleneck without also requiring them to be within immediate driving distance of a central office.

Trust and security with remote teams

More so than many western countries, Israel tends toward having close-knit communities based on family, values, and tradition. Many Isreali companies prefer hiring people they know or at least hiring locally. Part of the insistence of Israeli companies hiring locally comes down to issues of trust. This may apply to a variety of questions like:

  • Will developers working outside the office do their work?
  • Will their work be good (good code with few defects)?
  • How can I be sure – how do I verify and validate their work?
  • Can I trust them to not steal my Intellectual Property?

Ten ways agile development cultivates team trust

Trust. Trust? Increasingly, all software developers should be designing everything based on “zero trust” principles. Trust nothing and no one, not people, not the software, not the network. Fundamentally, when it comes to software development – not trusting anything or anyone is (or will be) “The Standard.” Crazy huh?

You’ll probably never be able to keep people from stealing stuff. Seriously, the CIA (okay, probably not the best example) lost 34 Terabytes (Vault 7) over a period of years – stolen by an employee. One case of many. There’s also the matter of a former Google engineer stealing data for Uber. Both are criminal offenses, to put it mildly. Data theft by employees is always a risk, and its elevated when they are about to change jobs. Hacking is also a risk – one we’ll cover in the near future.

One of the ten ways you can mitigate issues like this is to always apply the Principle of Least Privilege (PoLP) so that all team members have access only to what they need to do their job – an essential part in secure software development.

The agile software development process will itself uncover the vast majority of negative behavior. The following nine additional activities serve to practically guarantee that any properly managed development team will stay on track with your software specifications and the tasks assigned to them.

  1. Establish coding standards to include style guides for the programming languages used and linter programs to enforce style rules.
  2. Define your standard for “good enough code” and keep an eye out for “perfectionist” developers and those who like to “reinvent the wheel.”
  3. Define the resources – tools, frameworks, libraries, and third-party services you want your developers to use. This extends to defining work processes and git branching strategies (GitFlow, GitHub Flow, GitLab Flow, Trunk-Based Development, OneFlow).
  4. Maintain a high standard for “good” (meaningful) test coverage. Low test coverage implies high code complexity and a higher likelihood of defects.
  5. Mandate that all team members participate in regular (daily) code reviews and that no commits are added without a review by another team member.
  6. Make sure that all team members have and meet with a mentor weekly.
  7. It’s universally recommended for software engineering managers to regularly engage with their team members.
  8. Conduct regular standups and retrospectives via services like Zoom to help ensure team members understand their tasks, request help when needed, and provide feedback on how the team can improve their performance on similar tasks in future sprints.
  9. Use software development performance analytics like WayDev or Gitential. These enable you to automatically track team efficiency and productivity. Simply put, you can see and proactively address negative trends impacting team and project health.

Prioritizing software engineer managers

Every software engineering manager should be able to implement all of these with ease.

A wide range of additional activities can help to further improve team efficiency and productivity. Experimenting with different Retrospective formats can make it easier for team members to share insights and techniques. The manager may pair the Scrum master with an experienced developer to help decrease the ambiguity of task requirements and breakup large story-point tasks into smaller ones to improve efficiency and utilization between senior and junior developers.

Thus, likely the single most important in-house role you should prioritize is your software engineering manager. They have huge shoes to fill – but a good software engineering manager can make any team – inhouse, distributed, hybrid – into a good team.

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