Brain Drain in Tech: Thousands Leave Israel as High-Tech Sector Struggles to Regain Momentum
Between October 2023 and July 2024, more than 8,300 employees from the tech sector moved overseas for at least a year, averaging approximately 900 departures per month
Illustration: fauxels via Pexels.com
Israel's high-tech industry, long regarded as the country's economic engine and a symbol of innovation, is facing an unsettling new reality. According to the 2025 High-Tech Employment Status Report released by the Israel Innovation Authority, not only has growth in the sector plateaued, but a concerning number of skilled professionals are choosing to leave the country entirely — creating a mounting "brain drain" that threatens Israel’s competitive edge.
A Decade of Growth Slows to a Halt
For nearly a decade, the tech sector experienced exponential growth, doubling its workforce to around 400,000 employees by 2022. High-tech workers now represent 11% of Israel’s total workforce, and the industry accounts for over 50% of the country's exports and roughly one-third of income tax revenues. But in stark contrast to this success, 2023 marked a turning point. The total number of employees in high-tech shrank slightly, from a peak of 427,000 in April to 391,000 by the end of the year — a 10% drop.
While a portion of this decline is due to layoffs in response to economic headwinds and reduced investments, the broader picture reveals deeper structural issues affecting the sector.
The October 7 Effect: War and Workforce Disruption
The "Iron Swords" War, which began in October 2023, had a profound and immediate impact on Israel’s economy — and the tech sector was not spared. The report highlights that from October through December 2023 alone, around 15,000 high-tech jobs were lost. Many companies scaled back operations, halted hiring, and in some cases, froze entire projects.
Venture capital investment also took a hit. While Israeli companies still managed to raise nearly $9 billion during the conflict year — placing Israel just behind Silicon Valley and New York — 71% of surveyed startups said they encountered more conservative investor behavior and tighter funding conditions. This slowdown had cascading effects on hiring and strategic planning, further contributing to employment stagnation.
Relocation on the Rise: A Growing Global Footprint — and a Local Gap
Perhaps the most alarming figure in the report is the number of Israeli high-tech professionals who chose to relocate abroad. Between October 2023 and July 2024, more than 8,300 employees from the tech sector moved overseas for at least a year, averaging approximately 900 departures per month.
While security concerns played a central role, this wave of relocation also reflects broader global trends. Many high-tech companies have begun expanding their operations internationally — particularly in the U.S. and Europe — to maintain business continuity and accommodate employees who prefer to work outside Israel’s uncertain climate. Some firms have even actively encouraged relocation, establishing new offices abroad and transferring key talent.
This shift may help companies remain agile and globally competitive, but it poses a long-term risk to Israel’s domestic innovation ecosystem. If the trend continues, Israel may find it increasingly difficult to cultivate the local talent pipelines it needs to fuel the next wave of tech breakthroughs.
Workforce Shifts: More R&D, Fewer Product Roles
The composition of Israel’s high-tech workforce is also changing. For the first time, over 50% of employees are now in research and development (R&D) positions — up from 37% in 2012. At the same time, the share of workers in product, marketing, and administrative roles has declined over the past six quarters.
While this pivot toward R&D reflects Israel’s deepening technological expertise, it also raises concerns about business development, commercialization, and market readiness. A tech sector that becomes overly weighted toward engineering — without sufficient investment in scaling and selling products — may struggle to grow sustainably.
Where Are the New Workers?
Another central challenge outlined in the report is the slowing entry of new professionals into the tech sector. The Inter-Ministerial Committee for Expanding Human Capital in High-Tech warns that Israel is not on track to meet its target of 736,000 tech employees by 2028. Achieving that goal would require an annual workforce growth of 3.5%, far above current rates.
To reverse this trend, the report calls for a national effort to improve STEM education and training, especially among underrepresented groups. Among the key recommendations: investing in AI education from an early age, increasing support for physics and engineering tracks in schools, and encouraging more girls to pursue technological fields.
Looking Ahead: A Call for Strategic Action
Despite the headwinds, there is cautious optimism. Around 69% of startups surveyed anticipate revenue growth in 2025, and there is still considerable international interest in Israeli innovation. However, the report makes clear that this optimism must be matched with strategic government action.
The Innovation Authority recommends increased investment in early-stage startups, targeted support for companies in diverse tech fields, and the creation of a more stable and attractive business environment. Monitoring key workforce and funding indicators will also be essential to guide policy decisions.
As Israel’s high-tech industry enters a period of reflection and recalibration, one thing is certain: retaining and attracting talent — at home and abroad — will be critical to maintaining its position on the global innovation map.
