Israeli innovation is under threat as tech employees seek relocation abroad: report

• Staff at multinational tech firms in Israel are increasingly seeking to relocate abroad, a new report says.
• The report found 53% of firms had reported increases in relocation requests over the last year.
• The report warned that this trend could threaten Israel's "innovation engine."

Increasing numbers of employees at multinational tech firms in Israel have requested to be relocated abroad over the last year, as security concerns amid the Israel-Hamas war heightened, a new report says.

The Israel Advanced Technology Industries Association (IATI) said in a report published last week that 53% of multinational companies had reported increases in relocation requests, as "security and geopolitical concerns" became "increasingly influential."

The report did not identify specific companies. Some of the world's largest tech companies have a presence in Israel, including Apple, Meta, Nvidia, Amazon, Microsoft, IBM, and Google.

"The relocation risk poses a direct threat to Israel's innovation engines," the NGO said, adding: "A significant wave of employee departures could undermine local innovation capabilities and weaken Israel's technological leadership."

The report found recruitment increases among multinationals in Israel had nevertheless exceeded decreases during the war, which it said highlighted the "organizational resilience and continued investment in talent" from these companies.

The data came from a mix of industry reports and public sources, as well as surveys and interviews with tech executives in multinational entities, the IATI said.

Israel's tech sector is a key driver of its economy. The Israel Innovation Authority, a government body, said the tech industry contributed one-fifth of the country's GDP in 2023. It labeled the high-tech sector "the shock absorber of the Israeli economy."

The IATI report said that there are around 430 multinational companies in Israel, with around 90,000 high-tech employees working for them.

It added that while multinationals had shown resilience over the course of the war — which broke out following the October 7 attacks on Israel — many had also faced business headwinds.

Around 22% of companies recorded reduced business activity during the conflict, it said, with 8% reporting a significant decline. However, 57% reported no change in business activity over the period and 21% expanded operations, per the report, which the IATI said showed "continued confidence in and robustness of local MNC activity."

Dror Bin, the CEO of the Israel Innovation Authority, previously said that the Israeli economy's dependence on the high-tech sector had "significantly grown in the past decade."

"We must do everything necessary to preserve the industry and continue nurturing its competitiveness in the global market," he added.