Israeli tech developers have become more expensive than their US counterparts for the first time in many years, according to a new study by the Israel Growth Forum lobby, raising fears that Israel’s vaunted tech talent and innovation savvy will grow and set foot elsewhere.
The cost of employing Israeli developers, such as software engineers and research and development workers, was found to be 8.2 percent higher than their equivalents in the US, according to the study put out by the lobby group representing public and private Israeli tech firms, including Wix and Monday.com.
The change in the cost of Israeli tech workers has been mainly attributed to the rapid appreciation of the shekel, which last month reached a 33-year high against the dollar and strengthened by some 20% year-over-year. The shekel is currently trading at roughly three to a dollar.
The strength of the local currency has been driving up the costs of hiring and expanding operations in Israel as local tech companies earn most of their revenue in dollars but pay expenses, including salaries, in shekels. The rapid change in the shekel-dollar exchange rate has been forcing tech exporters and startups to make tough decisions about sweeping layoffs, hiring abroad, and moving R&D centers out of Israel.
Over the past decade, by contrast, Israeli engineers were typically 10 to 15% cheaper than their counterparts in America, giving Israel an advantage in growing its vaunted tech industry and talent, according to the RISE Israel Institute, which focuses on economic policy.
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Now, there are fears that Israeli-founded companies may leave Israel.
“Israeli technology companies will continue to compete, adapt, and grow,” said Michal Sarig-Kaduri, government relations manager for Wix, the Tel Aviv-based do-it-yourself website development company, who also heads the Israel Growth Forum. “The real question is whether Israel will remain the place from which they choose to continue to do so.”
Michal Sarig-Kaduri, Wix’s government relations manager, a Tel Aviv-based do-it-yourself website development firm, who also heads the Israel Growth Forum. (Courtesy of Amitai Beker)
The study, conducted over the past month, is based on data collected from seven Israeli tech companies that are part of the Israel Growth Forum and employ more than 10,000 workers in Israel and globally.
Founded in 2015, the forum includes some 25 leading Israeli public and private tech companies — including Wix.com, Lemonade, Fiverr, and Outbrain — that employ thousands of workers. They join forces to lobby the government on issues that concern the Israeli tech community.
Overall, the study showed that the cost of workers in Israeli tech firms, including developers and those in marketing and sales, was two percent higher than the cost of their US counterparts. For comparison, as recently as May 2025, the salary of an Israeli tech worker was just 15% lower than what that worker would cost in the US.
A conservative analysis based on the study’s data suggested that workers in both countries would cost about the same amount at an exchange rate of about NIS 3.21 to the dollar, as opposed to the current rate of around NIS 2.99 to the dollar.
A geographical analysis, moreover, found that Israeli tech workers are 2.4 times more expensive than their counterparts in Poland, Lithuania, Romania, and Ukraine.
“For a single company, the decision of whether to recruit staff in Israel or the US is a specific business choice,” said Sarig-Kaduri. “For the Israeli economy, however, when that same decision is made by hundreds of companies simultaneously, it involves thousands of employees, managers, expertise, and an entire chain of economic activity that could potentially be built outside of Israel.”
“Israel’s challenge is not merely to retain the employees currently working here, but to preserve the viability and capacity of the Israeli high-tech sector to continue generating growth within the country,” Sarig-Kaduri cautioned.
The economy’s dependence on the local tech sector has grown significantly in the past decade. That’s driven by rapid growth in tax revenues from the sector, which in turn is led by an increase in the number of employees and their rising salaries. Tech employees, who account for 11% of the country’s workforce, pay more than a third of all collected tax income, underpinning the vital importance of the sector as a key driver for Israel’s war-hit economy.
The study by the Israel Growth Forum was published as pressure has been mounting for the government and the Bank of Israel to help Israeli startups and tech firms cope with the shekel’s steep appreciation.
Illustrative: A view of the Nvidia offices at the Yokneam High-Tech Park, September 8, 2024. (Michael Giladi/Flash90)
Finance Minister Bezalel Smotrich on Tuesday presented a NIS 1.6 billion ($534 million) assistance package meant to fast-track funding for cash-strapped startups, advanced manufacturing equipment, exporter support, vocational training, and tax incentives.
“The measures announced to support the high-tech sector may well assist some smaller startups in the near term, but Israeli growth-stage companies are at a different stage,” said Sarig-Kaduri. “These companies employ hundreds or even thousands of workers in Israel, and a broader, more creative approach is required to ensure their continued growth within the country.”
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