High-tech

MULTINATIONALS FLOCK TO ISRAEL

More than 300 multinational companies have facilities in Israel – among the highest number in the world. They employ nearly 25% of Israel’s high-tech workforce in their R&D centers and through acquisitions of local start-ups

Driving through the industrial parks that dot the Israeli landscape, one could be forgiven for feeling like they were in California’s Silicon Valley. Indeed, large foreign corporations can be found throughout the country and include such giants as Facebook, IBM, Microsoft, Samsung, HP, Google and more.

Microsoft Israel's R&D Center

Uniquely talented

When Israel-based managers of large multinationals discuss why their companies are drawn to Israel, terms like “talent,” “unique,” “innovative” and “entrepreneurial” pepper the conversation repeatedly. “Israel has a distinctive talent pool with unique problem-solving skills, and companies recognize that,” notes Joey Simhon, the Engineering Office Site lead for Facebook Israel.

In 2013, Facebook acquired Israeli start-up Onavo, which led to the company’s decision to open offices in Tel Aviv. The Tel Aviv office is one of Facebook’s few offices outside of the US, and Simhon attributes this to the amazing technical talent available.

Alon Bar-Shany, the General Manager at HP Indigo, describes the local tech scene in similar terms. “Israel has a small but innovative pool of talent,” he points out, adding that “Israelis think out of the box.” Indigo Digital Press was founded in 1977 and was acquired by Hewlett Packard (HP) in 2001. When HP purchased Indigo, it was already a fully operational company with its own R&D, production and management. This was considered an advantage, as time to market was a critical aspect of the company’s operations. Says Bar-Shany, “We developed cutting edge technology. HP acquired us because we specialized in an area of printing that interested them.”

Yossi Matias, Vice President, Engineering, at Google and the Managing Director of Google's R&D Center in Israel, concurs. “It's about the talent and execution, and the proven record of Israeli teams developing innovative products and technologies that have high impact,” remarks Matias. As part of its global footprint and driven by technological innovations that positively impact people’s lives, Google established its R&D center here approximately 11 years ago, seeing it as a natural move in light of that talent and innovation. Since then, the company has also acquired four Israeli start-ups, including Waze.

The IBM building in Petach Tikva

An entrepreneurial spirit

When discussing why so many multinational companies opt to have a presence here, Danny Yellin, Vice President of IBM Mobile and Israel Software Lab credits Israel’s infrastructure, mentioning the country’s designation as the “start-up nation,” its rich resources and excellent education. “At the end of the day, Israel has incredible research capabilities and a culture that encourages risk-taking. People want to work for start-up companies, which isn’t as common in other cultures,” says Yellin. “There is access to great talent,” he adds.

Yellin states that IBM – which opened its first scientific center here in 1972 – wants to be part of the Israeli technology ecosystem, and the company has acquired a number of local start-ups. “Israel has very innovative companies that can help IBM move forward in key areas,” he remarks. IBM’s Haifa lab is the company’s largest lab outside of the US, and Yellin confirms that having the lab facilitates easier, more successful integration for the start-ups it acquires.

Microsoft’s first investment in Israel occurred in 1991, when several Redmond, Washington-based Israeli employees wanted to return to Israel and Microsoft didn’t want to lose them. The company has grown tremendously since then through a combination of organic growth and acquisitions, of which there have been 12 since the year 2000.

Yoram Yaacovi, the General Manager of Microsoft Israel R&D Center, attributes the penetration of so many multinational companies here to a number of factors. Says Yaacovi, “there is talent and an entrepreneurial spirit in Israel that multinational companies look for, but rarely find in other countries.” He also points to the country’s technological and educational strengths, and notes that there are “large numbers of people here who are driven towards bold ideas.”

Facebook offices in Tel AvivItai Sikolski

Great respect for Israeli technology

According to Viktor Ariel, the former President and General Manager of Samsung Israel R&D Center (SIRC), the relationship between the Israeli high-tech industry and the Chinese and Korean high-tech industries has changed over the years. “Fifteen years ago, Israeli companies seeking to connect with Chinese and Korean companies required an intermediary to make the connection,” notes Ariel, who founded the Samsung-acquired start-up TransChip, a designer of CMOS digital cameras for mobile devices. “Today, there is a lot of respect for Israeli technology. It’s usually very easy to make that connection directly,” he adds.

Ariel explains that China is even trying to emulate the Israeli accelerator environment. “The Chinese greatly respect what we do here, and want their start-ups to be like Israeli start-ups,” he says. To the best of Ariel’s knowledge, most if not all of Samsung’s key mobile phone cameras are currently designed in Israel, and approximately one in five mobile phone owners in the world uses technology developed by Samsung SIRC.

Global companies, local achievements

Israeli R&D centers play pivotal roles on both the global and local levels, with companies making a splash for their technological achievements as well as their contributions within the local high-tech community. Google's R&D center in Israel works on core products and technologies in strategic areas including search, cloud, account security and crisis response, as well as Waze and a newly established research team working on A.I. technologies.

Facebook’s Simhon lists internet.org – an umbrella initiative of products and projects designed to bring Internet access to people living in areas with limited or no connectivity – and Facebook Lite (a faster, more basic version of Facebook for people with limited connectivity) among its achievements. “We have a unique opportunity to make a positive impact on the world by helping billions of people to connect online,” says Simhon with conviction.

HP Indigo sells their products in approximately 120 countries, and due to the company’s success, HP sees Israel as a country that is viable for investment. The company places a strong emphasis on the environment and on outreach, and has a number of vendors in both the north and south of the country.

IBM’s local achievements are many. They’ve helped IBM become leaders in the fields of security, media analytics, multimedia and healthcare, among others. “Healthcare is a data-driven industry,” notes Yellin. “We even have a project that does mammograms and provides automatic diagnoses,” he adds.

Microsoft’s Yaacovi is proud of his company’s accomplishments. In addition to involvement with cybersecurity products and services, the local team has played a role in building start-ups and creating accelerators within Microsoft. There are currently eight more Microsoft accelerators around the world, and they are all managed from Israel.

One of the collective achievements of the Israeli high-tech sector is the Israel Advanced Technologies Industry organization, a forum for members of the local high-tech sector that Yaacovi helped found. “We work together to address interests that involve all of us,” he notes. The IATI creates bonds that benefit the high-tech community. Says IBM’s Yellin with enthusiasm, “this rich sharing of knowledge here is amazing.”