Arabs Taking Their Place in Startup Nation

Nazareth is emerging as a new Silicon Wadi.

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Israel is known around the world as Startup Nation, but much of the nation is underrepresented, at best, in the tech companies behind that name. Ultra-Orthodox Jews are relatively scarce in Israeli high-tech; women, too, have largely been left out of the party.

One of the most glaring absences in Israel’s high-tech sector is that of its Arab citizens, but there are signs that the situation is starting to change. With Arabs making up such a large part of Israel’s population and Israel facing a shortage of engineers, the industry will be increasingly counting on Israeli Arabs to keep growing.

According to the latest available figures from the Central Bureau of Statistics, from the end of 2010, Jews accounted for 95.6% of those engaged in high-tech, even though they make up only 75% of the population. There has been a bit of improvement since then, but the percentage of Arabs employed in high-tech is still well below their 20% share of the population.

In absolute terms, the number of Arabs in Israeli high-tech has shot up, but it is still so small as to have little impact.

In 2013, 1,200 Israeli Arabs worked in high-tech companies, up from only 350 in 2008, according to Tsofen High Technology Centers. That represents an increase from 0.5% of all high tech employment to 1.5%, says the Nazareth-based organization, which promotes the integration of Israeli Arabs into high-tech as a means to advance economic development, reduce poverty and create jobs.

Gai Hetzroni, director of corporate social responsibility for Cisco Systems Israel, believes the real number os higher. He estimates that the number of Arab engineers in Israeli high-tech has doubled in the past three years, to about 2,000 today.

Cisco belongs to Ma’antech, a coalition of Israeli high-tech firms founded by President Shimon Peres for the purpose of bringing more Israeli Arabs into the sector. Ma’antech and Tsofen have worked in recent years mostly to open doors for young Arabs in Israel’s largest high-tech firms.

Parents prefer a traditional career

Young Arabs in Israel face many obstacles to a high-tech career. Since they are not subject to the draft, they miss out on the personal connections and training that elite Israel Defense Forces units, such as Unit 8200 of Military Intelligence, can offer.

In addition, employers are often hesitant to hire Arabs.

Parental pressure to choose a more traditional career can also be a factor. “Until now, like the [Jewish] mother the most desirable professions among [Arab] parents were in medicine,” says Sami Saadi, comanager and one of the founders of Tsofen.

“Today, however, the ‘brand’ of the high-tech Arab is improving. We’re seeing the first high-tech companies in Arab society and I’ve heard that in villages such as Daburiya people are excited that there are cars with the Amdocs logo driving around,” he says. “It interests people and encourages them to work in high-tech.”

Amdocs, the Israeli company that provides billing and other services to telecommunication companies around the world, has opened a center in Nazareth that employs some 150 people.

Indeed, Nazareth has emerged as the Israeli-Arab Silicon Valley. The number of high-tech jobs in the city of 80,000 rose from only 30 in 2008 to over 400 in 2013, reports Tsofen. Nearly one-third are filled by women. In the same five-year period the number of companies operating in Nazareth rose from only one to 12.

Amdocs’ Nazareth staff is one-third Jewish and one-third Muslim; the remaining third consists of Druze, Circassians and Arab Christians, many of them from nearby villages.

As a high-tech company operating a center in Israel’s geographical periphery, Amdocs receives government tax breaks. The company doesn’t disclose the amounts, but the Economy Ministry’s Investment Center has a program that subsidizes 35% of salaries, on the condition that the wages are at least 2.5 times the national average. The subsidy can reach 40% in the first year of employment.

Despite the growth, the integration of Arabs into Israeli high-tech sector has a long way to go. “The vision was if we reached 1,000 Arab engineers in the industry it would pass the tipping point and start to work through the regular mechanisms such as ‘a friend brings a friend.’ We have passed that point but we don’t think that has happened,” says Tsofen executive director and cofounder Smadar Nehab. “The leaders of Israeli high-tech say they are short of engineers – here we have an invisible population,” she says.

Bring the jobs to the women

One of the most important things Tsofen’s directors say they have learned from the project in Tsofen is that the main way to increase Arab participation in high-tech is by bringing the jobs to Arab population centers such as Nazareth.

“High-tech is the future ofArab society,” says Saadi. “It is the lever for economic equality we are thirsting for. Civil equality is not enough, ethnic equality is not enough; if we want to reach a joint civil society we must also have the economic equality. Today it is not strange for high-tech companies to discuss opening a branch and bringing projects into the Arab society. For us that is a big change,” he says.

In addition to providing good jobs for residents, high-tech industrial zones can also bring much-needed tax revenues that can jump-start Arab communities. While 15 high-tech parks have been opened in predominantly Jewish cities, not a single one has been opened in an Arab city, according to Tsofen. Only 2.4% of all industrial zones in Israel are located in Arab communities. That means Arab areas are losing out on jobs and on substantial tax revenues.

Tsofen is also promoting high-tech centers within Arab communities to create jobs for women. There is no convenient public transportation from most Arab towns to high-tech centers, explains Roni Floman of Tsofen, so the goal is to bring the jobs to them.

One such project is now underway in Tira, in the Triangle area. The European Union is helping fund the project, as is Germany’s Konrad Adenauer Foundation.

Tsofen founders Yossi Coten (left), Smadar Nehab and Sami Saadi. Cracking the code to bring more Israeli Arabs into high-tech.Credit: Courtesy of Tsofen

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