R&D and Software Led Growth of Israel's Service Exports Last Year

Ora Coren
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Ora Coren

Sales of research and development as well as programming and computer services to customer overseas led an 11% rise last year in Israel’s service exports, the government’s Export Institute said Monday.

Business service exports climbed 15% last year to $20 billion, with the main contributors being R&D services, which soared 47%, and programming and computing services, which grew by 12%. Standing at $7.7 billion, the latter is now Israel’s single largest export category, comprising 25% of all service exports, the institute said.

The institute’s economic division estimated that 2012 saw an 11% increase in total service exports, which reached $30 billion. Covering a broad range of business that includes computing, tourism, research, medicine, financial services, consulting and advertising, services made up a third of total exports last year. That puts Israel is 14th place among 82 countries that measure service exports, putting it ahead of the U.S., Switzerland and Sweden among others.

“Service exports are gradually assuming a larger portion of the total, with an added value reaching 70%,” said Uriel Lynn, president of the Federation of Israel Chambers of Commerce. “If government authorities stop nibbling away at employers’ rights, the expansion of service exports will continued.”

Exports of tourist services rose by 7%, reaching $5.2 billion, or 17% of the total.

Transportation service exports rose by 3% to 15% of the total. Some NIS 840 million of service exports derived from sales of start-up companies.

According to Ramsey Gabay, the Export Institute’s chairman, the 2012 increase in computing and programming services followed a 28% increase in 2011. To help foster the segment’s growth, the institute has launched a mobile phone applications unit that will help Israeli companies make contacts abroad and enhance their overseas sales.

Israeli high-tech companies are growing, but experts warn of a shortage of skilled workers.Credit: Tomer Appelbaum