Over the past two decades, even as Israel has developed a strong high-tech industry and earned the sobriquet “start-up nation,” much of its Arab population has remained on the outside. Arabs comprise 20% of Israel’s population, but only contribute to 8% of its GDP. It is estimated that of the 100,000-plus software developers in the country at present, Arabs account for only 2,000.
Dan Senor and Saul Singer, authors of the 2009 book, Start-up Nation: The Story of Israel’s Economic Miracle, list two major reasons for this lack of integration. First, because, unlike Jewish Israelis, Arabs aren’t included in mandatory service in the Israeli army, they are less likely to develop technology skills that the Israeli defense forces inculcate. Second, they do not develop the business networks that Israeli Jews do while serving in the army.
Smadar Nehab, a Jewish Israeli, and Sami Saadi, an Arab Israeli, co-founders and original managing partners of Tsofen, a non-profit organization devoted to integrating Arab engineers into the Israeli high-tech sector, note that the engine of growth of the Jewish economy has been inaccessible to the Arab workforce. This has resulted in a huge chasm separating the two societies. Tsofen aims to bridge this divide.
“High-tech is a major driving force for the Jewish economy. It can be the growth engine for the Arab economy, too,” says Nehab. Pointing out that there is a shortage of engineers in the high-tech sector, she adds that there is no reason why Arabs cannot fill these positions. “Our goal is that by the year 2020, 10% of the workforce in high-tech in Israel must be Arab.”
Tsofen, founded in 2008, is already making an impact: Nazareth, the largest Arab city in Israel’s Lower Galilee, is slowly becoming the Arab Silicon Valley of the north. The number of engineering jobs here has grown from 30 to 700 in the past seven years according to Tsofen. And while at present there are almost 3,000 Arab software developers in the country, this number is actually up almost eight times since Tsofen began its activities. In 2008, there were only 350 Arab software developers. The opening of Stef Wertheirmer’s Industrial Park in Nazareth back in 2007 was a major catalyst for this growth and Tsofen certainly played an important part in this increase – and with the growth of the entire eco-system in general in Nazareth which now boasts around 20 hi-tech companies, including global brands such as Galil Software, Amdocs, Broadcom and Alpha Omega. Tsofen has also helped encourage entrepreneurship and a hi-tech community through its events such as Mobile Mondays, now in its fourth year.
How has Tsofen brought about this change? To begin with, it offers three to four courses a year designed for college graduates in computer science, software engineering, electrical engineering, bio-medicine and bio-tech. These courses are conducted at Tsofen centers and typically spread over three to four months, four days a week. Currently, Tsofen has two centers — one in Nazareth and the other in Tira in the Triangle region in central Israel. By 2017, Nehab and Saadi plan to operate two more centers in the country; in Shefaram, a predominantly Arab city in the north, and in the Negev in the south.
“By 2025 there will be 10,000 Arabs in the hi-tech sector” –Paz Hirschmann
The courses include a practical software development project that simulates an internship experience. There is also special emphasis on projects that are equivalent to three to four months of work experience. In addition, participants undergo soft skills training and preparation for the work environment. The content is defined according to the needs of the industry and students meet with industry heads and mentors to familiarize themselves with the demands of the workplace. On completing the course, every participant is required to submit at least two original projects. These serve as the basis of their presentations in their job interviews.
Twenty participants are selected for each course after a rigorous selection process, which includes testing them on their technical knowledge, personality, intelligence and aptitude. According to the cofounders, the tests are in line with what prospective employers look for. Paz Hirschmann, Co-CEO at Tsofen, adds that the course fees are heavily subsidized with the government and philanthropic institutions paying 80% and the students paying 20%. The students are required to pay only once they are placed in a job.
“Our roots in Arab society help us recruit suitable potential students through social networks in the universities and the technology social networks,” says Saadi. Adds Nehab: “Tsofen’s programs provide the graduates with the equivalent of prior experience [and the advantage] that their Jewish counterparts [get] due to their early entry in the industry, working with the army or through the heavy social networking in the Jewish sector.”
Tsofen also acts as an interface with high-tech companies connecting Arab graduates with jobs in the sector. Special workshops are held in universities to provide Arab students with direct access to executives and engineers of leading high-tech companies. And since 60% of recruiting is done through ‘friend bring friend’ or referrals, Tsofen creates a robust social network that connects candidates with companies. “We expose them to opportunities and also provide them with Tsofen’s services for support as they graduate,” says Saadi. Pointing out that Tsofen has an 87% success rate in placing its students, Nehab notes that placement is “about four times easier in companies that are located in Arab cities.”
Sari Qashuw, a 24-year-old college graduate who completed a course in software development with Tsofen in 2014, credits the organization with helping him find employment. Says Qashuw: “Tsofen helped me integrate my computer skills with practical software development competency. They also composed my CV, which they sent to companies, and coached me in interviewing skills. All this helped me get a job at a software engineering company despite not having the required years of experience.”
Getting women into the workforce is also high on Tsofen’s priorities. Over the past six years, the organization has had around 100 women students and all of them have been placed in the high-tech sector. According to Nehab, at the industrial park in Nazareth established in April 2013, a quarter of the 214 employees are women. Tsofen, which participated in the establishing this industrial park, is now looking towards the Triangle, a concentration of Arab towns and villages in the center of Israel close to the Green line, the unofficial border with Palestine.
“Our objective is to do in the Triangle what we’ve done in the north,” says Saadi. “But since the majority of the unemployed population in the Triangle are women with non-science degrees, we want high-tech companies to create development centers there that require more than just engineers. Through this, we will be able to develop a high-tech support industry.” He goes on to add: “Arab women want to work outside the home to support their families with dignity. The potential is huge, and the [industry] needs to reach out and allow them to do so. We believe that bringing advanced industries to Arab communities will help to develop Arab cities and provide women with employment.”
Zvi Eckstein, dean of the schools of economics and business administration at the Interdisciplinary Center (IDC) in Herzliya, and a visiting professor at Wharton, says that Tsofen deserves “praise for its efforts. It’s a real advantage for Israel to increase the integration of the Arab community into highly skilled occupations such as high-tech, as well as having the source of labor so close to the work place.” Pointing out that Israel’s goal is “to increase the hiring of Arab workers for corporations, especially in this field,” Eckstein notes that the main problem is location — residential locations are far away from the employment areas — and also that the number of Arabs studying computer science and related fields are relatively low. The education system, he adds, does not give Arabs “enough opportunity to learn high level subjects like mathematics and English.”
“If you bring the companies close to [the Arabs], it gives them the option of working in the high-tech sector.” –Ihab Atalla
According to Eckstein, there is great potential to increase Arab employment in the high-tech sector. “The book Start-up Nation correctly states that the army provides a real laboratory [to] producing high quality programmers as well as innovators, which is missing in the Arab community. The government should provide some parallel opportunity for allowing on-the-job training and internships, in particular in research laboratories,” he says, adding: “I think that programs subsidized by the government for Arabs to study computer science, especially in the development centers, which normally are not open to the Arab population because of security restrictions, could provide a big step-up for the Arab high-tech community. I don’t think we are doing enough, but I think eventually we will get there.”
Funding is Key
Meanwhile, over the years, Tsofen has been developing its own support system. According to the co-founders, 15% of Tsofen’s funding comes from the government and another 15% from student and corporate fees. The rest is through donations from various organizations. It is becoming easier [to attract funds] as we get more known and successful,” says Nehab.
For instance, towards the end of 2014, the U.S. Agency for International Development gave over $1 million to Tsofen for a period of three years to promote the integration of Arab citizens into the technology sector. “The U.S. is supporting our activities because it sees it as a way to not only improve the standard of living in the Arab sector but also to promote Arab-Jewish cooperation and integration,” says Saadi.
The European Union (EU) has also been very supportive. Tsofen is part of an EU project called ‘Connecting through Technology’ that is working towards building effective engagement between the Arab communities of the Triangle region and Israel’s technology sector. This project, which commenced in January 2013, has funding of 500,000 euros ($567,000) for three years. Says David Kriss, press and information manager of the EU delegation to the State of Israel: “We are supporting Tsofen under the EU Partnership for Peace Program, which aims to contribute to an environment favorable to peace in the Middle East, building trust and understanding between communities. Through the projects that we support, we want to offer concrete examples that illustrate a better future.”
In 2015, the Israeli ministry of economy announced funding of $2.5 million to Tsofen and ITWorks, a Netanya-based organization that promotes diversity of employment and job opportunities among under-represented population groups. This amount will be provided to the two organizations over the next three years for the training and integrating of Arab, Druze and Circassian students and academics into the high-tech sector. Tsofen and ITWorks will be required to examine the manpower needs of employers in northern and central Israel and locate, guide, train and place students and academics in this sector.
“We view the encouragement of high level employment that offers good salary and employment conditions as a significant component in strengthening economic growth and narrowing the social and economic gaps between population sectors in Israel,” says Michal Tzuk, deputy director-general at the Israel ministry of economy and head of employment. (There is no official government goal for Arab employment in hi-tech)
On the Expansion Track
With the support that it is garnering, Tsofen is looking to replicate its Nazareth operations to three more locations over the next five years and also increase its network of employers. Companies where it has already successfully placed Arab workers include Amdocs, Microsoft, General Electric and Babcom Centers.
About two years ago, Amdocs, a global leader in software and services in the communications industry, opened a state-of-the-art facility in the industrial park in Nazareth. Of its worldwide employee pool of 22,000, about 4,500 are in Israel. According to Amdocs’ branch manager Ihab Atalla, collaboration with Tsofen is helping the company find top talent in the Nazareth area.
Atalla sees cultural diversification as a business strength. “You need to be open every day, including the weekend. On Saturday, which is very religious for Jewish people, Muslims or Christians can work. Sunday is a holy day for Christians, but Jews can work. Diversity is very important to us”.
At the Globes business conference in December 2014 in Tel Aviv, speaking about Amdocs’ center in Nazareth, Atalla said: “You can feel the energy between the people who work here. We have a very broad social integration, which creates a pluralism of creative ideas that leads to innovation [and out-of-the-box thinking].” He pointed out that since Arabs like to be close to home and live in the north, working in central Israel is difficult for them. “If you bring the companies close to them, it gives them the option of working in the high-tech sector,” he added.
“High-tech is the future of Arab society. It is the lever for economic equality we are thirsting for.” –Sami Saadi
Babcom Centers, an Israeli-Arab high-tech company specializing in business outsourcing services, including call centers and software development, is located in the Galilee. Of its 1,700 workers, two-thirds are Arab. Babcom was recently acquired by Matrix IT Ltd., Israel’s largest computer services company. Noa Bar Rose, Babcom’s human resources manager for software, says that that the firm is employing more Arabs now than in previous years. Babcom hires graduates trained by Tsofen and ITWorks to meet its job requirements. The company recently established a branch staffed entirely by Arab women in Daliyat HaCarmel, a Druze Arab town.
In recent years several start-up companies like Optima Design Automation, Markitect and Beam Riders have also been founded by Arab entrepreneurs in northern Israel. Many of them look to Tsofen for hiring their employees.
One of the earliest companies founded by Arab entrepreneurs, Alpha Omega, was established in 1993 by the husband and wife duo Imad and Reem Younis as a small engineering firm in Nazareth. Over the years, it has grown to specialize in neuroscience technology. The company has 65 employees and 90% of its products are exported. According to Reem, Tsofen has been a “valuable partner” in supplying the firm with trained Arab employees.
The Younis’s have recently partnered with a few other Arab organizations to set up an accelerator called NaserahTech for Arab entrepreneurs. “We take in new Arab entrepreneurs, put them through a six-month course of mentoring, help them with networking and other tools to start their own high tech business,” says Reem.
Tsofen’s co-founders say that one of the most important lessons they have learned is that the way to increase Arab participation in high-tech is to bring the jobs closer to them. Says Saadi: “High-tech is the future of Arab society. It is the lever for economic equality we are thirsting for. Civil and ethnic equality are not enough. If we want to reach a joint civil society we must also have the economic equality. Today, it is not unthinkable for high-tech companies to discuss opening a branch and bringing projects into the Arab sectors or for Arab entrepreneurs to set up high-tech ventures. For us that is a big change.”