Multinationals discover Israel's wealth of hi-tech talent

Why some of world's largest computer companies have labs in Israel.

By DAVID SHAMAH
computer comapnies 88 (photo credit: )
computer comapnies 88
(photo credit: )
With a rich pool of talent to draw from, large multinational companies have discovered that setting up shop in Israel - taking advantage of engineers, programmers, and even marketing and sales experts - is a wise move. With the need to maximize profit and cut expenses urgent in today's business climate, companies are expanding their research and development activities in Israel, and are doing business with Israeli firms and businesses on an unprecedented level. Google, for example, believes in Israel's hi-tech potential to such an extent that it has opened not one, but two research and development centers in the past four years - one of the few countries outside the US where the company has multiple R&D offices, says Google Israel CEO Meir Brand. "That's an honor reserved for large countries, like Russia and China," Brand says, "so it's an indication of just how advanced Israel's hi-tech capabilities are that the company would open two R&D centers here," in Tel Aviv and in Haifa. "We've found a huge pool of scientists, engineers and mathematicians full of innovative ideas. Israelis tend to think 'out of the box,' a trait highly valued at Google," he adds. Besides converting Google products, such as Gmail and Google Docs, for use in Hebrew, the 100 employees of Google Israel are at the forefront of delivering some of Google's latest and greatest products. Among them are Google Trends, which lets you research and compare what people are looking for online, contests and annotations for Youtube, and Google Insights for Search, which lets you compare search volume patterns across specific regions, categories, and time frames. And Google believes in Israel's hi-tech future, as well, Brand says: Among other projects, the company has developed, in cooperation with the Ministry of Education, layers for Google Earth that will help Israeli students learn history, geography, and other core subjects. Cisco, another worldwide technology powerhouse, also has a huge presence in Israel - with some 750 employees, mostly engineers, working at the company's R&D facility in Netanya, says Cisco's Israel director Bina Rezinovsky, making it the company's second largest research center outside the US. Many of those workers came to Cisco as the result of the company's purchases of Israeli companies; to date, Cisco has acquired nine Israeli companies, which, says Rezinovsky, have furnished the technology for some of Cisco's most important products, such as the network management systems designed by Israel's Sheer Networks. Cisco acquired Sheer in 2005 for some $100 million, part of the over $1 billion Cisco has invested in Israeli companies over the past decade. "Israelis are imaginative, and they are familiar with technology, two traits that make the human resources of the country very valuable to Cisco," says Rezinovsky. While they can sometimes be a bit "provincial," she adds, the "Israeli brain is dynamic and creative, and that's what we need on our development teams. "For Cisco, Israel is a second home, an island of stability in a difficult world economy. We have no plans to stop investing here." Cisco has had great success in Israel, Rezinovsky says, and gives back to the community as well: Besides job training programs in peripheral areas, the company runs the Mediterranean Youth Technology Club (MYTecC), an education initiative aimed at giving ninth and tenth grade pupils from the Mediterranean region the skills needed for them to become future business and social leaders, and the Digital Cities project, which includes more than 20 different projects aimed at improving relations between Israeli Jews and Arabs in Nazareth and Nazareth Illit. When it comes to working with Israel, however, the "grandfather" of all multinational investors here is, of course, IBM, which began working in the country in 1949. Invited to help the fledgling country with defense needs, the company stayed, and grew from its initial three employees to about 2,200 today, says IBM Israel CEO Meir Nissensohn. "We also had the privilege of opening the first R&D lab, in 1972, when we established the IBM Science Center, developing projects in the medical, agricultural, and other fields." Today, IBM has three research labs, with almost 1,000 employees - including the company's largest research lab outside the US, in Haifa. And despite its image as a large, mature corporation with very specific policies, IBM actually prefers the less rigid mentality of Israeli workers when it comes to development. "Israelis are very big on innovation, which is key for any corporation today, including ours. There is a huge amount of innovation on all levels in Israel, and the workforce is well educated and motivated." IBM also pioneered the practice of acquiring Israeli companies, and last year it snapped up three more, including XIV, FilesX, and Diligent Technologies. Those acquisitions made IBM the largest foreign investor in Israel in 2008. IBM is a strong player in data storage, says Nissensohn, "and companies like XIV and FilesX, developed using the strong talents of the Israeli hi-tech workforce, provide top of the line solutions for IBM to bring to its customers worldwide. Israel has become a worldwide center for data storage innovations, and we intend to continue our growth in this area." IBM is also well known for giving back to the community, and has a long history of supporting educational and cultural institutions, and supplying schools with computers, libraries, and scholarships for promising students. Microsoft, which sells more software worldwide than anyone else, is also heavily invested in Israel. Microsoft Israel has a large research and development center here, and has acquired several Israeli companies, says Microsoft Israel CEO Danny Yamin; today, about 700 people work for MS Israel. "Microsoft sees Israel as an excellent source of innovative workers, and we at MS Israel are proud of our contribution to Microsoft's worldwide development," Yamin says. Those traits are essential in the software business, says Yamin, and Israel has more than pulled its weight in developing important Microsoft products. "Their ability to think out of the box and get past formal strictures is a big advantage," Yamin says. MS Israel is also heavily involved in the local market, helping large and small businesses, as well as consumers, with software solutions. "Microsoft was one of the first companies to commit to translating its products into other languages. In fact, any new version of Windows or Office is available in Hebrew the same day it is released worldwide," Yamin says. "We see ourselves has having an important responsibility to the local market. "According to an IVC survey, about 90,000 workers in Israeli hi-tech use Microsoft products. That's a large group, and they look to us for solutions." Microsoft Israel's commitment to the country also expresses itself in the many philanthropic and education projects the company runs; the Maala index for Social Responsibility consistently gives the company its highest ranking for philanthropy and community involvement.