2017 Sees Significant Increase in Wages in Israeli Tech Market

In Israel, the limited supply of software professionals, combined with the entrance of multinationals like Amazon into the local market, have caused a peak in wages and signing bonuses offered to prospective rising stars in the industry.

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The average pay for software professionals in Israel has increased by 7% in 2017, to an annual salary of NIS 319,728 (approximately $91,000), 2.5 times higher than the average local wages. According to data published by see.V, an Israeli placement company specializing in tech and startup recruitments, most fields showed an increase in pay, with DevOps engineers enjoying the highest peak— a 17% increase that resulted in an annual salary of NIS 354,000 (approximately $100,750).

“2017 was undoubtedly a very good year for software professionals in Israel,” Merav Laifer, CEO of see.V, told Calcalist. The best-ranked professionals are algorithm developers, whose average annual salary recently increased to NIS 366,000 (approximately $104,200), a 7% gain compared to the last quarter of 2016. In this category, data scientists are now the highest earners, with an average of NIS 480,000 (approximately $136,650).

Nearly $30,000 in signing bonuses

According to the Israel Innovation Authority, Israel's government tech investment arm, the local industry has a deficit of some 10,000 software professionals, forcing tech companies to compete top talent. As a result, salaries are on the rise and average signing bonuses can reach as much as NIS 40 thousand, NIS 80 thousand or, in extreme cases, even NIS 100,000 (approximately $11,400, $22,800 and $28,500, respectively).

“In the past two months, Amazon stormed in and offered Israeli programmers huge salaries and unprecedented signing bonuses,” said Ms. Laifer. “Amazon did not invent signing bonuses, and even before it entered the market we experienced a step up in the war over leading candidates.” According to Ms. Laifer, candidates are sought after by chief executives and directors of development and are offered lucrative employment terms, company-paid vacations and high signing bonuses. Startups are unable to compete as aggressively over candidates, especially when competing against companies like Amazon, end up paying the price, she said. Ms. Laifer believes that the real struggle is dealing with the shortage in workers and that the solution will not come from the relatively few ‘programming stars,' but from the integration of less experienced workers and in-house training.

The hottest candidates: front-end and big data developers

So far, according to the data, the fourth quarter of 2017 has seen an increase in the number of open positions in almost every field, compared to last year’s fourth quarter. Throughout the year, the highest demand was for front-end and Java developers, with over a 100 new positions opening each quarter. In addition, there has also been a rise in the demand for DevOps engineers (a 95% increase from last year’s fourth quarter), and big data developers (a 156% increase in new positions).

Data also shows a sharp decline of approximately 40% in new openings for PHP and Ruby developers. In both cases, the decrease in demand also manifests itself in lower average wages. A decline in the salaries of Ruby developers (17%) is especially prominent, amounting to a now lower median annual pay of NIS 258,000 (approximately $73,600).

AI becomes essential; demand for blockchain developers rises

“The fields with the highest rises in demand were also the most difficult to man this year”, said Ms. Laifer. At the top of the list, she names DevOps engineers, front end and Python developers, and data scientists. “2017 was the year when it became decisively evident that artificial intelligence tools may become invaluable for many companies. There has been an increase in the demand for algorithm developers in general, as well as data scientists and machine learning engineers in particular.”

The past year has seen an increase of around 27% in the number of new positions for algorithm developers and an even more significant rise in the demand for data scientists. “This a global trend,” says Ms. Laifer. “in the U.S., we have seen a rise of over 650% in the number of available positions for data scientists within the past five years, according to LinkedIn data. The increase in the number of professionals in the field is far from adequate. Data scientists are especially hard to find since these are highly skilled professionals, with more advanced academic degrees.” Israel is currently affected by the sharp rise in bitcoin rates, which creates a greater demand for blockchain developers.  

 

Not job hunting

In the past, the most significant data about the tech job market was the amount of time candidates spent looking for work in different fields. It indicated how high the demand for their skills actually was. Today, this data is no longer usable as an assessment tool, because of a continuous rise in the number of “passive candidates” who are happy in their current position and are not actively job hunting, yet are still constantly examining new opportunities for bettering their employment terms.

“Most candidates in the field of software fall into this category,” Ms. Laifer said. “These candidates are not quick to leave their current positions and so their ‘search time’ is longer, but that does not, in any way, indicate difficulty finding work." The shortage in available employees and the difficulty in finding suitable candidates have led to the use of AI within the recruitment process. According to Ms. Laifer, recent years have seen many startups offering innovative recruitment methods like automated interviews soming on to the scene.