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Think Tech, Think … Israel?

April 27, 2006
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Israel has long known that its highly educated and entrepreneurial workforce constitutes its greatest natural resource. Now a growing number of Israeli companies are offering American organizations high-quality business solutions and professional services at prices that are significantly lower than in the United States.

To promote this emerging trend and encourage more Americans to take advantage of Israeli talent, the Israel Economic Mission and Israel Export Institute has initiated a U.S. public-awareness campaign, "Professional Services From Israel." It features an online database that connects U.S. businesspeople with Israeli companies and individuals who offer expertise in a range of fields. (The database can be found at: http://professional-services-israel.export. gov.il.)

A cultural affinity with the United States, multilingual capabilities - including many native English-speakers, tech-savvy talent and a compatible legal system - are among the advantages Israel can bring to American businesses, say campaign organizers. Israeli companies offer expertise in a number of different fields, such as software design, testing and support; language translation; global relocation services; architectural design; mobile satellite communications; and management consulting.

'An Outsourcing Boutique'

"Israel is an outsourcing boutique, not an outsourcing supermarket like India," says Zohar Peri of Israel Economic Mission to the United States. "In specific niche markets, companies can tap into Israel's highly skilled labor pool for one-third to one-half the price available as in the U.S."

Compumat, for example, provides IT consulting services to small- and medium-sized enterprises in America, and to small divisions within larger businesses, such as GSK-GlaxoSmith-Kline, BSH-Bosch Siemens and Johnson & Johnson. The Israeli company essentially functions as an off-site "help desk," handling all aspects of computer-system maintenance, including disaster recovery, remotely.

Compumat's technology professionals communicate and support clients in real-time via Web-based videoconferencing, and can take control over any device in the customer's system.

The company's key advantage, according to founder/president Mati Herbst, is a combination of sophisticated human resources, American-style service and Israel's relatively lower labor costs. "The cost of a senior IT manager in the U.S. is $125 to $250 per hour; the cost in Israel, is $60 to $70 per hour," he explains.

Tescom, an Israeli software-testing and quality-assurance firm with its U.S. headquarters in Atlanta, sends between 10 percent to 40 percent of the work on any given project for its U.S. clients to Israel. According to Sarah Bajc, the company's managing director, "If even 1,000 hours of a 100,00-hour project can be completed in Israel at $20 or $30 less than in the U.S., that's a $20,000 to $30,000 savings."

The fact that Israel has a huge supply of highly educated and technology-oriented workers gives Tescom an advantage: "We could outsource to India, but we have found that we can't replicate Israel's productivity. There are so many quality problems that we would spend more hours and see less savings and more risk."

To help meet demands from American clients for its computer-consulting services, one company - Xtivia - has tapped into a little-known source of talent in Israel: ultra-orthodox women. The company opened a software development center in Modi'in Ilit, a religious community with high unemployment and many educated women who are reluctant to work in a secular setting.

Today, some 200 women are working as software developers at Xtivia's center there.

Seeking the competitive advantage that Israel offers, some American companies are starting to tap into the country's talent by establishing offices there.

David Tesler, CEO of the New Jersey-based LeaseProbe, LLC, opened an Israel office where 60 lawyers, paralegals and accountants review and write abstracts of commercial leases.

In addition to lower costs, Tesler cites language and cultural factors as reasons he chose Israel as a base for overseas operations. The fact that all of his employees are native English-speakers originally from the United States is what "makes Israel a really great choice," he says.

"We explored subcontracting some of our work to companies in India and the Philippines, but their work product could not compare to Israel precisely because of an imperfect grasp of English. I feel comfortable knowing that when I have to arrange a conference call with my Israel-based management and our U.S. clients, there is no language or cultural gap."

Even the time difference between Israel and America works in his favor: "A client can deliver documents to us at the end of the working day, and we can often provide them with a finished product by the start of the next business day."

And, he adds, "utilizing Sunday as a work day in Israel allows us to have many projects on our clients' desks first thing Monday morning."

Adding to these advantages are Israel's Western legal system and state-of-the-art technology infrastructure.

"Israel was the only country in the world," says Tesler, "where I would be able to find all of these benefits in the same place."

This article was prepared in cooperation with the Israel Economic Mission and Israel Export Institute.

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