Non-techies lead Israeli tech industry pay boom

Yoni Wasserman and Amit Rapaport  credit: Compete website

Salespeople and project managers are benefiting as more Israeli startups decide to grow independently, says pay data company Compete.

When it comes to high-tech salaries, the focus is usually on developers and the tech people. There is a chronic shortage of these workers and, according to Israel Innovation Authority data, at the end of 2020 there were 13,000 vacancies for technology workers in Israeli high-tech.

The assessment in the market is that things have only gotten worse since then, with more and more well-funded Israeli high-tech companies launching major recruitment campaigns. The continuing scarcity of tech workers is, naturally, pushing wages up.

However, data obtained by "Globes" reveal an even more dramatic phenomenon has taken place in recent months in salaries for high-tech sector workers in ancillary, non-technological positions.

The numbers, taken from a database of salary and benefits provided by Israeli start-up Compete, reveal that these professions have enjoyed a significant rise in pay over the past six months. Compete's figures are based on salary data of more than 10,000 employees at 200 Israeli high-tech companies.

Pay up tens of percentage points

The median salary has grown, in particular, for highly experienced ancillary workers. For example, according to Compete, the median monthly salary for a Customer Success Manager (persons responsible for keeping contact with customers, post-sale) with five or more years of experience increased by 30% in the last six months to NIS 26,000. Similarly, the median monthly salary of experienced Marketing Managers increased by 34% in the last six months to NIS 34,000. A high-tech VP Sales hired during the last six months received a median salary of NIS 45,000 - an 18% increase in comparison with the previous period.

There was also a significant increase in salaries for ancillary workers with relatively limited experience in certain positions. According to Compete, a project manager with up to four years' experience, for example, newly hired in high-tech during the past six months, received a median salary of NIS 23,000 monthly, 35% higher than for the equivalent position six or more months ago.

An accountant with four years of experience received a salary of NIS 13,000 monthly, an increase of 13% over the accepted industry standard six or more months ago.

Many companies stay independent

The surprising salary increases for various ancillary positions are apparently related to some major changes in the Israeli high-tech sector in recent years. Traditionally, Israeli startups tended to be acquired quickly and swallowed up into the development centers of the multinational giants. These foreign-owned development centers had limited need for ancillary, non-technological workers. However, over the last two years, there has been a significant drop in acquisitions of Israeli startups which, meanwhile, have continued to grow independently.

The fact that Israeli start-ups have remained independent, with some even going public, has led to a high level of demand for workers beyond the classic development chain.

In addition, Covid-19 brought many sales and marketing positions back to the local market; jobs for which Israeli startups previously preferred hiring in the US.

"Traditionally, Israeli companies used to recruit this type of worker in their target market, which is generally the US," says Amit Rapaport, CEO and co-founder of Compete. "But the coronavirus taught everyone that sales and marketing are not location-dependent, and that everything can be done via Zoom. It brought new jobs to Israel, and increased both demand and salaries for these positions."

Moderate increases in developer salaries

Surprisingly, Compete's data reveal that pay for development engineers in the Israeli high-tech industry has risen at a relatively moderate rate over the past six months, especially when it comes to workers with 0-4 years of experience. For example, the median monthly gross salary of a full-stack developer with up to four years' experience hired for a new job in the last six months was NIS 26,400, similar to salaries of employees hired six or more months ago.

Among inexperienced mobile developers as well, the median salary has not changed, at NIS 26,000 monthly during the last six months. A DevOps engineer hired during the past six months received a median monthly salary of NIS 26,500 thousand, 6% more than DevOps workers in the previous period.

When it comes to more experienced technology workers (five years or more), wage increases over the last six months are a bit more significant. The median salary for a full stack developer hired in the last six months, was NIS 30,000, an increase of 3% compared with prior data. Mobile developers received NIS 32,500 , up 4%. By contrast, the median monthly salary of an experienced DevOps engineer shot up 15% to NIS 35,000 in the last six months.

Rapaport says that the moderate increases in developer salaries are due mainly to rigid policies adopted by many companies. "As someone who also recruits employees, I can say that I've seen some crazy demands. When I was looking for a front-end developer, for example, one candidate demanded a NIS 300,000 signing bonus. Of course, I refused. And I think many other companies also refuse that sort of thing, and maintain their pay policies. Our database provides real-time data to high-tech companies and also helps to stop the craziness in the industry."

A real-time payroll report

Rapaport worked for years as the Human Resources and Recruitment Manager at the Palo Alto Networks development center in Israel, and then at cyber startup SentinelOne. She recalls the feeling of uncertainty within the industry during this period about accepted salary levels. "I was never sure how much I would have to pay for new hires and exactly what employee benefits my competitors were giving in signing bonuses, advanced training funds, and meal vouchers," Rapaport says.

"Of course we had payroll reports, but these were usually only updated once every six months and they went through a few months of analysis before they were published, so the data were never sufficiently up-to-date. The information in those reports wasn't exactly tailored to high-tech companies in terms of roles and didn't give me relevant comparisons with other cyber startups, for example."

At the end of 2019, Rapaport left her job at SentinelOne and for half a year thought about what to do next. During one of her morning runs, she came up with the idea of establishing a start-up that would solve that shortage of information, and offer real-time updated salary data tailored to high-tech companies. She brought in Jonathan (Yoni) Wasserman, a developer who had worked with her at Palo Alto Networks (and who is also her husband), and the two formed Piplwize, which last week announced a name change to Compete.

Compete was born in May 2020 and currently works with 200 Israeli tech companies, among them Lemonade, Fiverr, WalkMe, Gong, Via Transportation, and Riskified. The companies pay for a monthly subscription and commit to providing their salary data to Compete. In return, they receive access to the full database, which is supposed to tell them the precise salaries paid to employees in various positions in their markets.

Last week, Compete announced it had raised $2.5 million in a seed funding round led by Aleph Venture Capital.

The start-up was founded at the height of the global pandemic, but this actually worked in its favor. The Covid-19 period generated a significant change in hiring practices for all industries, especially high-tech, with companies trying blindly to figure out what exactly their competitors were doing.

"Because companies started hiring remote workers, there were lots of questions. For example, if my company is located in Tel Aviv but the job applicant lives in Karmiel, should they be paid according to the median wage in northern Israel or the central region? Another question that came up at many companies was whether they needed to keep paying travel expenses for remote employees. Our database provides them with information about all this," says Rapaport.

Published by Globes, Israel business news - en.globes.co.il - on June 23, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

Yoni Wasserman and Amit Rapaport  credit: Compete website
Yoni Wasserman and Amit Rapaport credit: Compete website
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