ICT- Information and Communication Technology
Israel: ICT Production |
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This section covers key statistics about ICT production. The top ICT industry types are Software and Telecommunications.  Source: Dun and Bradstreet Top 100 Israeli firms by 1999 sales. All high-technology
firms (28 in all) from among the 100[19].
 Young Israeli High-Tech firms: Distribution of 249 Firms by Type.
Source: Israel Venture Capital Online (IVC) www.ivc-online.com, March, 2001. Note: These are young firms with products in R&D or Beta testing. Enterprise software The three largest Israeli software companies are Comverse, Amdocs and Mercury. Comverse, Amdocs and Mercury were established in the 1980s and in 2001 accounted for about $3.4 billion in sales revenues. There was a boom in small enterprise/software companies from 1995 to 2001 as e-commerce and telecommunications companies required enterprise management solutions. The economic downturn after 2000 led to consolidation, but the big three still stands. The sales and operations are largely driven by American and European markets and are listed in NASDAQ (American stock exchange). Information security Israeli information security sector consists of several older companies and fledgling start-ups. The evolution of information security in Israel owes much to both the military and academia. The military organization was innovator in transferring information securely and in real time. But classified nature of technology prevented direct commercialization. Instead it was training, ideas and team relationships that were transferred to tackle civilian applications. Software industry is larger than many industries that traditionally are examined thoroughly on a current basis in establishment surveys and covered in production and price indices [21].  Israel has also emerged as a major software design center. It is significant to note that the Israeli and Indian software industry started off at the same time, but the market value of Israel’s software listed on NASDAQ is $50 billion today. Software R&D centers in Israel include multinational setups such as Microsoft, IBM and Digital. Many Israeli companies are operating in the US market through joint ventures, OEM and marketing agreements also [23].
Hardware Manufacturing Israel’s manufacturing sector is the most diversified and technologically advanced of any country in the Middle East. Government investment in defense industry primarily in research and development is main driver. A skilled and educated workforce, continually renewed by immigration, also aids manufacturing. Israel’s industrial output is among the fastest growing in the world. Until the 1970s manufacturing was concentrated on traditional branches such as food processing, textiles, chemicals, pharmaceuticals, and metal products. Since then Israel has moved into high-technology fields such as medical electronics, telecommunications, computer hardware and software, and diamond polishing. Electronic equipment, chemical products, textiles, transport equipment, and machinery are among Israel’s biggest export earners. The Tel Aviv-Yafo metropolitan area and Haifa serve as the primary manufacturing centers. ServicesThe service sector remains the largest in terms of GDP and percentage of labor force it employs. In the late 1990s it contributed about 60 percent of GDP and employed 69 percent of Israel’s workforce. Immigration stimulates growth of primary public services such as education, health, and welfare. Business and financial services, wholesale and retail trade, and transportation, storage, and communication services are also relevant [22]. High-Tech Exports Israel's first high-tech exports were produced by defense industry/contractors such as the Israel Aircraft Industries and Rafael. Demand for "proven in battle" products from Israel led to an export industry of defense-related products. It is still a relatively large percentage of high-tech exports. Studies have shown that R&D-intensive, high-tech companies have been a major factor in the growth of exports over the years, especially in electronics, optics, electro-optics, lasers, computer-based equipment, robotics and aeronautics. In the last two decades Israeli developments have contributed significantly to the following information technology and telecommunications industries [24]:
Israel is a destination for offshore outsourcing especially for software design and telecom R&D. The shock of economic downturn in USA impacted Israel industry also, as there were stakeholders from US companies. Israel is known as global player for R&D especially for software and defense related products. IT Financing There is FDI involved and IBM, Motorola and Microsoft are poster children of the FDI inflow. The venture capital community is active. The local stock exchange is active in technology IPO's but the ultimate goal is to get listed in US NASDAQ. The government provides R&D funding as mentioned in ICT usage section. The high-tech industry has the most promising growth potential in the Israeli economy. In 2003, 48% of Israeli exports were high-tech related. The industry is characterized by three phenomena [45]:
Established in March 1993 to encourage high-tech industries in both countries to engage in joint projects; foster scientific exchanges between universities and research institutions; promote development of agricultural and environmental technologies and assist in the adaptation of military technology to civilian production.
In 1993, the United States and Israel each committed $5 million annually for three years, for a total of $30 million. The American contribution was made without requiring additional appropriations. Approximately half of the U.S. money comes from the Department of Commerce, with the other half coming from the Departments of Agriculture, Energy, Defense, State, Health and Human Services, and the Environmental Protection Agency. The Commission is co-chaired by the U.S. Secretary of Commerce and Israel's Minister of Industry and Trade. The Commission includes representatives from U.S. and Israeli government agencies and ministries (the Environmental Protection Agency, the Departments of Agriculture, Energy, Health and Human Services, State and Defense and their counterpart Israeli Ministries). The Commission also has a joint high-level advisory panel comprising private sector representatives from both countries, including leaders from academia and industry. The commission meets twice a year, once in the United States and once in Israel. It is administered on a day-to-day basis by the Commission's Executive Director at the U.S. Commerce Department's Technology Administration. The Commission has established the U.S.-Israel Science and Technology Foundation, a nongovernmental organization to disburse grants funded jointly by the U.S. and Israeli governments and following a single set of rules and regulations—agreed upon by both countries—for making grants [47].
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