Israel, dubbed the Startup Nation, is known for being at the forefront of innovation and modern technology. Home to nearly 100 unicorns and the highest number of engineers per capita, it’s no wonder over 400 multinational corporations have chosen Israel as their R&D hub.
With the US economy slowdown impacting business, the global R&D outsourcing market growing over 8% this year, and software development expected to grow by more than 70%, outsourcing development teams is a solution worth exploring.
When choosing to venture down this path, which strategic considerations must be accounted for? What kind of management tactics are required? And what kind of dilemmas can you expect to encounter?
Compete conducted an expert panel on the matter with top-notch panelists:
On Freund, Co-Founder, and CEO at Wilco, Leah Cowperthwaite, Manager of Growth Partners at Globalization Partners, Gilles Gade, Co-founder and CEO at Crossriver and Natalie Ledbetter, Head of People at boldstart ventures as moderator.
Build or Buy?
It’s naive to assume you will immediately attract the best talent when entering a new geography.
The 2 different approaches you can take are:
Buy – make an offer to a team that already knows how to work together. The downside of this option is the possibility of cultural clashes.
Build – find an anchor that can serve as a talent magnet to bring in additional people. Ideally you want someone who has done it before. Consider that building the core team could take months.
Sell the Mission
Established corporations that have flourished in the past decade may be the first choice for many talents. What strategy should a startup deploy in order to have a fighting chance at winning these talents? “Sell a mission and engender passion in people” says Gilles Gade, Founder & CEO of Cross River Bank. “This will give them a role in the ecosystem and instill the belief that together you can change the world”, he continues.
Doubling down on this effort can allow your company to hire and retain key talents that will help build the growth culture you want and need.
Don’t Rush, Get it Right
The factor that has the greatest impact for determining timeframe is getting competitive offers out quickly. Once you’ve identified the candidates you want to hire, having them review the employment contract is what typically takes the longest amount of time.
Speed to market is important, but the decision-making process shouldn’t be rushed. “You’re choosing business partners that are going to be representing your people and making the organization move forward… You want them in your corner.” says Leah Cowperthwaite, Manager of Growth Partners at Globalization Partners.
Get the evaluation process right the first time.
Cheap Work isn’t Cost Effective
Early-stage tech companies spend approximately 90% of their budget on headcount. The department that greatly contributes to this figure is Engineering. Remaining efficient and cost effective is key, and paying cheaply will most likely result in poor work quality.
If you are looking to expand into international teams, you must first decide on the team structure and the communication between them, taking into consideration of course the relevant domain for which you are hiring.
“Know your market and play to its strength”, says On Freund, Co-founder & CEO of Wilco. “Understanding that will dictate the geography you should be searching in and the type of talent you wish to attract”.
Don’t Mirror Comp & Ben Policies
Copying the same compensation & benefits package you are offering in your own country and pasting it into a new geography can set you up for failure. Learn as much as you can with an expert on how to adapt your business initiative.
Cost analysis is also very important. There can be many little cultural norms that can throw you off. Understand the pay range and make sure your benefits are in line with the expectations within that region.
Stability Comes at a Cost
Israeli R&D talents may be an expensive hire, but conflicts such as the war in Ukraine showed us how instability of a core team such as development can cause extreme business disruption.
Israel is the Startup Nation, they have an immense talent pool, and one of the highest computer literacy rates in the world. If your company has margins and a product or service in demand, it’s justifiable to pay a premium for the ability to support your customer base with a sound mind.
Watch Out for Big Egos
You want a level playing field that allows people to communicate and work as a family. By selecting individuals that fit well with the core, people can feel more loyal and secure in their jobs and focus on personal and professional growth. Look for people who want a career, not a job, and remember that talent comes before skills. The latter can be acquired.
Ask Tough Questions
There are many cultural differences between Americans and Israelis, and real conflicts are surfaced differently. To really understand potential candidates, ask about past conflicts and how they were resolved. This is a great method that can help you spot red flags, which is something you definitely want to look into.
A Few Final Tips
Israel is a small market where just about anyone can have direct ties to your person of interest. Find the right person to connect you.
Don’t confuse conflict with a natural form of communication. Heated discussions are common among Israelis.
Israelis can be skeptical and cynical. If you want to break the ice and hook them, get personal.
Hire people that are on the edges of your organizational culture in order to expand it.
It’s hard to build culture remotely. Send someone who embodies the culture of your company for the first few months.
The discussion was closed with words by Gilles Gade, Crossriver Co-founder and CEO, so inspiring we felt the need to close with them here too, “Don’t hesitate to dream and demonstrate your capacity for passion… Humility is key… it is the ability to aggrandize others. Make everyone around you better.”
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