Israeli technology companies expanded their European payrolls throughout the war period, adding staff across key hubs even as hiring at home slowed sharply. A new study shows the continent has become a stabilizing base for Israeli startups, underscoring a quiet shift in how the sector spreads risk during prolonged uncertainty.
The numbers surprised even some investors.
Europe hiring rises as domestic growth stalls
Employment by Israeli tech firms in Europe has grown by an average of 5% a year over the past three years, according to a joint study released Tuesday by Planven and KPMG, in collaboration with IT Hub Israel, part of the European Institute of Innovation & Technology.
As of January 2025, 1,686 Israeli tech companies operating in Europe employed 32,617 people. That figure is up from 30,936 in 2024 and 29,317 in 2023, even as tech hiring inside Israel flattened after more than a decade of steady growth.
The contrast is sharp. While European headcount kept climbing, Israel’s domestic tech workforce faced a slowdown tied to investor caution, reserve military service call-ups, and prolonged uncertainty from the war with Hamas.
In other words, growth didn’t stop. It shifted.
War did not reverse European expansion plans
The study covers a period marked by diplomatic strain and heightened criticism of Israel across parts of Europe following the conflict in Gaza. Still, Israeli companies kept building teams across the continent.
Elle Taitou Spruch, an investor at Planven, said the data reflects long-term thinking rather than short-term reaction.
“Even during hard times like the war, when criticism from Europe was intense, founders kept doubling down on Europe,” she said. “People are making commitments that go beyond one crisis.”
That commitment shows up in hiring patterns. Instead of pausing recruitment, many firms added sales, engineering, and customer-support staff close to European clients.
For startups selling enterprise software, cybersecurity tools, and fintech platforms, proximity matters. Time zones matter. And hiring locally often smooths market entry more than flying teams back and forth.
The UK remains the primary anchor
The United Kingdom leads Europe as the top destination for Israeli tech employers. The study found 704 Israeli tech firms operating there, more than in any other European country.
London’s pull remains strong. Its financial sector, legal framework, and investor networks continue to attract Israeli startups, especially those targeting global markets.
Germany, France, and the Netherlands followed, forming a second tier of hubs where Israeli firms cluster around enterprise customers and research centers.
Here’s how employment has trended:
| Year | Employees in Europe |
|---|---|
| 2023 | 29,317 |
| 2024 | 30,936 |
| 2025 | 32,617 |
The steady climb suggests companies are not treating Europe as a temporary fallback. They’re embedding themselves.
Why Europe, and why now
Several forces are pushing Israeli tech firms westward.
First, customer access. Many European clients prefer local account teams, local language support, and on-the-ground presence, especially in regulated industries like finance and health care.
Second, workforce availability. Europe offers deep pools of technical talent, often at costs lower than Silicon Valley and with less volatility than Israel’s labor market during wartime.
Third, diversification. By spreading teams across borders, companies reduce operational risk tied to any single location.
Executives interviewed for the study pointed to practical considerations rather than politics. Offices opened to serve customers. Hiring followed revenue.
In many cases, European teams now handle functions that once sat exclusively in Tel Aviv or Herzliya.
Domestic slowdown breaks a long trend
Inside Israel, tech employment has essentially plateaued, ending a run of near-constant expansion that lasted more than ten years.
The reasons are layered. Venture funding tightened globally. Military reserve duty pulled thousands of employees away from startups for weeks or months. Uncertainty delayed hiring decisions.
The study does not suggest a collapse, but it does mark a pause.
That pause has real implications. Tech has been Israel’s growth engine, driving exports, tax revenue, and wage growth. A flat employment curve changes the tone of boardroom discussions and government forecasts alike.
Still, the European expansion acts as a counterweight, keeping companies growing overall even if domestic hiring slows.
What roles are being added in Europe
The hiring surge is not uniform across functions. Companies are selective.
Roles most commonly added include:
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Sales and business development teams near major clients
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Customer success and technical support staff
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Engineering groups tied to product localization and compliance
Core research and early-stage development still tend to stay in Israel, according to the report. Europe, by contrast, is where firms scale.
This split reflects a broader maturity in the ecosystem. Israeli startups are no longer just building products. They’re running international operations.
Anti-Israel sentiment did not freeze hiring
One of the study’s more striking findings is what did not happen.
Despite protests, public criticism, and political tension in parts of Europe, companies reported no widespread pullback in hiring plans tied directly to sentiment around the war.
Recruitment challenges existed in some cities, particularly where protests were frequent. But they were described as manageable, not decisive.
Investors say European labor markets largely separated corporate hiring from geopolitical debates, especially in sectors hungry for talent.
That separation helped companies keep growing quietly while headlines suggested rising hostility.
Investors see a structural shift
Backers interviewed for the study say Europe’s role in Israeli tech has changed permanently.
What began years ago as sales outposts has evolved into full operational centers. Some firms now employ more people in Europe than in Israel, a reversal that would have been rare a decade ago.
This does not signal an exit from Israel. Rather, it shows a more distributed model, one designed to absorb shocks.
As one executive put it, “Europe gives us breathing room.”
What comes next
Looking ahead, analysts expect European hiring to continue, though perhaps at a slower pace if global tech markets soften further.
Much depends on funding conditions, the duration of regional conflict, and how quickly domestic hiring recovers in Israel.
For now, the picture is clear. Israeli tech firms did not retreat during wartime. They reorganized.
Europe, once a secondary market, has become a central pillar in how the sector grows, hires, and plans for the long haul.
