Israeli tech firms expanded their workforces in Europe during war, study shows

Workers employed in Europe by Israeli tech firms has grown by an average 5% annually, while tech employment in Israel faces a slowdown, according to a new study

Israeli tech companies have continued to expand their operations in Europe and have hired more employees, despite growing anti-Israel sentiment in some of the continent’s countries ignited by the war with the Hamas terror group, according to a new study released on Tuesday by venture capital fund Planven and consulting firm KPMG.

Employment in Europe by Israeli tech firms has grown by an average of 5% annually over the past three years, even though the country has been facing difficulties and challenges in diplomatic relations over its conduct during the war with Hamas in Gaza, according to a study conducted jointly by Planven, KPMG and IT Hub Israel – the Israeli innovation hub of the European Institute of Innovation & Technology (EIT), an EU organization.

As of January 2025, a total of 1,686 Israeli tech companies operating in Europe employed 32,617 people, up from 30,936 in 2024 and 29,317 in 2023, according to the report. Israeli companies have been increasing their workforce in Europe at a time when tech employment in the country slowed and essentially flatlined, breaking a decade-long pattern of consistent expansion in the number of employees.

“The data shows that there is a constant growth of Israeli startups that are deepening their long-term presence in Europe, even during hard times like the war, when we faced so much criticism from Europe – people are still choosing to double down,״ Elle Taitou Spruch, investor at the pan-European VC Planven, told The Times of Israel.

The UK led the list with 704 Israeli tech firms in Europe, and a workforce of 6,724 employees, followed by Germany with 415 companies and 2,131 workers, and Ukraine with 312 enterprises employing 2,598 people. In France, 279 Israeli tech businesses are employing 1,750 workers, in Poland, 257 Israeli firms have a workforce of 1,734 people, and in Spain, 356 companies are the employers of 1,415 workers.

During the two years of war with Hamas, European countries have ramped up pressure on Israel over alleged war crimes in Gaza as Israeli forces fought Hamas in the wake of the October 7, 2023, Hamas invasion of southern Israel that killed some 1,200 people and saw another 251 taken hostage. Israel denies any abuses and blames Hamas for embedding itself in the civilian population.

The war has seen widespread anger at Israel in much of Europe, with calls for sanctions and downgraded trade ties alongside arms embargoes already going into effect.

The European Commission threatened to suspend part of a trade arrangement affecting about 5.8 billion euros ($6.78 billion) of Israeli exports to the European Union, its largest trading partner. Earlier this year, Prime Minister Benjamin Netanyahu cautioned that Israel was facing increasing isolation and warned that it might be required to become a self-reliant economy.

“Despite geopolitical challenges and the sentiment we have seen over the past two years, there is a natural synergy between Israel’s strengths in AI, cybersecurity, robotics, and defense and the structure of leading European economies such as Germany, France, and the UK, as well as the EU’s new priorities, particularly in internal and external security,” said Dina Pasca-Raz, Partner and Head of Technology at KPMG.

R&D departments account for about 40% of the workforce of European engineers and scientists employed by Israeli tech companies in Europe, according to the study. Sales and customer service departments constitute the second-largest workforce component, as Israeli tech firms expand their global footprint and seek to boost revenue growth.

“There are some great R&D people, and the cost will probably be less expensive than in Israel or the United States,” Taitou Spruch remarked. “But it’s not only the cost – we can also see that there is less churn of employees because you have less competition in Europe when it comes to tech.”

In countries in Eastern Europe, including Lithuania, Bulgaria, and Romania, Israeli companies are establishing large service centers employing hundreds of workers, thereby creating significant employment clusters, according to the study.

While the US is often the preferred market for expansion for Israeli tech firms, Europe “has become a strategic destination, offering access to a major market, reliable regulation, and advanced industrial partners that enable responsible growth,” said Taitou Spruch.

For the purpose of the study, an Israeli tech company was defined as a public or private enterprise with an Israeli headquarters and at least 10% of the workforce based in Israel. Among Israel’s largest tech employers with R&D hubs in Europe are Playtika, Wix, Check Point Software, Verint, CyberArk and NICE.

“The nature of this activity and the profile of these companies differ from the familiar model of a young startup initially targeting the US market,” said Pasca-Raz. “A clear majority, or around 60% of Israeli companies operating in Europe, are mature businesses (8-12 years old) with proven models and senior executives based in the region.”

Taitou Spruch noted that there is a trend of “early-growth companies expanding in Europe with greater readiness than ever.”

“The alignment between Israel’s strengths in AI, cybersecurity, and health and Europe’s priorities is creating meaningful opportunities, and we expect Israeli activity on the continent to continue to accelerate in the years ahead,” she added.