The Information Technology Landscape in Israel
Analysis: Impacts on the IT Business
Israel is an
attractive place to do business simply for it's innovation. As a world
leader in the production of highly educated, military trained engineers, Israel
is know for its resources of human capital. Fortunately, the government has
contributed significantly to encourage this innovation and enterprise. The
unique blend of technological know-how and government support has enabled Israel
to emerge as a world leader in technology.
A global technology company considering doing business in Israel should focus on Israel's "specialties" which include the production of software and telecommunications products and the telecommunications industry. Last year alone, Israeli high-tech start-ups attracted $3.2 billion in mostly foreign capital investment. There is definitely an opportunity to invest in Israel.
Software:
Israel's software industry is based on mainly small privately owned companies. Therefore, it has not been easy to establish significant brand name recognition. Instead most leading software houses have grown by concentrating on developing niche products. "However, because of the explosion of small software exporters it is rather difficult to establish ties with serious oversees customers and distributors". (47) Herein lies a definite opportunity for oversees companies.
Telecommunications:
Israel's recent deregulation and liberalization of its telecommunications market has successfully opened its markets to competitors. Since the introduction of competition, new services are being offered to enhance the IT industry. New infrastructure such as fibre optic and other optic cable lines have increased the transmission potential of data and information. Israel is also about to improve its satellite capability with the launch of its second device in 2002 in order to provide more services to a greater population.
Legal:
Until recently, there were very few legal vehicles in place governing the Information Technology industry in Israel. Israel has recently revised a number of laws to protect new software, hardware and other IT related innovations. Proper legal vehicles not only encourage development within the nations, but also creates a trustworthy environment for investors.
Investment:
After a recent divestment in the Industry, recent history has seen a reverse in a steep decline of Venture Capital funds since late 2000. This recent increase in capital funds forecasts a positive outlook for the future of the IT industry in Israel.
Not only is the recent trend in Venture Capital funds an important impact it is also necessary to reiterated that the IT industry receives substantial amounts of support from both national government funds and private investor groups and organizations. This will continue to encourage the nation to innovate and develop products, services and ideas. People with ideas have a number of sources to turn to for funding assistance, which, as stated throughout this paper, has lead to the creation of a number of publicly traded and successful companies on NASDAQ, only second to the United States.
