A John Perry Contribution:


High-tech company aims to be first Israeli firm to hire Palestinian engineers


Forget the Far East, says CEO. Palestinian workers are good, cheap, close - and take shekels.

By Tali Heruti-Sover
As part of its never-ending search for talented manpower at reasonable prices, a high-tech company found itself opening an office in an unconventional location: Ramallah.

Asal CEO Murad Tahboub, left, with Mellanox CEO Eyal Waldman in Ramallah.

Photo by: Ofer Vaknin

Mellanox Technologies CEO Eyal Waldman said he had considered employing Palestinians for some time, for both economic and ideological reasons.

"I asked our team to look into it, but they were busy, and to tell the truth, there was a bit of fear," he recalled. "Only once they got an unequivocal order and a two-week deadline did the excuses end."

Mellanox, which develops server and computer storage hardware, has been working on its Site Ramallah project for a few months now. As part of the project, it is employing five Palestinian engineers, currently through an outsourcing company.

Mellanox had been looking for a source of high-quality, inexpensive manpower for several years. The company employs 500 workers in its offices in Yokneam, Tel Aviv and Tel Hai, but Israeli engineers are expensive. It considered the standard overseas options - hiring engineers in India, China or Eastern Europe - but rejected them due to the cost of setting up offices there.

At that point, Waldman decided to seriously investigate the Palestinian option. The company contacted Asal Technologies in Ramallah, a company that does international outsourcing, and it located 12 candidates for engineering jobs. The interviews were conducted via video, and Mellanox ultimately hired five people.

At that point, Mellanox started training its new Palestinian employees. But its CEO didn't actually set foot in Ramallah until he decided to conduct his interview with TheMarker there.

Ultimately, Mellanox wound up bringing Ramallah to Yokneam: Two of the five workers make the two-hour trip to the company's office there once every week or two.

Mellanox isn't the first Israeli high-tech company to turn to the not-so-far East for manpower. Cisco Israel also recently shifted some of its outsourcing to the Palestinian Authority.

Nevertheless, only an estimated 10 to 12 Israeli companies have yet taken this step. Most are start-ups with an average of five to eight employees, and all employ the Palestinians as outsourced workers.

But if Waldman's project succeeds, Mellanox's initiative will become one of the more interesting on the Israeli high-tech scene: The company soon hopes to employ 15 to 20 Palestinian engineers not as outsourced workers, but as regular employees, who will be eligible for options to boot.

During his first visit to Ramallah - though likely not his last - Waldman appeared happy to see myths shattered. The quiet, the cleanliness, the new hotels and the real estate development, along with his hosts' excellent English and the Italian restaurant that charged NIS 40 for salad lunches, all made the city feel very Western. Asal Technologies' office building was only a little less nice than comparable offices in Ramat Hahayal.

Still, there were a few small differences. Some of the female engineers wore veils, for one.

The Palestinian engineers studied either at overseas universities or at one of the PA's 11 universities and colleges, and colleagues described them as educated and professional. Since engineering is usually taught in English, they have excellent language skills. They also have relatively small families - only two or three children - and their spouses work. Plus, they are not overly political: Ramallah's high-tech employees live comfortably, and they want to preserve that.

Palestinian engineers earn between $1,000 and $2,000 a month. That is significantly less than what their Israeli counterparts take home, but still four times the average salary in the West Bank. For an Israeli employer, a Palestinian engineer costs half what his Israeli counterpart does, yet he lives in the same area and is still paid in shekels.

Plus, while there are 15,000 Palestinian engineers, there is work for only 2,000 of them. That lets employers choose the best of the best, and forces employees to produce their best work.

Nevertheless, the big political questions lie just under the surface.

"We're doing business here, not politics," said Asal CEO Murad Tahboub, 40, who was born in Kuwait. He has degrees from universities in Greece and Holland, and three children. His wife is an economist from Haifa. For vacations, his family goes to Turkey, and sometimes the Golan Heights.

Tahboub, who has started multiple companies, also owns the holding company Massar, one of the largest in the West Bank.

Obviously, his business could suffer greatly if there were another outbreak of violence with Israel, but Tahboub said repeatedly that he won't let the working relationship be damaged.

"We set up the company a decade ago, and we've already gone through no small number of trials, such as the Gaza war" of December 2008-January 2009, he said. "Sure, people talk about politics around the water cooler, but none of the 75 engineers has ever asked that we not place him to work with an Israeli."

And what if there's a third intifada?

"Nothing. We're completely committed to our partners. In terms of technology, we have back-ups, and in the worst-case scenario, we have offices in Arab countries, so a team from Ramallah could always be sent abroad in order to do its work."