Israeli companies outsourcing to Palestinians

Associated Press (AP)

HOD HASHARON, Israel (AP) — Within the pastel walls of a modest suburban office, Israeli high-tech workers have accomplished a feat that still eludes their political leaders: They have created a partnership with the Palestinians.

Israeli-Palestinian peace talks may be stalled, but that hasn't stopped a small but steady trickle of Israeli technology companies from seeking to work with people on the other side of the decades-old conflict.

Israeli CEOs say it's their way of bringing a little bit of peace to their troubled corner of the world. But the real reason they're hiring Palestinians, they acknowledge, is because it simply makes good business sense.

Israel's high-tech industry is among the country's crowning achievements. Israel has the most start-ups per capita in the world and has helped produce such game-changing innovations as instant messaging and Internet telephony. Many Israeli tech firms send work offshore to eastern Europe, India or China.

In the past three years, however, some have turned to Palestinian engineers and programmers. They are cheaper, ambitious, work in the same time zone, and — surprisingly to many Israelis — are remarkably similar to them.

"The cultural gap is much smaller than we would think," said Gai Anbar, chief executive of Comply, an Israeli start-up in this central Israeli town that develops software for global pharmaceutical companies like Merck and Teva.

At a previous job, he worked with engineers in India and eastern Europe, but found communication difficult. So in 2007, when he was looking to outsource work at his new start-up, he turned to Palestinian engineers.

He said they speak like Israelis do — they are direct and uninhibited. Today, Comply employs four Palestinians.

Palestinian engineers have also warmed up to the idea. "I doubt you would find a company who says, 'I am closed for business'" to Israelis, said Ala Alaeddin, chairman of the Palestinian Information Technology Association.

If there is hesitation, it's in marketing Israeli products under a Palestinian name to tap into larger Arab markets off-limits to them. "We're looking for a partnership ... not one side benefits from the other side," Alaeddin said.

"We have a window of opportunity to demonstrate our skills," said Murad Tahboub, CEO of Asal Technologies, a Palestinian outsourcing company that works with Comply and a handful of other Israeli-based companies. "The more people know about us ... the more comfortable they will be in doing business with us."

This is easier said than done. Comply's office in Hod Hasharon is only about 20 miles (30 kilometers) from Asal Technologies in the West Bank city of Ramallah — but they are worlds apart.

Israel's military prevents most Palestinians and Israelis from visiting each others' cities without special permits, citing security concerns.

A network of fences and concrete walls divides Israel from the West Bank, built by Israel earlier this decade amid a wave of Palestinian attacks. Travel restrictions make meetings between Israelis and Palestinians rare, and psychological barriers separate them as well.

Anbar says his company is proving skeptics wrong. One recent morning, Israeli project manager Gali Kahane chatted online in English with Palestinian programmer Mohammad Radad, sending him smiley emoticons while reviewing updates to the database software they are developing.

"At first it was a little bit strange" to work with Palestinians, but now it's like working with any other Israeli developer, Kahane said. "We are very curious what they think about us," but they never talk politics. "The only thing we talk about is when the bugs will be finished, and reaching our deadline together," she said.

Anbar says working with Palestinians is "doing something good for the world we are living in," but says the real reason he outsources to the West Bank is financial: He pays the outsourcing company about $4,000 a month per engineer, half the cost of outsourcing to an Israeli company.

While Indians or Chinese engineers cost even less, he said Palestinians are more loyal to his company than workers from distant countries — and have a dogged work ethic. Many gained experience working abroad, and stiff competition for coveted engineering jobs in the West Bank pushes those who have work to prove themselves, Tahboub said.

About 10 Israeli start-ups and international companies with centers in Israel have been outsourcing to the West Bank in the past three years, said Tova Scherr of Mercy Corps, an international aid group working to encourage these ventures. Scherr said visits by Israeli businessmen to Ramallah — with Israeli military permission — are becoming more common.

Networking giant Cisco says it was the first international corporation with research and development centers in Israel to begin outsourcing work to the West Bank. Israeli branches of Hewlett-Packard Co., Intel Corp. and Microsoft Corp. have followed Cisco's example and begun to outsource to the Palestinian territories this year, according to Mercy Corps.

Arranging meetings is "sometimes like crossing the Red Sea," said Cisco spokesman Gai Hetzroni.

Last year's initial meeting of Palestinian and Israeli engineers was meant to take place in the West Bank city of Jericho, but an Israeli military closure forced the workers to drag their laptops into a nearby Bedouin tent they rented for the day. Hetzroni said it was an "extraordinary meeting" that convinced the firm to go forward with the partnership.

Word of the West Bank's potential is spreading: Tahboub of Asal Technologies said he received about 20 inquiries this year from Israeli companies.

"We are doing great work for our country," Tahboub said, referring to the yet-to-be-born Palestinian state. "I believe the (technology) sector will become one of the pillars of the Palestinian economy."

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