Workers in Israel’s dynamic tech sector are joining the war effort. That’s affecting the industry, and the economy.

Thousands of Israelis and Palestinians have lost their lives since Hamas gunmen staged their surprise raid on Oct. 7. In the wake of the attack, Israel’s defense forces have called up more than 350,000 reservists, about 4% of the country’s population.

Israel’s booming tech industry could be affected more than most, given that so many younger Israelis work in the sector. Issie Lapowsky, a contributing writer for Fast Company, recently interviewed several of them, including a tech lawyer named Yitzy Hammer. The following is an edited transcript of her conversation with Marketplace’s Lily Jamali.

Issie Lapowsky: On Oct. 7, he was, like a lot of people, getting ready to celebrate the end of the Jewish High Holidays and celebrate Sabbath. He woke up to what sounded like bombs going off. And it wasn’t until he was on his way to synagogue that he realized that Hamas had invaded, and obviously returned home. He spent some of that day in his home with his children, sheltering in a bomb shelter. And by Sunday, the very next day, because he’s a reservist with the Israeli Defense Forces, he was headed about an hour south to a military base on the Gaza border, where he’s now spending 12 hours a day, working out of a fortified caravan to serve as a legal adviser to the Israeli Defense Forces.

Lily Jamali: And his day job is actually as a lawyer as well, but he usually works in the tech sector, working with emerging companies in the tech sector in Israel. I wonder if you can give us a sense of the scale of the tech industry in Israel. How big is it?

Lapowsky: The tech sector in Israel is a huge part of the economy. It accounts for about one-fifth of Israel’s annual [gross domestic product] and about 10% of the labor force. So when I talked to Yitzy, he said, “Pretty much everybody here with me here on base is connected to the tech industry in one way or another.”

Jamali: And what kinds of companies are we talking about? Are these mostly big U.S. tech companies with outposts in Israel, or are there a lot of homegrown tech companies in Israel?

Lapowsky: Israel is nicknamed the Startup Nation for a reason. It has a huge number of homegrown tech companies. And then on top of those companies, you have pretty much all of the major U.S. tech companies, whether it’s Meta or Google or Amazon, that have outposts or headquarters in Israel. So we’re talking about many thousands of tech employees working in the country.

Jamali: And people like Yitzy Hammer, he’s just one of many people who have been brought into this conflict to fight on Israel’s behalf. I’m wondering if you have a sense already of how the tech sector has been impacted?

Lapowsky: It’s clearly going to have some impact. There’s going to be a disruption, there already has been a disruption. I spoke with a number of [company] founders, who all said, “Work is the last thing on my mind right now. My only priority right now is, as far as work is concerned, is the safety of my employees and the safety of their families.” A lot of the founders I spoke to do have counterparts or colleagues in the U.S. and other countries. They talked about how those colleagues are really stepping up to share some of the load. But there’s obviously going to be, as is always the case in war, economic disruption.

Jamali: And given that so many major U.S. tech companies have significant outposts in Israel, I wonder what are we hearing from tech leaders based here in the U.S.? How are they addressing the crisis?

Lapowsky: So a number of them have spoken out publicly. Sundar Pichai of Google said we’ve made contact with more than 2,000 Google employees in Israel, that they’ve made contact with all of them and that prioritizing their safety is No. 1. Mark Zuckerberg at Meta said something to that effect. I think that sort of has been in these early weeks, the sort of first priority is just ensuring that people are safe, that their human needs are met. And that whatever needs to happen in terms of productivity is kind of back-burnered.

One thing that I think has sort of manifested since my reporting, which was just in the days after the initial attacks, since the counterattacks have begun in Gaza, I think there’s also been a pretty widespread, or at least burgeoning movement of support among tech workers in support of Palestinian civilians, who are now largely displaced and experiencing really catastrophic levels of violence. And so I think we’re seeing different sides of this tech industry in the U.S. rallying around folks on both sides of this war.

Jamali: It might seem that when we’re talking about the Israeli tech sector, that there would be just kind of unified support for one side in this conflict. And I wonder if that’s been what you’ve seen as you’ve been interviewing people, talking to people within the sector. Are there people also doing outreach to Palestinians that are having a very difficult and very trying time right now?

Lapowsky: Yeah, it is an important point. I mean, I would say, I’ve already seen some activism, for instance, from Amazon tech workers speaking out about Amazon’s contracts with the Israeli military. So I think you are seeing areas where particularly worker-led movements are trying to speak up for the rights of Palestinian civilians who are caught in the midst of this conflict.

More on this

Here’s a piece from TechCrunch on how Israel became a tech hub in the first place.

Israel’s tech industry was already under pressure before this month. Prime Minister Benjamin Netanyahu’s controversial plan to overhaul the nation’s judicial system prompted some tech players to tread carefully. Earlier this year, CNN profiled a company that moved funds and workers out of the country and cited a survey that found some tech companies laid off staff there.

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