Israeli defense startups recruit laid-off hi-tech workers as AI reshapes industry

Israeli hi-tech companies are shedding workers as artificial intelligence automates tasks and accelerates development, but many of those employees are quickly finding new jobs in one of the country's fastest-growing sectors: defense technology.

A new survey published this week by Israeli recruiting firm GotFriends found that job openings at Israeli defense-tech companies increased by 20% in the first half of 2026 compared to the same period last year, while salaries for those positions rose by about 8%.

The hiring boom reflects the rapid expansion of Israel's defense-tech industry, fueled by wartime innovation, strong investor interest, and direct support from the Ministry of Defense.

As hundreds of new defense startups emerge, companies are racing to recruit experienced engineers, cybersecurity specialists, and other highly skilled workers leaving the broader hi-tech sector.

According to the survey, companies expanding their workforces include Kela Technologies, Xtend, Airis Labs, D-Fend Solutions and Axon Vision.

Although most of these firms were founded only within the past few years, they have already established themselves as suppliers to the IDF and other allied military, security and police organizations, driving rapid growth and increasing demand for talent.

The hiring surge is part of a broader global trend. Companies developing defense technologies have raised $12.3 billion worldwide so far in 2026, including $846 million in Israel.

The Ministry of Defense has played a direct role in that growth by purchasing products and services from more than 800 startups established in recent years.

Those early contracts help young companies generate revenue while building relationships with military personnel who can provide real-time operational feedback, enabling startups to refine their products and make them more attractive to customers in Israel and abroad.

The report said this process is already positioning Israeli companies as global leaders in autonomous systems, drones, intelligence and air defense, drawing strong interest from military, security and law enforcement agencies in dozens of countries.

As a result, the industry's hiring spree is expected to continue. According to the report, companies are seeking not only software engineers, but also cybersecurity researchers, reverse engineering experts and threat intelligence specialists.

Engineers with the skills to build and integrate the technologies being developed are also in high demand, particularly in robotics and autonomous air, land and maritime systems.

The survey said salaries for these positions range from NIS 44,000 to NIS 50,000 (roughly $13,300 to $15,200) per month, compared with Israel's average monthly salary of NIS 12,000 to NIS 14,500 (about $3,600 to $4,400).

However, many employees say they are motivated by more than competitive pay. Many of the new companies were founded by IDF reservists and veterans of Israel's recent wars who sought to develop solutions to challenges they encountered on the battlefield, including gaps in available equipment.

Their goal is to apply lessons learned in combat while working closely with troops currently operating in the field to develop new technologies quickly and at scale, helping strengthen the security of Israel and its allies.