Palestinian Tech Firms Fueled by Israel, Google, Cisco, Intel

Peace negotiations between Israel and the Palestinian Authority have ground to a near-halt again, but the IT departments of the two countries are getting along just fine. Israeli high-tech firms are increasingly outsourcing work to the West Bank, while the State Department, Google and Cisco have all recently announced investments in Palestine's technical infrastructure.

The stereotype of Israeli-Arab relations says little trade takes place between Israel and its Arab neighbors. In fact, there is a long history of business deals between firms on both sides of the border. Microsoft Israel outsources their technical support to Egyptian call centers filled with Hebrew-speaking Egyptians. Israeli software firms regularly operate in the United Arab Emirates, Qatar and Bahrain both directly and through third-party intermediaries.

A recent Associated Press report covered the growing trend of Israeli high-tech firms outsourcing work to Palestinians. In this case, the Palestinian Authority fulfills the role for Israel that India or Mexico performs for the United States--offering a talented, technically proficient labor market that will work for less pay. The AP spoke to businessmen and non-governmental representatives on each side:

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.

Although West Bank urban centers such as Ramallah and Nablus are located within an hour's drive of Tel Aviv and even closer to Jerusalem, travel is virtually impossible for both Israeli and Palestinian civilians. A complicated permit system largely restricts Palestinians from traveling into Israel or Israeli West Bank settlements, while Israeli citizens are prohibited from entering areas of the West Bank under Palestinian Authority control. Instead, Israeli and Palestinian businesspeople communicate via Skype, instant message and email.

For Palestinians, Israel is by far their largest export market and business partner. Israelis similarly benefit from the geographic proximity between Israel and the West Bank. While bigotry persists on both sides, the almighty dollar is supreme in the region. For Israelis and Palestinians willing to cooperate, the financial rewards can be considerable.

Meanwhile, foreign investors and NGOs are pumping cash into the Palestinian Authority's nascent tech industry.

The State Department announced on December 17 the launch of the Palestine Information Communications Technology Capacity Building Initiative (PITI). PITI is a collaborative project between the State Department, USAID, Partners for a New Beginning, Cisco, Google, HP, Intel, Medcor and Salesforce.com. The project is designed to “enhance Palestinian economic capacity in the information communications technology (ICT) sector by facilitating partnerships between Palestinian ICT companies and U.S. multinational companies, particularly those with operations in the West Bank, Gaza, Israel, Jordan, and the broader Middle East.”

Included in the current round of aid:

• Cisco will invest $5 million in a venture capital fund for Palestinian startups.

• Google is investing $2 million which will include contributions to the same VC fund and to the local operations of NGO Mercy Corps.

• A long term commitment by HP to expanding business operations in Palestine and local collaborations with USAID.

• Intel will expand cooperation with Palestinian IT/software firm Asal Technologies.

Palestinian blog Bazinga uncovered a Facebook status message by Google's Gisele Hiscock announcing the tech giant's investment in the Palestinian Authority.

[Image of Palestinian Internet cafe via Flickr user The Advocacy Project]

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