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Human Resources in Israeli Hi-Tech

There is confusion between three types of companies in the high-tech market: placement companies, manpower companies and outsourcing companies.

To settle this once and for all, we wrote the following blog that makes order in a mess.

In the past, when a worker started working for a company, he enjoyed all the conditions that the company gave - tenure, salary, accompanying conditions and pension.

The market has changed and improved, and the methods of employment have changed with accordingly. Today, for example, not everyone who works for a company is indeed an employee of that company - he may be an outsourced project manager or a manpower worker. This great variation creates quite a bit of confusion among job seekers, and this article will try to resolve this confusion once and for all.

How many of you can honestly say that they know the difference between a placement company, a manpower company, and an outsourcing company? Quite a few job seekers do not really know the difference between the three, or even know that there is such a difference. In practice, these three companies are very different from each other, and the only connection between them is that all three are engaged in recruitment, each in its own special way. Before we explain the differences between the companies, it is worth explaining why two of them - placement companies and outsourcing companies -

In the mid-1990s, the high-tech market began to flourish in Israel. Due to its rapid growth, several processes took place simultaneously - there was a great demand for professional workers, and due to that demand, salaries of high-tech workers surged. The surge in salaries meant that many employees (as well as future students) were eyeing the high-tech industry, and universities and colleges were quick to offer training courses that would create new high-tech workers into an insatiable market. Suddenly, high-tech companies were forced to deal with recruiting, interviewing and locating highly skilled workers, and the need arose to establish companies whose purpose was to locate and classify these workers, with a great wealth of employees. Some of which are more suitable, some are less suitable, some have excellent training, and some have less good training. Some of the companies recruited employees as full-time employees, and some companies sought a cheaper solution, which would allow them to hire workers, and on the other hand, would not impose heavy labor costs on them. This different need led to three different recruitment agencies: placement companies, manpower companies and outsourcing companies.

Placement agencies

The placement companies were established in Israel in the late 1980s, and they work mainly with technological industries. Among these industries are the high-tech, biotech, cleantech and infrastructure industries.

Placement companies have two big advantages - from the high-tech companies, they can sort, quickly and professionally, a huge number of candidates, and therefore can find a high-tech company almost every type of employee in a short time and effectively. On the job seekers side, the advantage of the placement companies is that they are in business contact with most of the high-tech companies in Israel, and therefore can help an employee looking for work, reach a very large variety of companies at the same time.

How it happens: Once the employee sends his resume to the placement company, placement consultants review the resume, check the qualifications of the job seeker, his experience and education, and check for the jobs he is suitable for. His candidacy is submitted to these positions, and high-tech companies interested invite him to an interview (or a series of job interviews). If he passes the job interview, the high-tech company will sign a contract with him.

Who works: From the moment the contract is signed, the employee starts working for the high-tech company itself. He becomes an employee, from the first moment, and will enjoy all the conditions that the company's employees receive.

Who pays wages: The employee's salary will be paid by the high-tech company, in full. No amount of money will be deducted from the employee's salary, to the placement company. In fact, the placement company leaves the picture once a contract of employment has been signed between the employee and the high-tech company.

Promotion: As is customary in a high-tech company, there is no restriction on the promotion of the employee.

The advantage to the job seeker: The service is granted free of charge, the variety of high-tech companies offered to the jobseeker is enormous, and some of the companies find it difficult to arrive independently. Most placement companies have been able to incorporate added values ​​in the service they provide to the job seeker, including rewriting CVs, professional advice throughout the recruitment process, advice on salary issues, recommendation of the candidate in the human resources of the high-tech company and expediting the recruitment process.

The disadvantage: When applying to the placement company, quite a few high-tech companies tend to toughen the job requirements, assuming that the placement company is able to find better quality employees, and therefore there is no point in compromising the identity of these employees. This feature may pose some difficulty in finding a job with the placement company, among "weaker" employees.

Manpower companies (or individuals)

Anyone who has chosen a job knows that there is a tendency to confuse it with manpower companies, and quite a few high-tech employees tend to think, mistakenly, that the way placement companies and manpower companies work is the same. First, most of the work of the manpower agencies deals with workers who are not from the high-tech industry. Companies usually engageunskilled workers such as cleaners, security guards, temporary workers and short-time replacements, as well as professional workers (administration, marketing, sales, etc.). The advantage of manpower agencies, like placement companies, lies in the fact that they can provide a large variety of workers in a short time, and are also able to provide a variety of jobs to the job seeker quickly. In the past, manpower companies dealt mainly with professions where a large part of them did not require experience or training, but today, a part of the manpower companies has a department that also deals with high-tech, which is source of confusion between them and the placement companies.

How it happens: Once a person is placed in the manpower company's database, he will be offered a wide range of jobs that are suitable for his experience and education. For specific jobs (for example, cleaning jobs), the job seeker will not have to undergo a job interview at the company where he will be placed, unlike for other positions (administration, sales, marketing, high-tech etc.).

An employee of a manpower company is employed, in fact, by a "two-headed monster". On the one hand, he will work in the company where he was accepted, and where, in his daily activities, he will be subject to local management. On the other hand, he is considered an employee of the manpower company and not of the company in which he works, and as such, he will not enjoy the benefits that ordinary employees enjoy. In this context, it should be noted that in 2000, the government tried to pass Amendment 12 (a) to the Employment of Workers by Manpower Contractors Law, which stipulated that a worker who was employed for nine months with the same employer would become a permanent employee. The amendment to the law came into force only in January 2008, but it does not apply to computer workers (Section 13A), which we will reach later. In spite of what has been said so far, in terms of high-tech, the employee may be a company employee from the first day of work, even if he came to work through a manpower company, but it is not binding (in fact some of the companies employ a separate subsidiary which deals solely with the recruitment and placement of high-tech personnel, and its method of work is identical to that of the placement company).

Who pays wages: Apart from high-tech employees (as mentioned above), the worker's wages are paid by the manpower company, and therefore the average wage of a manpower company employee is lower than that of the employee employed directly by the company that employs them.

Promotion: Promotion is not always possible, since the employee is not employed by the company in which he is stationed.

The advantage for the job seeker: Because the employee is an employee of the manpower company, not the employer, and since the manpower company is in business contact with many similar companies at the same time, it can move the employee from one company to another, thus ensuring that he reaches full-time to maximize his salary.

The disadvantage for the job seeker: There are two main disadvantages of working through manpower agencies: The first stems from the fact that a manpower worker is in fact subordinate to two managers - his practical manager (in the company in which he is stationed) and his employer (in the manpower company).

The second, and more substantial disadvantage stems from the fact that although he is employed in any company, he remains an actual employee of the manpower company and therefore does not enjoy the benefits that the company's employees actually enjoy (from wages, benefits, to regularity and promotion). In addition, due to Article 12A, quite a few employees of manpower companies are fired or transferred to another employer before the nine months have passed, to avoid becoming employees of a regular company.

Outsourcing Companies

Section 13A was first mentioned in an amendment to the Employment of Workers by Manpower Companies Law, which exempts companies from the need to hire personnel for their content, after 9 months, if they come from the field of computerization. The amendment to this law is very relevant to the outsourcing companies, which specialize in the supply of high-tech professionals (software engineers, QA engineers, project managers, and especially infrastructure and information systems personnel), and are not included in section 12A.

How it happens: The outsourcing companies employ two types of workers, so the recruitment process of each type is slightly different. The first type is called "projectors," and these are employees who are taken for a fixed period, to set up a product or project, or to manage a product or project with a third company. The projectors undergo a job interview with the outsourcing company, and then they are sent to the company where they will be placed and where an interview is conducted. The second variety is the employees of the outsourcing company itself, who sit at its headquarters, and are responsible for the computerization and administration systems of the outsourcing company. Due to the size of some of the outsourcing companies, they use placement companies to recruit their employees - both project developers and their employees.

Unlike the manpower agencies, even when the employee is stationed in any company, he is still managed by the outsourcing company. In fact, the outsourcing company can move him to work in another company or replace him with another employee.

Who pays the salary: The salary is always paid by the outsourcing company. The salary of an outsourced employee will be lower than that of a company employee in the same position as the company in which he is stationed, and he will not enjoy the benefits provided to the employees of the company (vacations, determinations, etc.).

Promotion: Unlike conventional thinking, outsourcing companies certainly allow promotion - both in content, as a staff member (or as a project manager), and in companies where their employees are placed as projectors. In fact, it is not uncommon for a company with a projector to offer him, at the end of the project, to work on a regular basis.

Advantage for the job seeker: One of the biggest advantages in outsourcing companies is versatility. A company-based projector can be exposed to a wide variety of technologies, diverse work methods, hierarchies and office dynamics, thereby enriching his technological and practical knowledge. However, jumping too fast between different projects may result in the worker being exposed to many technologies, but the scope of his knowledge in each of them will not be deep enough. On the other hand, for employees who find it difficult not to get bored in one place, this arrangement can be very effective, and very refreshing.

Another advantage mentioned above is the ability to enter companies that are difficult to enter, not through outsourcing companies, such as government companies, banks, security companies, etc. Despite what is commonly thought, quite a few companies will offer employees to stay with them, and then open up all the possibilities to employees of a full-fledged society.

And despite the two advantages mentioned above, the biggest advantage of outsourcing companies may be because their workload, coupled with the high turnover rate of their employees, makes them more likely to employ workers with lower education and experience. For such employees, outsourcing companies can be a real lifeline, and more than once, a graduate of a less reputed institution, with a poor average, and without previous work experience, may enter the high-tech world through an outsourcing company.

The disadvantage for the job seeker: The salary of a projector may be lower than a full-time employee. In addition, a projector may feel alienated when all the company's employees go on holiday, and he and his project colleagues will have to go to empty offices to work as usual.

Is there anything left unclear? You are welcome to ask questions and we will be happy to answer.


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