A new survey by Israeli recruiting firm GotFriends, seen by Globes, reports that while many tech companies continue to reduce employees and slow hiring, as part of streamlining adjustments for AI adoption, defense-tech startups are aggressively expanding their workforce. The number of new jobs in the defense-tech industry increased 20% in 2026 compared with the same period last year, and wages are climbing by about 8%.

In recent months, dozens of tech companies in Israel and around the world have announced new rounds of layoffs. Many of them explained that these are part of efficiency measures due to expanded use of AI, automation of work processes, and reconfiguring the workforce structure. However, while large parts of the tech industry are laying off employees, one sector continues to move in the opposite direction. In effect, the GotFriends report indicates a change in the employment map of Israel’s tech industry.

The survey reports that the number of new jobs opened at defense-tech startups has increased 20% this year compared with the same period last year. At the same time, wages in the industry increased about 8%, a figure that illustrates, among other things, the increasing competition for employees with experience in the fields of software, hardware, cybersecurity and AI.

According to GotFriends, among the companies currently hiring the largest number of employees in the field are Kela Technologies, Xtend, Airis Labs, D-Fend Solutions and Axon Vision. Thus, if in the past the main competition for engineers was between software, fintech and cybersecurity companies, today defense-tech startups are also competing for the same candidates, offering similar salaries and conditions.

Procurement orders from the Ministry of Defense

The increase in the number of jobs in defense-tech in Israel is not happening in a vacuum. It is coming in parallel with broader growth in the entire industry. According to the report, defense-tech companies around the world have raised about $12.3 billion since the start of 2026, almost twice as much as in the same period last year. In Israel, companies in the field have raised about $846 million since the start of the year, almost the amount that was raised in all of 2025.

Investments are only part of the story. According to the report, about 800 Israeli startups are already receiving procurement orders directly from the Ministry of Defense. In other words, the industry is no longer relying solely on venture capital but is establishing business activity and producing revenue. For early-stage companies, this is a significant change, because it allows them to test their technology in real conditions, improve it quickly, and reach additional customers with a product that has already proven operational capability.

According to the report’s authors, one of the main reasons for the growth of the field is the change in the global security reality. The wars in Ukraine and the Middle East have shown many countries the need for solutions that can be developed and implemented quickly, instead of projects that take many years. At the same time, the procurement model has also changed. Alongside large defense companies, more and more governments and armies are also turning to startups that are able to provide targeted solutions in a short time.

The wars have also shortened the path between the laboratory and the battlefield. Technologies that previously underwent years of trials and demonstrations are now being tested in real conditions, sometimes in the early stages of development. For companies, this is an opportunity to learn from the field, make adjustments quickly, and present solutions that have already proven themselves to customers around the world. According to the report, this process has turned Israeli defense innovation into an international showcase in areas such as autonomous systems, drones, intelligence, and air defense.

Hardware professions are returning to center stage

The change is also evident in the types of employees that companies are looking for. While in the past the main demand was for software developers, today companies are hiring for almost all areas of development. According to the report, Python, Embedded, and C++ developers are sought after, along with cloud and AI experts. Demand for hardware engineers is also increasing, including FPGA and VLSI engineers for the design and development of chips and electronic components used in advanced defense systems.

Algorithmic fields are also growing, mainly in the field of computer vision, which allows systems to recognize and analyze images, and in the field of integrating information from various sensors, an essential ability for drones and autonomous systems. Alongside these, companies also continue to recruit cybersecurity researchers, reverse engineering experts, and threat intelligence personnel.

One of the most notable trends the report points to is the return of hardware engineers to center stage. For years, the main demand in Israeli tech was for software developers, but the shift to AI-based systems, drones, sensors, and advanced communications is bringing back the need for experts who develop the physical infrastructure on which those systems operate. GotFriends notes that roles such as hardware architects, VLSI and board design engineers, who design the structure of electronic cards and the components on which the systems are based, are currently among the most sought-after and well-paid roles in the industry. According to the report, while in some tech companies the adoption of AI brings job cuts as part of efficiency measures, in defense-tech the opposite process is occurring. The more AI-based systems companies develop, the more engineers and developers are needed, and so AI acts as a catalyst for hiring employees.

Narrowing the salary gap with other fields

The change is not limited to the number of jobs. According to the report, salaries in the industry have also increased by about 8% in the past year. GotFriends notes that one of the most significant changes is that the gap in salary levels between defense-tech startups and SaaS, fintech, and cybersecurity companies has narrowed significantly.

If in the past, defense-tech companies were perceived as stable employers but less competitive in terms of salary, today defense-tech startups offer compensation packages similar to those of leading tech companies, in order to attract the same engineers and developers. For example, the average salary of hardware architects reaches about NIS 50,000 per month, algorithmic engineers earn an average of about NIS 47,000, AI engineers and VLSI engineers about NIS 45,000, and the salary of experienced software developers is approaching NIS 44,000 per month.

According to GotFriends, the competition is no longer based solely on salary. In the past three years, there has been a sharp increase in the number of candidates who apply for jobs at defense-tech companies. In the past, many preferred to build a career in commercial software companies, but today more and more employees are seeking to integrate into the development of technologies with defense applications. According to the report’s authors, in addition to salary, the sense of meaning and the desire to work on products that have a direct impact on national security have become a significant consideration for some candidates when choosing a job.

The change is also noticeable on the entrepreneurial side. According to the report, many of the new startups in the field were founded by reservists and veterans of technology units, who during their service were exposed to operational needs that were not adequately met. The combination of operational experience, engineering knowledge, and entrepreneurship has created a new wave of companies that are developing solutions in areas such as drones, autonomous systems, cybersecurity, and AI, and these companies are attracting both investments and employees.

This post was originally published on here.