An unusual summit between Israelis and Palestinians took place 15 months ago at an unnamed gas station along Route 1 between Jericho and Jerusalem, in the West Bank. The "diplomats" were engineers and software designers from Global Hosted Operating System, or G.ho.st, the first-ever high-tech Israeli-Palestinian joint venture. The gas station was a place where employees from its offices in Ramallah, in the Palestinian National Authority, and Modi'in, Israel, could meet without getting permits or waiting in long lines to cross the border.
In the technology sector, at least, a quiet little trend of cooperation is emerging. A handful of Israeli companies are outsourcing to Palestinian engineers, aligning the bottom line with lofty ideals. Some Israel-based branches of multinational companies, such as Cisco Systems, Intel, and the software consulting firm Equiom, are doing the same thing.
"At first, it was strange for both of us—you could feel the tension on both sides," says Montasser Abdellatif, G.ho.st's marketing and communications manager. "But we avoid talking about politics. We're helping to create more jobs in a small industry where a lot of educated people can't find good jobs. And the bottom line of any start-up company is putting out a good product, so we're optimistic about that."
Each year, 3000 computer scientists graduate from the 11 universities within the Palestinian National Authority and enter a workforce suffering from a 21 percent general unemployment rate. With wages that are a third of Israel's, cultural familiarity, good English-language skills, and a shared time zone and currency (the Israeli shekel), the Palestinian National Authority is in many ways ideal for outsourcing—particularly for software, a business that can be conducted over the Internet. Telecommuting is practically a necessity, as Israelis are not allowed into Palestinian territories, and Palestinians must wait months to get permits to enter Israel, only to wait again on long lines at the border. "This could only happen with an IT company," says Abdellatif. "You don't have to rely on transportation or logistics."
Jonathan Levy, president of Nuvoton Technology Israel, a silicon-chip design firm that invests a year in training new employees, hesitated to set up design teams in China for fear that their English skills would be weak and their long-term commitment to a low-profile company would be weaker still. G.ho.st CEO Zvi Schreiber referred Levy to Murad Tahboub, a G.ho.st equity partner who runs Asal Technologies, an outsourcing firm in Ramallah. It located all the engineers Levy needed.
"We were the first Israelis some of the Palestinian engineers had seen out of uniform," says Levy. "It was a big gap for us both. But as soon as we had personal meetings, everyone's fear disappeared. We've since heard that salaries are going up in China very significantly."
Meanwhile Galil Software, a service company in Nazareth, is trying to narrow the cultural gap within Israel itself by helping Arabs already living there find jobs in the country's high-tech industry. CEO Inas Said estimates that fewer than 16 percent of the 2500 Israeli Arab engineers enter that arena because few Israeli Arabs serve in Israel's army, where early work relationships are often formed. Roughly 90 percent of Galil's engineers are Israeli Arabs.
"When we first started this engagement, we worried that customers would consider it risky," adds Levy. "But they said, 'This means if I use your chip, I'm contributing to world peace.' It creates an emotional value as well as technical one."