Israel's Matrix Taps Devout Women for IT

The largest software shop in Israel is competing with offshore rivals by hiring underemployed ultra-Orthodox women as programmers

By Neal Sandler

When Moti Gutman first thought of tapping into Israel's insular ultra-Orthodox community as a source of inexpensive high-tech labor, he had no idea how complicated it would be.

The chief executive of Matrix IT (MTRX.TA), Israel's largest contract software and IT services house, Gutman was trying to cut costs to compete with rivals who sent jobs offshore. He and his management team had a different idea: They opened a software programming center in Modiin Ilit, an ultra-religious or Haredi community 18 miles (30 km) east of Tel Aviv, where office space was cheap and there was an ample supply of underemployed female workers. From an initial group of just 50 women five years ago, the staff has now grown tenfold—and continued to expand even during the economic downturn of the past year.

The financial benefits are clear. Entry-level pay at Matrix Global, the subsidiary in charge of the project, starts at around $1,000 for a five-day, 40-hour week, about half the going rate for comparable positions in the Tel Aviv region. Wages also tend to rise more slowly than elsewhere in Israel. That lets Matrix offer IT services at prices competitive with places like India, Bulgaria, and Ukraine. "This allows us to offer a 'nearshore' option to many of our customers who have either moved or are considering moving development work outside of Israel," says the 47-year-old Gutman.

Separate the Men from the Women

Getting the idea off the ground wasn't easy, though. Gutman first had to clear it with local rabbis, who set down a raft of religious conditions, particularly concerning the separation of men and women. All workers are required to wear modest dress, and the women work in cubicles set apart from men to minimize nonbusiness interaction. Matrix also was compelled to provide gender-segregated kitchens and private rooms for nursing mothers. A rabbi visits the facility twice a week to deal with any problems that arise.

Finding such ways to make work compatible with religious observance should help the local area. Modiin Ilit, a town of 45,000 settlers located 1.2 miles (2 km) beyond Israel's 1967 border with the West Bank, has already felt a socioeconomic lift, especially as several other companies have followed Matrix into the area. Better standards of living are also a much-needed boost for the Haredi, who make up about 15% of Israel's population and are by far its poorest community.

The biggest impact is on Haredi women, who often serve as their families' main breadwinners to allow their husbands to continue studying at yeshivas, or religious centers of learning. Traditionally, most Haredi women have worked in lower-paying jobs as teachers or caregivers for local children. Few ventured into the mainstream Israeli economy.

Outsourcing Right in the Neighborhood

"Our big selling point is that the women have flexible hours and are close to home," says Libby Affen, Matrix Global's chief operating officer. That allows them to take breaks to go home and tend children. The high number of children in religious families also means that typically 10% of the workforce is on maternity leave at any given time. Affen says Matrix copes well with the issue: The women work in teams and can shift tasks easily to colleagues. And they almost always come back to their jobs after their three-month maternity leaves end.

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