Israel's Matrix Taps Devout Women for IT

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The success of the Modiin Ilit facility has lifted the fortunes of Matrix, based north of Tel Aviv in Herzliya. The company employs a total of 4,500 people and took in revenues last year of $380 million. Its Matrix Global unit now offers software development and quality assurance services to about 60 clients, including many leading Israeli and foreign high-tech companies such as SAP (SAP), Hewlett Packard (HPQ), Nice Systems (NICE), and Amdocs (DOX).

Clients are happy to have an outsourcing provider near by. "Offshore is 25% cheaper, but when you factor in all of the overhead the differential all but disappears," says a senior software engineer at the Israeli subsidiary of an American high-tech company. She cites proximity and quick response time as crucial factors in the success of her company's contract with Matrix Global, which is now in its fourth year.

Some customers don't even have the choice to go offshore. The Israeli government, for instance, has an ambitious program called e-Gov that aims to digitize delivery of public services—and the work has to be done in Hebrew. Pinhas Rozenbloom, chief technology officer of the Finance Ministry's e-Gov initiative, says the government looked for off-the-shelf solutions before deciding to award the huge project to Matrix Global. Now, 40 women in Modiin Ilit work exclusively on the e-Gov program for what Rozenbloom says is a fraction of the price the government would have had to pay to other software companies.

The government is encouraging Matrix in other ways, too. Because the company is lifting the fortunes of the Haredi, the Israeli Industry & Trade Ministry pays Matrix a $270 monthly subsidy for each worker. "We can help 10 times the number of ultra-religious to go in this direction and make their lives much better, and at the same time strengthen the economy," says Government Services Minister Michael Eytan. That's an important objective because Israel lags far behind most Western countries in its labor-force participation rate. This is largely the result of limited employment in the Haredi and Israeli Arab communities, where job opportunities are often scarce.

Few Pay Gripes

There appear to be few complaints among Matrix Global's employees in Modiin Ilit about their low pay compared with that of other Israeli high-tech workers. "The flexibility of work hours combined with the on-site training open up a whole new world for religious women," says Galit Kouhana, a 34-year-old mother of five who quit her job as a teacher three and a half years ago to join Matrix as an entry-level tester and has since graduated to project leader.

While Matrix was the first high-tech firm to tap the potential of the Haredi community, several other Israeli software companies now have followed its lead, including Malam Team (MLTM.TA) and TesCom Software Testing Systems (TSCM.TA). They all recruit from an estimated annual pool of 1,500 graduates who take computer and software engineering courses offered to Haredi women through training colleges.

Last year, Matrix opened its second facility in Bet Shemesh, 12 miles (20 km) from Jerusalem. A third center is expected to begin operations in Haifa in 2010. "Our target is to have 1,000 from the Haredi community working for us within two years," says Matrix CEO Gutman. But he estimates the potential at more than 10,000 workers. With the rabbis sanctioning the entry of women into this field, Israel's high-tech industry may have just found a way to stay competitive.

Sandler is a correspondent for BusinessWeek in Jerusalem.

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