Requests to relocate abroad by Israelis working at multinational companies operating in Israel ⁠rose in the past year in reaction to Israel's two-year war against Palestinian militant group Hamas, a report showed on Sunday.

The Israel Advanced Technology Industries Association (IATI) found that 53% of companies reported an increase in relocation requests from Israeli employees, noting this was "a trend that may, over time, harm ‍the local innovation engine and Israel's technological leadership."

The tech sector accounts for about ‍20% of Israel's GDP, 15% of its jobs and more than half of its exports. The hundreds of multinationals in Israel include Microsoft, ⁠Intel, Nvidia, Amazon, Meta and Apple.

DISRUPTIONS IN SUPPLY CHAINS

In its annual report, IATI also said some multinational companies are examining the transfer of investments and activities to other countries.

"In ​some cases, companies that faced disruptions in supply chains found alternatives outside Israel during the war, and when these proved efficient, there is a risk that activity will not fully return," said the report, issued ‍at a meeting led by IATI CEO and President Karin Mayer Rubinstein.

At the same time, it ⁠added, there has been an increase in demand for relocation among senior executives and families, with more employees applying for positions outside Israel.

Still, the report noted that multinationals view the Israeli tech ecosystem through a long-term lens and many firms have thrived during the war.

TECH SECTOR 'PROVES ITS RESILIENCE'

Some 57% ⁠of companies maintained stable business activities throughout ​the fighting, and 21% ⁠expanded their operations in Israel, "a figure that indicates continued confidence in local activity and the Israeli ecosystem even under conditions of uncertainty," ‍IATI said.

Another 22% of companies reported damage to business activity during the war, which began on October 7, 2023, triggered ‌by Hamas' raid on Israel, and ended two months ago following a U.S.-led ceasefire deal.

"Even during the difficult war, the Israeli high-tech industry, including the global companies operating in Israel, once again ⁠proved its ​resilience and its ability ‍to lead in innovation and creativity," said Rubinstein. "We work tirelessly to ensure that Israel continues to be an attractive hub for the activity of multinational companies."

IATI noted ‍that "without active steps by the state to create regulatory and geopolitical stability, there is concern about gradual erosion in the stability of the local ecosystem."