Outsourcing Israel Style

When a real estate management company in Lakewood, N.J., had several 500-page leases from previous landlords to review, its bookkeeper began calling local attorneys and asking them to examine the leases and prepare five-page abstracts.

"I found that attorneys were booked and that it would take them a long time to do it," the bookkeeper, Rina Yakubovsky, recalled. "And they wanted to charge an arm and a leg."

Yakubovsky then came across LeaseProbe LLC, a Lakewood firm that specializes in reviewing and summarizing commercial leases for large real estate transactions.

Her company, Diversified Capital, found that LeaseProbe was "much cheaper and faster," she said. "Dealing with them was great."

Yakubovsky said she was also impressed that LeaseProbe converted those bulky leases into computer files.

"Now with a click of a button I can see my leases and the abstracts," she said. "It’s great. We’re really in the 21st century now."

Sometime after the work was done, Yakubovsky learned LeaseProbe’s secret weapon: Israelis working in the center of Israel.

LeaseProbe has only about a half-dozen employees in Lakewood, but it has a full-time, native English-speaking staff of five lawyers, two accountants and more than 50 paralegals at offices in Betar Ilit and Modiin Ilit.

As the time in Israel is seven hours ahead, work dropped off in the New Jersey office at the end of the day often can be ready by the start of the next business day, according to David Tesler, LeaseProbe’s CEO. And because of a different standard of living, the Israeli workers are paid less and Tesler can charge less: $75 an hour compared with the $150 fee of many local law firms.

In a twist on outsourcing, LeaseProbe is among a host of American companies relying on the Israeli talent pool for their business operation.

Israel boasts many native English-speakers with expertise in such fields as software design, computer testing and support, language translation, architectural design and mobile satellite communications.

To encourage more American companies to take advantage of Israelís well-educated workforce at discount prices, the Israel Economic Mission and the Israel Export Institute have jointly initiated a public awareness campaign.

Called "Professional Services from Israel," the campaign has an online database that connects U.S. businesses with Israeli companies and individuals who possess skills in various fields.

Zohar Peri, Israelís economic minister to North America, said the project is in response to the outreach of American companies to Asia.

"We observed what India is doing with Internet services," he said. "We wanted to identify our advantages in relation to India."

Peri compared India to a supermarket and Israel to a boutique.

"We don’t want to supply a huge number of cheap workers and quantities of jobs," he said. "We are looking at existing Israeli and American businesses that are working together and [finding that] most of them have specific expertise that is very special."

For instance, Peri said he found that an Israeli printing company was performing high-quality jobs for a Wall Street firm that not many other printers could handle.

"You cannot simply go to India and hire [such] printers," Peri said, adding that some printing prices are 40 percent below those in the U.S.

And he pointed out that when it comes to intellectual property protection, Israel with its compatible legal system affords greater protection than countries like India, China and Russia.

"You are never safe in those places," he said.

Salaries of computer experts in Israel are generally not much different than they are in the U.S., so Ori Ben Zvi, chief financial officer of Xtivia, said his database and Web enabling firm headquartered in Manhattan turned to an economically depressed city in Israel.

Xtivia, which was bought in 1999 by an Israeli company, Matrix, turned to the women of Modiin Ilit, a fervently Orthodox, highly educated community with a high unemployment rate and relatively poor residents.

"The husbands study all day and the women raise the children and are the main breadwinners," Zvi said. "Our parent company opened a large development center in a big office building and, with the blessing of the big rabbis, we took a group of 30 carefully screened ladies who had college degrees in computers and we trained them about what we thought would be needed in the market.

"There are thousands of talented individuals, and the best qualified are going to the computer market," he said, noting that he is drawing women not only from Modiin Ilit but from other fervently Orthodox communities between Jerusalem and Tel Aviv. "If this goes to capacity, we would open more development centers."

Asked about the lower salary they are being paid, Zvi replied: "We are building an infrastructure in an ultra-Orthodox environment and we are doing it according to their requirements. We have separate dining rooms and kitchens for men and women. We do not expose them to the secular environment. There is a separation between men and women, and we provide babysitting and schooling on site. We are offering them jobs that typically, if they wanted to be an IT professional, they had to expose themselves to a secular environment.

"Their salaries are low enough for us to be able to compete in the worldwide market, and we offer fees that are close to the rates that you see offered in India and Eastern Europe. They are competitive to the Asian and Eastern European market."

Zvi added that his Israeli workforce is loyal and there has been no turnover, compared to a 25 percent turnover rate that he said occurs elsewhere.

"People jump from job to job, and it hurts projects that depend on intellectual property," he said. "There is also a culture gap in Far Eastern countries; in Israel the culture is much closer to that of the U.S. with people thinking out of the box."

In another attempt to go after the American market, a company with offices in Tel Aviv and Jerusalem, Compumat, has just started promoting its IT consulting services to small and medium-sized companies, as well as to divisions within larger businesses.

Mati Herbst, Compumatís president, said a company with about 20 employees online pays about $3,000 to $5,000 a month in return for his firm tending the entire computer system. And, Herbst said, "99 percent of our work is done remotely in Israel."

In case work needs to be done on-site, Herbst said his company has three employees in Manhattan. But he stressed that they would rarely be needed.

To avoid complaints that his company is too impersonal, Herbst said Compumat installs a video station so his customers can see the technician in Israel, and the technician can explain what he is doing.

Herbst acknowledged that other companies provide remote services, but he said few can compete with his price.

"The cost of labor in Manhattan is between $120 and $140 an hour," he said. "An engineer in Israel earns $60 to $80 an hour."

The Web site for Professional Services from Israel is http://professional-services-israel.export.gov.il.