How AI Is Helping Government Companies in Israel Cut Costs and Improve Efficiency

Government companies in Israel face a clear opportunity: national strategy, local talent and real business need are converging to make AI a practical lever for cost reduction and faster citizen services.

The Israeli National AI Program lays out the strategy and infrastructure that let agencies pilot tools at scale, and a recent CBS/OECD snapshot shows 28% of Israeli businesses already use AI - with 42% of adopters automating routine tasks - so public bodies can target low‑risk, high‑payoff automation to free staff for complex work.

Concrete pilots matter: municipal chatbots that cut licensing backlogs while routing tricky cases to human officers and preserving audit trails illustrate how productivity gains translate into faster permits and lower operating costs.

With a dense local AI ecosystem and growing investment, Israeli government entities can pair focused tech pilots with upskilling to realize incremental efficiency without wholesale disruption.

“AI plays a significant role in healthcare, with diverse applications in areas such as medical imaging, electronic health records, robotics, drug discovery, and clinical trials. While these applications hold immense promise for improving healthcare outcomes and efficiency, there are several challenges that need to be addressed for successful adoption, including data privacy concerns, data scarcity, business model complexities, long development cycles in drug discovery, and navigating the regulatory landscape,” notes Kimberly Powell, VP of Healthcare at NVIDIA.

Israel's national AI push has moved from slogan to line‑item: the program now shows roughly NIS 1 billion budgeted to date and a focused NIS 500 million phase through 2027 to beef up R&D, talent and government adoption, with concrete bets on a National AI Research Institute and sector “moonshots” to unlock public‑sector innovation; the official program overview is captured in the OECD's National Program for Artificial Intelligence.

At the center of the infrastructure story is a planned national supercomputer - Nebius was chosen to build a ~16,000‑petaflop machine that, by early 2026, aims to give startups, researchers and public bodies affordable access to high‑performance training capacity and reduce the cost barrier to large‑scale model work (details on the Nebius award and public‑private access model).

Complementary pilots - from an education sandbox to civil‑service adoption programs - signal a pragmatic approach: invest in shared compute and data platforms while funding targeted, auditable pilots so agencies can capture efficiency gains without upending critical services.

“The second phase of the program is a critical stage in maintaining Israel's position as a leading power in artificial intelligence,” said Ziv Katzir, Director of the National AI Program.

For Israeli government companies modernizing telecom backbones and AI clusters, cloud‑native networking is rapidly moving from lab idea to operational advantage: Israel‑based DriveNets offers a containerized Network Operating System (DNOS) and a cloud‑native Network Cloud that disaggregates hardware onto standard white boxes, bringing zero‑touch provisioning, lifecycle automation and far clearer telemetry for fast fault isolation (DriveNets DNOS).

That same stack has been optimized for AI workloads - the Network Cloud‑AI fabric boosts GPU cluster efficiency and, in trials, reduced idle time by up to 30%, a vivid cost‑saving reminder that better networking can pay for itself by keeping expensive compute busy (Network Cloud‑AI).

For public‑sector networks this matters: disaggregated, microservices‑based control planes and enriched telemetry supply the transparent diagnostics and orchestration policymakers need to deploy predictive alerting, automated remediation workflows and audited change trails without vendor lock‑in - helping agencies cut operating expense while keeping critical services resilient and auditable.

“DriveNets stood out in our research as having the strongest combination of innovation, maturity and proven high‑scale deployment, supporting a wide range of use cases and network function. It is a forward‑looking vendor that continues to develop and deploy solutions that allow service providers to evolve their networks to the cloud era,” said Ivan McPhee, GigaOm analyst.

Edge AI is moving from lab to frontline for Israeli government companies, and Tel Aviv's Hailo is a prime example: the new Hailo-10H brings on-device generative models and vision-language inference so ministries and municipal services can run LLMs and real‑time video analytics without constant cloud links, cutting bandwidth bills and keeping sensitive citizen data on the device.

With first‑token latency under one second and the ability to process real‑time 4K object detection while sipping about 2.5W, this class of accelerators makes always‑on, privacy-preserving features - like natural‑language kiosks at remote clinics or autonomous perimeter monitoring at ports - affordable and resilient.

Choosing the right chip is still a balance of compute and memory, so agencies should match workloads (VLMs vs. high‑fps video analytics) to hardware capabilities rather than obsess over TOPS; Hailo's analysis on compute vs.

memory tradeoffs explains why bandwidth matters as much as raw TOPS. For Israeli public bodies, that means smaller edge boxes can now replace costly cloud inference, shrinking operating expense while improving latency and data governance.

“With the Hailo-10H now available for order, we're taking another major step toward our mission of making AI accessible to all. This is the first discrete AI processor to bring real generative AI performance to the edge, combining high efficiency, cost-effectiveness, and a robust software ecosystem.” - Orr Danon, CEO and Co‑Founder of Hailo

Remote inspection and autonomous operations are already reshaping how Israeli government companies and critical infrastructure teams cut costs and protect people: Israel‑based Percepto's drone‑in‑a‑box systems run scheduled and event‑driven flights from on‑site weather‑proof bases, upload imagery to Percepto AIM for AI‑driven change detection, and let operators spot issues - like clogged ACC pipes at a 73 MW Siemens Energy plant in Israel - before they cause downtime, all while keeping staff out of harm's way; the same platform powers continuous monitoring at ICL's Dead Sea site and scales to multi‑site control centers for rapid, auditable decisioning.

Learn more from the Siemens Energy case study and Percepto's drone‑in‑a‑box overview to see how on‑site autonomy turns costly inspections into repeatable, safety‑first workflows that pay back in fewer outages and faster turnarounds.

“The biggest benefit from Percepto technology is being able to trace or to locate the faults in a very quick way. Before Percepto, we were not able to trace issues easily, and it would take us a long time to understand that we have those problems on our site. Using Percepto, we are saving time and increasing employee safety.” - Avishay Malul, Siemens Energy, Power Plant Manager

Public-sector decision-making in Israel is getting a practical boost from civic‑AI platforms that turn messy, real‑time community signals into actionable priorities: Tel Aviv‑based Zencity combines millions of anonymized data points and continuous polling so municipal and national agencies can spot neighborhood‑level sentiment shifts during flash points and reallocate resources or tailor messaging fast.

By stitching together organic discourse from hundreds of sources with representative surveys - strengthened through acquisitions like Elucd and Civil Space - Zencity helps governments hear quieter voices, speed up budget trade‑offs and justify service changes with auditable evidence, which matters when a single metric can flip a capital project or public‑safety response.

For Israeli government companies aiming to cut costs without losing public trust, this means moving from intuition to dashboards that highlight where a small policy tweak will deliver outsized citizen value; see the Zencity civic-AI platform overview and the Zencity funding announcement that scaled its reach for more data-driven governance.

“The past year has proven, more than ever before, that local governments are the most essential institutions of our society. We're proud that our platform has played a role in helping leaders take into account more voices from across their communities…” - Eyal Feder‑Levy, CEO and Co‑founder, Zencity

Data access is often the bottleneck that turns promising AI pilots into stalled projects for Israeli agencies, and an AI‑driven security layer can turn that blocker into a catalyst: platforms like the Velotix AI‑powered data access platform speed approvals with context‑aware, policy‑based controls so

“access in minutes, not months”

becomes realistic, while automatically discovering, classifying and tagging sensitive fields across BI tools and cloud stores to cut exposure and simplify audits (Velotix AI-powered data access platform).

By applying PBAC and dynamic policy tuning, continuous monitoring, anomaly detection and full request logs, agencies can enforce GDPR‑style rules and industry controls at scale without slowing analysts or creating shadow data copies; Velotix's privacy statement even notes the company's Israeli registration in Ramat Gan and its GDPR responsibilities (Velotix GDPR privacy policy).

The result for Israeli government companies: faster, auditable access to the right data for decisioning, fewer manual approval bottlenecks and measurable risk reduction - turning data governance from overhead into a direct enabler of cheaper, faster public services.

Administrative teams across Israeli government companies can take routine, repetitive communications off overworked staff calendars by swapping manual letters and one-off videos for automated, personalized AI video workflows that scale: platforms like D‑ID let agencies generate thousands of tailored messages for onboarding, permit-status updates, multilingual citizen outreach and internal training with real‑time rendering, avatar presenters and CRM integration, so a single template can become thousands of native‑language, name‑specific touchpoints in minutes - turning a week of follow‑ups into a brief batch run that still feels handcrafted.

This approach boosts citizen engagement and cuts downstream calls or ticket churn because video holds attention and drives clearer next steps; D‑ID's use‑case guide and Video Campaigns show how text‑to‑video, dynamic scripts and analytics replace costly studio time while preserving brand and compliance controls.

For municipal teams aiming to reduce licensing backlogs and route complex cases to human officers, pairing chatbots with scalable personalized video can close the loop between automated intake and human escalation, making service delivery faster, auditable and far cheaper to operate.

“The automated steps built into this tool make the video campaigns quick to build; with a prepared script and a pre-chosen avatar, our team implemented each email in just under an hour.”

Ital FIdelman

Cross‑sector analytics are the glue that turns Israel's fragmented innovation into operational savings: the country's EnergyTech ecosystem - mapped with 130+ firms across generation, storage, hydrogen and OT cyber - supplies hardware and process breakthroughs while data‑mining players turn streams of sensor, grid and citizen data into timely actions.

Combining the interactive EnergyTech landscape with AI platforms that optimize KPIs can shrink unplanned outages, tune battery dispatch and prioritize maintenance windows so costly manual checks become exception workflows; for example, pairing advanced analytics with breakthroughs like H2Pro's >95%‑efficient E‑TAC green hydrogen method or SolarEdge's energy‑management expansion lets agencies weigh decarbonization and cost at the same time.

Home‑grown and Israel‑connected analytics vendors also matter: SparkBeyond's Always‑Optimized approach automates feature discovery and recommendation for operations, and Tel Aviv‑based G‑stat brings predictive modeling expertise for risk and service management.

The net effect for government companies is straightforward - better forecasting, tighter resource allocation and faster, auditable decisions that turn strategic energy and infrastructure investments into measurable day‑to‑day savings.

Israel's fast‑growing AI ecosystem is a double‑edged sword for government companies: abundant capital and home‑grown vendors make it easy to pilot cost‑saving tools, yet procurement teams now must budget for heavy compute, vendor lock‑in and rapid obsolescence.

Local investors and funds - notably OurCrowd, with about $2.3B under management and a highly active AI agenda - are backing edge and infrastructure plays (Hailo's chip traction and the OurCrowd AI fund's tie‑ins to NVIDIA illustrate the supply side), so ministries can buy tested, locally supported tech while negotiating SLAs and compute‑cost KPIs.

Still, documented risks include rising GPU and data costs, regulatory uncertainty and longer fundraising timelines for capital‑intensive infrastructure; CTech's coverage and sector surveys recommend pairing staged pilots with strict procurement checkpoints and agile contracting.

A practical mitigant: combine phased RFPs and live pilots with focused upskilling of procurement and program teams - courses like Nucamp's Nucamp AI Essentials for Work bootcamp help non‑technical buyers evaluate vendor claims - and require auditable performance and export‑control compliance in contracts to keep projects on time and on budget (see broader reporting in CTech ecosystem briefing on the Israeli AI sector).

“Some people were afraid that Israel's tech ecosystem would fall apart in the war, but it never happened.” - Jon Medved, OurCrowd