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Andela Embarks On Major Overhaul, Lays Off Over 400 Developers in Africa

…Plans To Hire Another 700 Experienced Engineers By End of 2020

Andela, the outsourcing and software developer training company is making a major tweak to its business model and is ending its developer training programs in Nigeria, Kenya and Uganda—three of its four African campuses. By this move, Andela is letting go of over 250 of its contracted junior developers in Lagos and Uganda while up to 170 trainees in Kenya could also be “potentially impacted,” the company said.

The junior developer training program will continue in Rwanda where the cost has essentially been subsidized by the government. It will also remain open to applicants outside Rwanda.

The layoffs come as the startup released first-time earnings figures indicating it will surpass $50 million in annual revenues for 2019.

An Insight entitled: “The Future of Andela,” written by its CEO and Co-Founder, Jeremy Johnson, pointed out that when the software developer training and outsourcing company, first launched in Lagos five years ago, its business model was simple: train local entry-level developers to be globally competitive, place them on four-year contracts and earn revenue by outsourcing their skills to clients, mainly in the US, in that time frame.

“As part of this shift, we have also had to make an extremely difficult decision as it relates to a number of talented junior engineers. Today, we are announcing that we are closing the D0 program in Nigeria, Kenya, and Uganda. Moving forward, we will be focusing on D0 training efforts on our pan-African hub in Rwanda. In addition, we will be letting go of approximately 250 Andelans in Nigeria and Uganda, with an additional 170 potentially impacted in Kenya, who we don’t believe we’ll be able to find meaningful work for over the next year,” Johnson said in his write up.

For its part, Andela says it’s working with local tech hubs like Co-Creation Hub to connect its outgoing junior developers with opportunities and has hired a consulting firm to provide resume review and interview prep services to them.

“We’ve partnered with innovation hubs in each country, CcHUB in Nigeria, iHub in Kenya, and Innovation Village in Uganda, to help connect the impacted developers with opportunities in their local ecosystem. Together, we have identified over 60 companies who are looking to hire top quality junior engineering talent. In addition, these hubs will offer impacted engineers the opportunity to use their co-working spaces free of charge for the next three months,” he said.

Johnson explained that the company’s “initial strategy was to identify high-potential talent on the African continent, train them in software development (with a heavy emphasis on remote work and soft skills) and then place them as full-time distributed engineers. We saw an opportunity to build a business while investing in talent creation across Africa, and that’s exactly what we did.

“Today, Andela is the most elite engineering organization in Africa, representing over 1500 engineers and working with more than 200 of the world’s most respected technology companies. We’re also on track to nearly double our revenue year over year. As the talent world has evolved, we have as well, and over the past few years, it’s become increasingly clear that the world needs what Andela provides: high-quality engineering-as-a-service. It’s also become clear, however, that the majority of the demand is for more experienced talent. As a result of that, we began sourcing and assessing mid-level and senior engineers, and they now represent more than 25% of our talent base.”

Before changing its underlying business model, Andela’s premise that talent is evenly distributed while the opportunity is not, proved a major draw for global investors. Keeping pace with its track record of big-ticket rounds, Andela announced a $100 million Series D round in January—one of the largest ever single rounds raised by an African-focused tech company. Its roll-call of global backers also includes Facebook founder, Mark Zuckerberg, former US vice president Al Gore, and tennis superstar Serena Williams.

For those who may not know Andela’s business, the startup’s client-base is over 200 companies around the world that pay for the African developers Andela selects and trains to work on projects.

Founded in 2014, Andela has offices in New York and five African countries: Nigeria, Kenya, Rwanda, Uganda, and Egypt. The Series D tech-venture is one of Africa’s most visible (by press volume) and best-funded ― backed by $181 million in VC from investors that include the Chan Zuckerberg initiative.

Andela selects a roster of developers each year who come on staff for a salary (similar to a management consulting firm) and are encouraged to continue working and living in their home markets in Africa.

By pre-layoff numbers, Andela had 1575 engineers on board. Big job cuts usually point to financial distress and decreasing demand for a company’s goods or services. That’s not the case with Andela’s personnel move, according to Johnson, who describes the layoffs more as a result of misreading the market.

Going forward, the company says it will hire another 700 experienced engineers by the end of 2020 in order to keep up with demand from its partners, adding that it will “continue creating junior engineering talent at scale, we will invest in the Andela Learning Community, through which we’ve already trained more than 30,000 learners in software engineering fundamentals. Over the next three years, we plan to cultivate more than 100,000 engineers across the continent who will, in time, contribute to the growth of their local tech ecosystems as well as the broader technology community. 

“All too often, an opportunity is limited by race, gender, and nationality. We’re working to chip away at this by placing African engineers on global tech teams and, in the process, changing the world’s perception of talent.”

 While noting that no story of growth is perfectly smooth, Johnson noted that “these last few weeks have been amongst the hardest. Yet despite this, I’m confident that we’ll emerge stronger and more connected both to the market we serve and to the mission we are working to advance. And I look forward to trying to hire back many of these extraordinary engineers down the road – if you don’t get there first.”

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