Andela is an African company that identifies and develops software developers.
The company launched operations in Nigeria in 2014, to help global companies overcome the severe shortage of skilled software developers and has offices in Nigeria, Kenya, Rwanda, Uganda and the United States.
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.
The layoffs come as the startup released first time earnings figures indicating it will surpass $50 million in annual revenues for 2019.
But the company is now is making a major tweak to its business model and will end its developer training programs in Nigeria, Kenya and Uganda—three of its four African campuses. By extension, Andela is also 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 says.
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 overall change of tack is down to the saturated market for skilled junior developers in the US, Andela’s most important market, says Seni Sulyman, Andela’s vice president for global operations. “Over the past five years, there has been a massive wave of boot camps and programming classes of different kinds like Lambda and Flatiron schools. Computer science schools in universities have also ramped up their programs. What that has done is create a massive flux of junior engineers in the US…which is our primary market,” he tells Quartz.
With more junior developers now more widely available in the US unlike when it launched, Andela’s value proposition of supplying talent is directly impacted and means the company can no longer place as many junior engineers as required, Sulyman acknowledges.
But the increased supply of junior developers also means “demand is heavily skewed towards more senior talent,” Sulyman says. As such, part of Andela’s shift in strategy will now see it focus more on hiring and then outsourcing senior engineers from its African markets.
The company will hire an additional 700 experienced engineers by the end of 2020.
On Andela’s $50 million in 2019 projected income, “It’s the first time we’ve ever confirmed anything on revenue,” said Johnson ― who acknowledged the venture is still not profitable.
He wouldn’t say why the company released those figures now, but one can speculate it is to soften concerns about Andela’s financial performance in light of major staff cuts.