Andela Changes Business Model After Mass Layoffs, Opens New Office In Egypt

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Written by Peter Pedroncelli
competitive globally
Recruiter of African tech talent Andela has changed its business model to focus on senior developers, launching a new office in Egypt. Image supplied by Andela

Andela — a recruiter of African tech talent —  has laid off 420 junior engineers, changed its business model to focus on senior developers and launched a new center in Egypt to extend its footprint to North Africa.

Andela trains and outsources African engineers and coders to work for global firms. It says it plans to hire only senior developers for its new Egyptian center. They will work remotely for firms in the U.S. and Europe, according to a statement sent to Moguldom.

Andela raised a $100 million Series-D round in January, bringing its total investment to date to $181 million, according to Crunchbase.

In June 2016, Facebook founder Mark Zuckerberg and his wife Priscilla Chan’s philanthropic Chan Zuckerberg Initiative led a $24 million Series B investment in Andela.

Andela struggled with placing junior developers due to a saturated market for skilled junior developers in the U.S., its most important market, Quartz reports.

An increase in boot camps and programming classes in the U.S. during the last few years led to an oversupply of junior developers — impacting Andela’s ability to place its junior talent. This changed the landscape for Andela as demand grew for experienced software developers in senior roles.

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In September 2019, New York City-based Andela announced that 250 junior engineers and staff from its Nigeria and Uganda hubs had been laid off while another 170 may be impacted in Kenya.

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

While Andela claims to have helped the laid-off developers with severance pay, counseling, and efforts to help them find new jobs, the news came as a surprise to those impacted by the decision.

“The information came abruptly, no one knew until the day it was unveiled in a meeting convened by the CEO of the company,” one of the laid-off junior developers told African Business Magazine.

“Perhaps if they had informed us earlier, it would have given people time to make alternative plans which would have made it a smooth transition,” he added.

The junior developer said he had a few job offers and now works remotely with an international client.

Andela previously hired developers for its junior developer training program on four-year contracts, placing them with companies that required their services.

Andela’s new business model means that it will only hire senior engineers to work as team leaders with companies across the globe. These experienced developers are expected to work remotely with international clients from Andela’s offices in Africa.

The company expects to hire an additional 700 senior engineers by the end of 2020, according to an Andela blog post.

Andela launches in Egypt

The company’s new center in Egypt adds a North African presence to the Andela teams in Rwanda, Nigeria, Uganda and Kenya.

Andela began exploring operations in Egypt in 2018 and has hired more than 80 senior engineers from Cairo, Alexandria, Damnhour, Port Saeed and Mansoura, according to the Andela statement.

Andela partnered with the Egyptian government, Weetracker reports.

The government is hyping the partnership as way of creating more jobs for Egyptian youth but Andela’s shift away from training junior developers means that mostly experienced engineers will benefit, and those are already in demand.

Since launching in 2014, Andela has hired and developed more than 1,000 software engineers across the continent who collectively help power the technology teams of 150-plus global companies, including MastercardMicrosoft, Google, IBMViacom, Pluralsight and GitHub.

https://twitter.com/Andela_Egypt/status/1192065026754072576