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.
In four years, Andela has hired 1,000 developers out of more than 100,000 applicants and become known as the “Best Place to Work in Africa”. Andela CEO and Co-founder Jeremy Johnson said in a blog post on Tuesday that they are closing the D0 program in Nigeria, Kenya, and Uganda.
“….. 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. The layoffs come as the startup released first time earnings figures indicating it will surpass $50 million in annual revenues for 2019.
The D0 programme is for developers in training. Johnson said Andela will now focus on recruiting senior talent.
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.
Techcrunch also, speculated that, Johnson 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.
Johnson flagged the revenue significance in a global startup context. “What it means is the world needs what we do. Very few companies have gotten to a $50 million run rate in under five years.”
If that’s rare in developed markets, its even more scarce in Africa’s tech scene where startups releasing any financial stats is scarce overall. Only one VC-backed digital company has revealed revenues between $50 and $100 million. That’s Jumia, the e-commerce startup that listed in an NYSE IPO earlier this year.
The release of 400 developers may be welcome in Africa’s most active tech hubs, such as Nigeria and Kenya, where rapid startup formation and funding is starting to outpace software engineering talent according to a number of founders.
Job placement will partially depend on whether local tech companies can offer competitive packages to incentivize the Andela alums.
According to Iyin Aboyeji, Andela’s co-founder, training programmes will now be limited to Rwanda. But it will continue to support Andela Learning Community (ALC), a free training programme that began in 2017.
“Our immediate focus is on providing practical support to those employees who are impacted by the restructure,” said Omowale David-Ashiru, Andela Nigeria Country Manager. “And we will provide them with the resources they need to succeed in their next steps,” he added.
If they do, the net effect of Andela’s layoffs could be more software engineering capacity for Africa’s tech ecosystem so long as most of the developers remain in Africa.
Before changing its underlying business model, Andela’s premise that talent is evenly distributed while 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 Goreand tennis superstar Serena Williams, said Quartz Africa.