September 25, 2020

Andela: Supplying Talents In A Changing Landscape

Education as an activity needs a medium to be accessed.  This medium from time has either been the classroom, a tutelage under a teacher/professor or the home, for the few  that were homeschooled. But as both parents in a home got involved in the new world of work and the internet gained a foothold,  the medium of education changed.  Computer science education was not an exception to this trajectory.


Telecommunication Licensing and its Forerunners

Prior to the GSM licensing in Nigeria around the early 2000s,  software skills acquisition was mainly through a university degree.  For the fortunate and a bit privileged ones,  parents or relatives provided foreign textbooks and additional study tools like a desktop computer.  In spite of this,  the programming languages taught were either outdated or inadequate.  So,  to an extent,  access to quality computer science education became, for the lack of words,  a privilege.

But these started changing with gradual but expensive internet penetration.Cybercafes and ‘business centres’ became internet access points.  During the same period,  Nigerians leapt from little or no mobile phones to feature phones with 2G and infrared connection.  Tech education businesses like IDM-licensed NIIT and Aptech filled the void left by the outdated university curriculum with price segmentation for Desktop Publishing, C++ to Javascript and Unix.

But businesses with their models and strategies play their roles as a segment grows,  mature and probably gets disrupted or reinvented.  As these aforementioned tech education businesses trained Nigerians with the  hot skills at that time,  the tech ecosystem sprouted.  Aside the Enterprise developers, e-commerce vendors like DeadDey and Konga gave homegrown talents a foot at the programming door. Those that couldn’t afford the services of these developers, looked towards India and Pakistan for cheaper developer talents, which oftentimes,  didn’t  end well.  Time difference, language barrier and sheer lack of trust frustrated these arrangements for Nigerian young businessmen.


And Here Comes Andela

But with Andela,  the talent pipeline supplying and sharpening available tech talents stayed wet.  Andela made being a software developer aspirational with perks and panache.  Young enthusiasts gradually preferred going through Andela before considering a university degree in computer science.  The graduates with their degree went through it to polish up their skills and gain access to the market and opportunities it provided.

By matching these young developers with clients,  most times foreign,  it helped introduce these young talents to quality work ethics with commensurate pay representing a percentage of fee paid by client. With a campus in country of operation,  collaborations and team building became a norm.

Since its founding 2014 and cumulative raise of $181m, it has over time become an enviable place to work.  But while it faced off with international competitions like Global Technical Talent,  Crossover and Gigstar,  it also,  faced local competition in African countries it operated like  Ethiopia’s Gebeya; Nigeria’s Decagon,  Natterbase and HNG internships. These local competition came with some form of tweaks in business models,  compensation packages, duration of training and paths to growth.  Recently,  Austen Allred’s Lambda School made a partnered entry into Nigeria, training designers and programmers with an Income Share Agreement(ISA).


Growth Comes with Pains

But as with water that floats or sinks a ship,  the internet with the access, learning opportunities it provides,  has gradually taken away the edge or if you wish,  the moats Andela had.  This is akin to a glut; a talent one.  The technical requirements in Nigeria’s tech ecosystem have evolved and grown.  Startups today need a combination of talents in one engineer to make progress,  popularly referred to as Full-Stack.  Full-Stack is however not necessarily the possession of these different skills alone but in addition,  practice and use of these skills over a period of time on projects.  There are ongoing conversations on what makes an engineer Full-Stack. Is it possession or usage on projects?  But that’s not the purpose of this writing.

And with the inflow of funding and few bright spots in exits and acquisitions,  these companies can now afford to pay what seems a decent salary according to Nigeria’s economic reality. This leaves the market with a somewhat oversupply of junior talents in the ecosystem.

Following the point above,  is the affordability of the internet.  A comparative data shows the geometric growth of Nigeria’s internet users and internet penetration of 42% and 3.55% in 2017 and 2005 respectively. Laden in these growth figures are jobs,  businesses with new models and pains for consumers for new businesses to solve.  With the growth of the internet,  the talent supply sources increased;  computer science graduates,  YouTube-tutored  developers and gig workers on platforms like Fiverr and Upwork are now competing for the same shrinking pie of work left for the average developer.


Layoffs,  Reputational Risks and Options

In response to the changes in the market,  Andela has had three rounds of layoffs in about two years while raising over $100m in the same duration. This ultimately makes it a nichey business exclusively focused on senior talent supply.

But the implicit cost to these layoffs is reputational.  One where the idea of job security at Andela becomes a distant one.  These layoffs should have been a deep,  one-off cut while pivoting to the new business focus.  What this does is: give it one-time opportunity at image  repairs in place of the periodic media trials and taunts.  One overlooked factor in business success is being ‘mediagenic’ and these intermittent workforce cuts aren’t serving that purpose.

It could also consider a partnership or owning a controlling stake in other talent management companies at the other spectrum dedicated to the grooming of junior developers.  What this does is:  afford it the steady supply of these talents at maturity or during demand surges and give a sense of job security and mobility for the young talents. This positions it as a purely senior talent acquisition destination from the smaller talent marketplaces. Acquisition is still a strategy.

It could however consider an Income Share Agreement while retaining the free training and mentorship model.  Seeing the quality of its developers are never in doubt and now a niche talent pipeline,  its return on investment is almost, if not guaranteed.  At least Lambda is proving this concept with a tweak.






Chinedu Okoro
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