Pan-African software engineering talent startup, Andela, just announced that it has laid off 135 staff across four countries it operates in.

This was made known to more than 1,300 staff in seven countries — Egypt, Ghana, Kenya, Nigeria, Rwanda, Uganda, and the US via a video conference call led by CEO, Jeremy Johnson.

According to him, Andela’s customer base has collectively done fairly well this period.

However, the decision had to be taken because the majority of these customers have been impacted by the recession caused by the coronavirus pandemic, hence, the startup is projecting a decline in customers and an increase in churn going forward.

“While our customer base has held up better than most, the majority have still been impacted by the economic downturn. Expectations for slow growth necessitate cost-cutting measures to ensure that we make it to the other side,” he said.

From May 8, Andela says the layoffs, which affects roughly 10% of the company, will take effect across all locations except Kenya and Egypt and the startup will provide severance packages and four months of health coverage for the affected employees.

In September last year, the company announced the laying off of 420 junior developers across Nigeria, Uganda, and Kenya. At the time, the company said it was restructuring its talent pool to more closely align with global market demand.

The company then shifted its business focus from being a talent accelerator to a full-on talent outsourcing firm as it began acquiring more senior developers.

“We will hire another 700 experienced engineers by the end of 2020 in order to keep up with demand from our partners,” Jeremy wrote in a blog post at the time.

It remains to be seen if the company will meet its target come December but barely five months into 2020, Andela has had to repeat the layoff process yet again.

Suggested Read: How Andela will hire 700 more senior developers by 2020 and what it means for Africa

This is the third set of layoffs to have occurred in the space of nine months as the second round was reported in late February and was said to have been initiated via a ‘voluntary exit program’ for developers in Kenya, Uganda, and Nigeria.

However, the condition of this particular lay off is quite different from the previous ones as companies all over the world are either laying off, slashing salaries or furloughing due to the recession caused by the pandemic.

And unlike the previous layoffs, Andela says engineers will not be affected as other departments are trimmed.

The company also stated that these layoffs will not affect staff in Ghana and Rwanda.

Going forward, Johnson says Andela’s directors will have their salaries slashed by 10% to 30% as the company hopes to save about $5 million from the layoffs and in the long run, reduce its expenses of almost $25 million on software, travel, compensations among others.

Nigerian startups raised $55.4m in Q1 2020; over 99% of which came from foreign sources. Find out more when you download the full report.

Subscribe to the Techpoint Africa Newsletter for weekly updates

Comments