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  • Tech - News - Startups
  • Updated: May 06, 2020

More Trouble Ahead For Andela As It Sacks 135 Workers, Customer Base Crumbling

More Trouble Ahead For Andela As It Sacks 135 Workers, Custo

 

Software engineering company, Andela, has joined the growing list of companies sacking workers to save cost. Andela is struggling in the economic downturn fueled by COVID-19, and in order to remain in business post-coronavirus, Andela laid off 135 of its engineers.

The retrenchment was done after Andela's Chief Executive Officer, Jeremy Johnson held a video-conference call with employees in Nigeria, Uganda, Kenya, Rwanda, Ghana, Egypt, and the United States. While Andela didn't downsize at its subsidiaries in Ghana and Rwanda, other locations where Andela operates experienced retrenchment.

The 135 workers sacked represents 10% of the company's workforce. It was also reported by Techcabal that Directors of the talent pool company will receive a salary cut. Andela was said to be pondering slashing the salary of the workers rather than an alright sack, however, it was disclosed that such measure will only have less impact on the company's finances.

Why is Andela laying off workers?

Andela concluded on laying off 10% of its workforce due to the impact of coronavirus on its 'partners' business. Andela depends on third party companies to generate revenue. This is because the software engineering firm trains individuals without a charge.

The company hires these trained software engineers to companies in need of their talent. Its simply an outsourcing firm with its own workers. But with the shutdown of business operation for over a month globally, which has led majority of companies to perform skeleton operation, Andela's business partners are unable to request or keep these engineers, hence, cutting down on expenses.

Majority of the affected engineers are reportedly the first-level engineers. This is not the first time first-level engineers will face mass sacking. Last year, Andela had also conducted a purge, which affected majorly junior engineers after companies began to prefer senior engineers.

The sack will boost Andela's revenue

The sack of the 135 workers is financially motivated. As earlier stated, the downsizing is a cost-saving measure that will help Andela save $5 million. Also, part of the cost-saving measures include cutting operational costs from travel, compensations, software and others; this cut will enable Andela save about $25 million.

Meanwhile, from directors and above, Andela will be slashing their salaries by 10% to 30% depending on their position. Andela is just one of several companies in Nigeria and globally adopting retrenchment and salary cut as a means to mitigate the fallout of COVID-19.

More trouble for Andela

Despite the capital expected to be saved from the downsizing and salary cut, Andela still has more to worry about as the company expects to have a decline in its customer base. This is one of the reasons that prompted the cost-saving measures.

Johnson said, “While our customer base has held up better than most, the majority have still been impacted by the economic downturn,”. The company expects to “see churn spike this year as well as a decline in new customers due to the economic uncertainty.” This shows Andela is struggling due to COVID-19, and it want to remain in business post-coronavirus.

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