Engineering talent outsourcing firm Andela lands $200M

Andela this week announced that it has raised $200 million in a series E round, bringing its total fund-raise to $381 million at a $1.5 billion post-money valuation. The investment, which was led by Softbank Vision Fund 2 with participation from Whale Rock and existing investors, will be used by the Nigeria-based startup to develop tools aimed at simplifying global hiring and to expand its talent pool in different geographies and verticals such as design and data.

With COVID-19 and the need to remain socially distant, organizations around the world have accelerated digital transformation efforts. The shift has increased the demand for skilled engineers who could work in a remote or hybrid work setting. According to stats from the U.S. Bureau of Labor, the employment of software developers, quality assurance analysts, and testers is projected to grow 22% by 2030, which is much faster than the average projected growth (5%) for all occupations. However, at the same time, the median time required to hire for an engineering job function is reported to be a significant 49 days.

Founded in 2014, Andela strives to solve this challenge by creating a network of remote engineering talent from across the world. The company, Africa’s second non-fintech unicorn, follows a rigorous screening process to onboard engineers and software developers onto its platform and then uses a data-driven matching process to connect the right talent with the right opportunity faster.

Engineering talent outsourcing across the globe

Andela began operations in Africa and currently represents engineers from more than 80 countries and six continents, with a placement rate of 96%. On the client side, it works with over 200 global firms, including ViacomCBS, Cloudflare, Coursera, Goldman Sachs, and GitHub.

“Our client support teams have conversations with clients to find out what sort of products they’re looking to build, what existing products they have, and how they want that to be maintained or managed,” Agnes Muthoni, the director of talent partnerships at Andela, told VentureBeat in a call. “At that point, we spend time distilling the skill sets and the experiences that are required for that specific client. Then, we tap into our existing talent network to match them with the talent meeting their needs.”

Explaining how the company taps into the talent pool, Alvaro Oliveira, EVP of talent operations at Andela, said it first uses machine learning algorithms to evaluate data points from both talent applications and job postings to create a shortlist of candidates.

“From there, a member of our matching staff manually assesses the shortlist to select the right candidate for the listing,” he told VentureBeat. Oliveira added that Andela continues to explore AI and ML for additional use cases in its business.

“We see a lot of potential in the area of machine learning and AI to help ‘go beyond the resume’ and more effectively predict a successful match,” Oliveira said.

The engineering talent outsourcing landscape

Globally, several talent marketplaces aim to connect companies with skilled remote talent, including the likes of Global Technical Talent, Crossover, Fiverr, and Toptal. The latter even sued Andela over theft of trade secrets to clone its business as well as interference with contracts, unfair competition, and misappropriation of trade secrets.

Andela, however, claims to be different from its competitors in that it provides flexible long-term opportunities with global tech companies and not just freelance or project-based gigs.

In addition to this, Muthoni said Andela stands out because of its 100,000+ global talent community, which engineers can use to connect with other candidates, as well as career coaching programs and on-demand courses that help technologists improve their skill sets.

Muthoni added, “74% of all of our underlying engineers have reported having an improvement in the quality of life, while 65% have essentially reported back an increase in take-home pay.”

Moving ahead, Andela plans to develop products to simplify global hiring, scale its platform, and strengthen the value proposition currently offered to technologists and clients. The company has already seen the number of applications grow 5x in Africa and 7.5x outside of Africa in the past six months.

“Hiring remote technical talent is one of the top challenges that companies face today. We believe Andela will become the preferred talent partner for the world’s best companies as remote and hybrid work arrangements become the norm,” Lydia Jett, partner at SoftBank Investment Advisers, said in a statement following the investment.