Understanding the Talent as A Service Model in Africa
The Talent as a Service model, popularly known as “The Andela Model” in Africa has become a widely adopted business model for numerous software companies in Nigeria. Since Andela pioneered this model in 2014 and secured recent investment rounds, many other businesses have followed suit, aiming to achieve profitability.
Andela was not the first company to implement the Talent as a Service business model in Nigeria. Other software agencies have been experimenting with this model for decades. However, Andela distinguished itself by building a community around the business and seeking foreign talent recruiters instead of focussing on building enterprise software for public agencies and corporate organisations, as existing companies did.
The Talent as a Service model allows organisations to train and recruit top talents for other organisations to work with them from your organisation. While it may seem simple, building this experience from the ground up requires a painstaking effort to attract customers, typical of a B2B business model. This means balancing demand with quality and striving for controlled growth.
The Talent as a Service model for tech services grew from the gig economy and remote working experience, with tech companies hiring remote developers to complement their in-house workforce. Initially, this trend seemed cost-effective but less efficient, as remote developers faced challenges such as different time zones, low internet connectivity, receiving payments from international organisations, understanding company culture, and taking on multiple remote gigs simultaneously.
Transitioning from this, Talent as a Service began to emerge through bootcamps and code schools seeking employment opportunities for their students. This created a new business opportunity where bootcamps could secure jobs and gigs for their students in regions with low demand, offering them as in-house projects or for a stipend.
Andela spearheaded this model in Africa by training developers for about a year and securing high-paying jobs from international firms. With its business office headquarters in New York, Andela focused on marketing and sales to secure premium gigs for its developers in Africa.
The Talent as a Service model has its pros and cons, similar to many other shared economy models. Andela covers the cost of training these developers over time and provides the resources needed for their development and growth, as well as handling their hiring and job placement. While Andela is not the only Nigerian company practising this model, it has popularised it over time. Paystack X Lambda is another example of this model, with Lambda partnering with Paystack to provide resources while Paystack offers technical jobs for the recruits.
There are other “Talent as a Service” models practiced in Europe and America, such as the boot camp model, where students attend a 2-year boot camp for free and receive job placement, with their institution taking a percentage of their earnings over time. However, the loophole in this model is that many students prefer gig jobs where they can retain 100% of their earnings, delaying payment of their expensive tuition until they secure a job as part of their contract with the institution.
Another TAAS model, “Hire for Talent,” is used by popular companies and organisations in Nigeria and beyond, serving as an in-house or outsourced talent service. This model popularised hiring individuals interested in becoming developers, training them for a period, and then placing them in full-time job roles. This allows organisations to anticipate their technical needs, recruit prospective talents, and identify those unlikely to succeed.
While the Talent as a Service model has been criticised in various domains, some labelling it a “modern-day slavery model,” it has also been praised for meeting the increasing demand for developers and reducing the timeline for developing products and solutions. By outsourcing challenging projects to TaaS companies, development agencies can take on more projects than their scope and capabilities would typically allow, while maintaining high-quality standards. Intellectual property theft is a concern, but carefully drafted NDAs and non-competes can mitigate this risk.
Top tech companies like Google, Facebook, Airbnb, and Microsoft are among the employers of TaaS companies. Microsoft, for example, has about 70,000 contingent workers compared to its 100,000 full-time workers, indicating the need for companies looking to scale their engineering to develop a network of talents in TaaS companies.
PS: This article was in draft for more than 4 years before it was published. I intentionally didn’t edit or update the nuances because it captures a time capsule.
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