The United Nations’ Sustainable Development Goals (SDG) of Quality Education (Goal 4) and Decent Work (Goal 8) are interlinked objectives that aim to ensure access to fair and decent work through quality, accessible education. There are vast issues that prevent governments, industries, and individuals from achieving quality education but there is a rise in innovative solutions to address many of these root causes.
We chose to focus on the potential opportunity for “digital skilling,” which is the training of individuals on digital capabilities. Digital skilling interlinks the two goals closely given the appropriate education is more likely to translate to employment in decent work given the high demand for digital skills across job sectors. Digital skilling also requires less time than training for other industries, making it accessible to a wider set of people. With multiple forms of delivery – traditional classroom, online or blended modes, reaching a larger target audience is easier, and the customer experience is more convenient. Digital skilling includes data science skills, working on becoming a software developer etc.
Industry Current Initiatives
The private education industry traditionally sought to address quality gaps in government-provided education. In particular, vocational training and higher education institutions aimed to provide quality education in order to help people find gainful employment. However, the industry fails to fulfill SDGs 4 and 8 because it does not offer training for low-income individuals; many of the skilling programs are quite expensive and cater to middle class markets. While middle class skilling can be helpful, particularly in emerging markets, the SDGs require a broader approach.
While private education has traditionally resolved the education quality gap, technology companies have started investigating how they can help train and educate the workforce across global markets. Technology companies are motivated to participate in education as they face a talent gap and are looking for new strategies to develop human capital so their companies can grow. The digital skill gap is a critical challenge in developed and developing markets; in the United States there is a significant supply-demand gap with 5 open jobs for every 1 available software developer. Given the stark shortage in human capital, companies like Microsoft, Google, and Facebook are investing in talent development to get more candidates in their pipeline.
While talent development initiatives make sense for large technology companies, we also found that these companies are launching programs with larger social impact. Major technology corporations are looking beyond their borders to 
harness talent in developing economies, including sub-Saharan Africa. For example, Microsoft has identified digital skills training as a priority in Africa, where they launched an initiative called 4Afrika. 4Afrika is a comprehensive program that offers relevant job training while also allowing trainees to access Microsoft’s networks and partnerships around the continent. Google launched a program called Digital Skills for Africa which provides training to individuals and SMEs via in-person partner training. Another example is Moringa school that offers training for data science and software development by working with corporates to understand their requirements and train the students accordingly.
Digital skilling programs offered by major technology companies help to serve a significant need, since youth unemployment ranges from 10% to 50% across sub-Saharan Africa and 70% of youths are classified as working pooriii. However, these programs are not broad enough to fulfill the SGDs. Digital skilling programs address a specific subset of the population, and typically caters to individuals that already received a quality education. Digital skilling programs typically do not guarantee jobs to participants, who graduate the programs without adequate soft skills and experience to translate to the work environment.
The SDGs aim for equal access to various levels of education and sustained economic growth. Broad initiatives are required to achieve these aims, and technology companies offer specific support for people to learn digital skills. In order to better meet the SGDs, technology companies should offer well-rounded training and job placement opportunities. A more comprehensive approach to digital skilling can broaden the reach of the program and enable participants to use their quality education in order to achieve decent work.
Business Model Innovation
The International Finance Corporation (IFC) recently identified the African digital skills market as a $130B opportunity with a large demand-supply gap. The gap stems from education and training shortages, as the market does not have employable workers with the right set of skills to fill roles in digital functions.
Andela, a company founded in 2014 in Nairobi, aims to bridge the skill gap by providing quality digital skills education to young people across sub-Saharan African. Andela innovated digital skilling through a new business model that uses distributive employment and guaranteed job placement to resolve shortcomings of incumbent programs. As a result of these innovations, Andela de-risks the
educational process by guaranteeing employment to any student upon acceptance in the study program. After applying to the program, fellows undergo an intensive, 6-month traineeship in which their housing and food are subsidized and they receive a small, stipend. After 6 months, they are employed for 3-5 years at Andela who matches them on projects with large, U.S. technology companies.
These combined innovations are game-changing as they allow young people who may not have the ability to take on the risk of a normal education program to acquire critical skills. The job placement ensures that participants will have solid work experience, which will help them build their CV and find other jobs later. Currently, there are 20 alumni of the program who have become permanent employees at Andela, Andela’s partner organizations, or their own startups. As a result, Andela is supplying a necessary and desirable product in a way increases access and ensures long-term impact.
At the same time, the guaranteed job also has elevated the program’s reputation, contributing to its 0.7% acceptance rate, lower than almost any other educational program worldwide. In addition, they are able to be a platform matching technology companies with these students – these companies are in much need of this labor and are able to pay a cheaper price for slightly less experienced people that covers the entire cost of the fellowship and is also the way in which Andela makes money. While the concept of providing outsourced labor is not new, providing more advanced skills and allowing employees to list the company on their resume and consider them as potential hires is new and particularly game-changing when combined with the guaranteed employment.
Andela’s innovative business model is a driver of its success. Students and employers are eager to work with the company because of the talent they attract from both sides and the quality of the educational provision. Financially, Andela is more stable than many other digital skills companies and the matching component allows them to be fully sustainable financially, unlike many other digital skilling programs that are non-profit. While they serve less students, they are arguably more impactful on people’s lives as they are able to ensure they have long-term employment due to the skills and network gained. Further, they are able to offer education to a wider group of people than for-profit providers where students must have the means to pay and must also take on the risk of having to find a job after the program. As a growing number of employers want workers and pay Andela, they will be able to fund more fellows, therefore forming a feedback loop where financial growth will lead to greater impact. Another key factor about this business model is that the training the students receive is in direct relation to the skill sets required by the companies that are hiring.
While the model is effective, there are a variety of potential risks to the model. The primary risks Andela faces is anticipating student performance, placing students in jobs, and ensuring students perform well for their future employers. These risks can be addressed by continuing to refine the program and ensuring that the quality of the program matches with what employers want and need. Further, as the program grows there is potential to have a strong alumni network that will help improve job placement. There is also a risk that as it grows, it will lose some of its brand name mystique over the difficult admissions rate and that it will not appear as premium – Andela seems able to mitigate this risk by still controlling the admissions rate and keeping low but raising it somewhat to be able to accommodate more students. They also can continue to generate interest via marketing which will ensure they still have a lot of applications. This is an issue any prestigious institute like INSEAD or other business schools face and while it is a risk, it is manageable. There is also, of course, a risk that competitors or a bad economy may make the employers less interested in paying for the students as software developers. Andela can mitigate this by continuing to build strong relationships with employers as well as thinking about diversifying their mix of companies (for instance, geographically) to ensure continued success.
Barriers to scaling are the fact that the program has to remain quite small to ensure the level of education they want and the prestigious reputation. However, the program can continue to grow around the continent (and has been gradually expanding). Similar to other premium institutions, they could also come up with a variety of products that use their brand and network but perhaps don’t cover the whole cost of the program or match people with local companies and therefore require less training. Being a replicable service, they could also consider expanding to other markets like Latin America or South Asia.
Potential negative impacts of this business model are that it can take top talent in Africa and have them work on international businesses instead of working on local projects and contributing to businesses that need top skills. However, as the program has a limited timeline, it seems that many of the graduates will stay in Africa and continue to contribute to their economies with better business skills. There is a risk that some will move to the US after the skilling that does contribute to brain drain which overall has a negative impact on developing economies – yet, this is an issue with many educational institutions and we believe it is less of a risk with Andela. Further, it could also prevent people in the US from getting these jobs or access to training but overall since there is such a demand and there are more resources and jobs generally in developed markets, this does not appear to be a huge cost. Job guarantees could make other non-profit digital skilling programs seem less attractive but overall there’s potential that Andela could change the way other vocational programs work which could have positive benefits. It could also persuade people from following other important vocational tracks that are still very needed like medicine, law, social work etc. but with small numbers taken each intake, this is not a huge risk. While digital skills can sometimes harden the gender gap with more men partaking than women and therefore continuing to have better opportunities, Andela focuses on having 30% of each class be female and has all-female application cycles so it appears they are contributing to help improve this issue.
Source:
- https://www.stackoverflowbusiness.com/blog/5-quick-stats-about-developers-and-what-they-mean
- https://www.microsoft.com/africa/4afrika/
- https://www.ilo.org/africa/media-centre/pr/WCMS_514566/lang–en/index.htm
By: Nishtha CHOPRA; Lily MURPHY; Roisin PELLEY; Indra SAHA
great initiative. to avert scalability issue, maybe the firm can offer up 3/4 segments of education? it doesn’t necessarily have to match the supply from more established tech companies, but can also match them eg to small SMEs with lower skill requirements in the low tiers. Bifurcating the programs can help to minimise the risk of tarnishing reputation of the brand, as the programs are segmented such that it requires different level of skills (rather than a particular subset which makes acceptance rate lower) 🙂
Very interesting and helpful initiative to promote fairness in the world!! I think that one of the problems is the lack of skills even before their digital gap (e.g., basic skills as learning) in these countries. Thus, I believe that Andela could also help in children early education (subsidize it) and track their performance. After the basic education is covered, they can select the most promising ones for the digital program, which will mitigate the risk of anticipating student performance while helping to have a broader impact. Furthermore, I believe that this kind of programs can include sponsorship programs promoted by previous Alumni to help new generations. In this sense, they create a loop and amplify the future positive impact in these societies.
Great idea of evelating educational levels while satisfying local business needs!
I have not fully understood the economics of Andela. If you would want to explore the business even further it would be intersting to find out more: What are the costs associated with educating these students? Are the teachers existing employees? How much does Andela charge for placing their students?
Great read. Having worked at a similar organization, I have seen first hand the impact such an organization can have on the lives of the African youth. A major advantage of such a model is that it equips the students with skills and know-how to create their own entrepreneurial ventures, especially that these students get the chance to experience real world experience and therefore have practical real world experience as well. The biggest risk I see is the financial viability of such a business innovation.
I am slightly disappointed by their target of having 30% female representation as it seems quite low as a target, considering the high percentage of unemployed yet high-potential females on the continent.
This is a really interesting idea! I wonder how you might port the model outside of where Andela currently operates? (maybe with INSEAD as a way to reduce the increasing cost of tuition and the risk that students take in obtaining financing to pay those bills, bills, bills)