A Forrester Total Economic Impact™ Study Commissioned By Andela, June 2024
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Digital transformation of business operations around the world is driving demand for technically talented workers. However, organizations face hurdles with recruiting and scaling up technical talent, including lengthy hiring timelines, underperforming hires, and administrative costs. To avoid these challenges, organizations need a partner that can capably provide high-quality, reliable talent.
Andela operates a global marketplace of skilled technologists. Through Andela, organizations can quickly source and onboard proven, technically skilled talent to drive digital transformation. This adaptive approach to hiring allows companies to scale up or down as needed to respond to their rapidly changing needs.
Andela commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying Andela.1 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Andela on their organizations.
Return on investment (ROI)
97%97%
Net present value (NPV)
$10.9M$10.9M
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed four customers and surveyed 30 respondents from companies with experience using Andela’s services. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization that is a global organization headquartered in North America with 2,500 employees and revenue of $1 billion per year.
generates in annual revenue and has employees. It expects to hire professionals from Andela in Year 1, in Year 2, and in Year 3 of the analysis. Custom results are based on user inputs and the TEI case study.
Base: 30 representatives of organizations that are Andela customers
Source: A commissioned study conducted by Forrester Consulting on behalf of Andela, May 2024.
Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
For , this benefit might be worth over three years.
For , this benefit might be worth over three years.
For , this benefit might be worth over three years.
For , this benefit might be worth over three years.
For , this benefit might be worth over three years.
Unquantified benefits. Benefits that provide value for the composite organization but are not quantified for this study include:
Costs. Three-year, risk-adjusted PV costs for the composite organization include:
For , these costs could represent over three years.
The financial analysis which is based on the interviews and survey found that a composite organization experiences benefits of $22.0 million over three years versus costs of $11.2 million, adding up to a net present value (NPV) of $10.9 million and an ROI of 97%.
might experience benefits of over three years versus costs of , adding up to an NPV of and an ROI of 0%.
“The reason we work with Andela is the agility it gives us. We’re able to onboard somebody faster with the right skill set, they’re able to ramp up quickly and swiftly deliver results to get us over the finish line.”
VP, worldwide partner and expert services, software
Return on investment (ROI):
Benefits PV:
Net present value (NPV):
From the information provided in the interviews and survey, Forrester constructed a Total Economic Impact™ framework for those organizations considering an investment in Andela.
The objective of the framework is to identify the cost, benefit, flexibility, and risk factors that affect the investment decision. Forrester took a multistep approach to evaluate the impact that Andela can have on an organization.
Interviewed Andela stakeholders and Forrester analysts to gather data relative to Andela.
Interviewed four representatives and surveyed 30 respondents at organizations using Andela to obtain data about costs, benefits, and risks.
Designed a composite organization based on characteristics of the interviewees’ and survey respondents’ organizations.
Constructed a financial model representative of the interviews and survey using the TEI methodology and risk-adjusted the financial model based on issues and concerns of the interviewees and survey respondents.
Employed four fundamental elements of TEI in modeling the investment impact: benefits, costs, flexibility, and risks. Given the increasing sophistication of ROI analyses related to IT investments, Forrester’s TEI methodology provides a complete picture of the total economic impact of purchase decisions. Please see Appendix A for additional information on the TEI methodology.
Readers should be aware of the following:
This study is commissioned by Andela and delivered by Forrester Consulting. It is not meant to be used as a competitive analysis.
Forrester makes no assumptions as to the potential ROI that other organizations will receive. Forrester strongly advises that readers use their own estimates within the framework provided in the study to determine the appropriateness of an investment in Andela. For the interactive functionality using Configure Data/Custom Data, the intent is for the questions to solicit inputs specific to a prospect's business. Forrester believes that this analysis is representative of what companies may achieve with Andela based on the inputs provided and any assumptions made. Forrester does not endorse Andela or its offerings. Although great care has been taken to ensure the accuracy and completeness of this model, Andela and Forrester Research are unable to accept any legal responsibility for any actions taken on the basis of the information contained herein. The interactive tool is provided ‘AS IS,’ and Forrester and Andela make no warranties of any kind.
Andela reviewed and provided feedback to Forrester, but Forrester maintains editorial control over the study and its findings and does not accept changes to the study that contradict Forrester’s findings or obscure the meaning of the study.
Andela provided the customer names for the interviews but did not participate in the interviews. Andela also provided respondents for the survey. Forrester fielded the double-blind survey using a third-party survey partner.
Consulting Team:
Corey McNair
Carmen Serradilla Ortiz
Forrester interviewed four customers and surveyed 30 respondents with experience using Andela’s services at their organizations. For more details on these individuals and the organizations they represent, see Appendix B.
Prior to using Andela’s services, the organizations primarily used in-house hiring teams to source, recruit, and hire employees. They also used some third-party staffing agencies but looked to Andela to scale that approach. Interviewees noted how their organizations struggled with common challenges, including:
Base: 30 representatives of organizations that are Andela customers
Note: Showing top 5 responses
Source: A commissioned study conducted by Forrester Consulting on behalf of Andela, May 2024.
The interviewees’ and survey respondents’ organizations searched for a solution that could:
“The world’s changed. Having a partner like Andela helps me scale up and down the technical functions where I need support. That’s the future of business.”
Worldwide partner and expert services, software
“Andela has exposed us to talent we wouldn't have access to. It makes a big difference as you build teams when you look at the quality, drive, and passion of workers operating out of different countries and regions.”
Chief technology officer, information technology
Based on the interviews and survey, Forrester constructed a TEI framework, a composite company, and an ROI analysis that illustrates the areas financially affected. The composite organization is representative of the four interviewees and 30 survey respondents, and it is used to present the aggregate financial analysis in the next section. The composite organization has the following characteristics:
Description of composite. The global, billion-dollar organization has 2,500 employees and operates across multiple business lines. The organization has a team of developers that works on multiple projects throughout the year. An in-house hiring team is responsible for sourcing and recruiting full-time talent, and technical teams participate in interviewing and reviewing candidates. The organization looks to Andela to support staffing operations and relieve internal bandwidth burdens around hiring and onboarding processes.
generates in annual revenue and has employees. It expects to hire professionals from Andela in Year 1, in Year 2, and in Year 3 of the analysis.
Deployment characteristics. The composite organization hires 20 workers through Andela in Year 1. The talent is brought in to support various projects; each have different contract lengths for their services depending on the project or areas where support is needed. In the first year, the composite organization has 10 projects that require external support and involve Andela talent.
Following positive experiences with the talent in Year 1, the organization has 40 workers from Andela supporting projects in Year 2 and 50 workers in Year 3. The number of projects leveraging Andela talent grows to 20 in Year 2 and to 25 in Year 3.
The following table shows custom results for .
Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
---|---|---|---|---|---|---|
Atr | Hiring cost efficiencies | $169,560 $169,560 | $339,120 $339,120 | $423,900 $423,900 | $932,580 $932,580 | $752,892 $752,892 |
Btr | Increased project value from accelerated productivity | $365,538 $365,538 | $1,096,615 $1,096,615 | $1,370,769 $1,370,769 | $2,832,923 $2,832,923 | $2,268,481 $2,268,481 |
Ctr | Avoided compliance infraction costs | $180,000 $180,000 | $270,000 $270,000 | $337,500 $337,500 | $787,500 $787,500 | $640,346 $640,346 |
Dtr | Avoided talent replacement costs | $540,000 $540,000 | $1,080,000 $1,080,000 | $1,350,000 $1,350,000 | $2,970,000 $2,970,000 | $2,397,746 $2,397,746 |
Etr | Worker cost efficiency | $3,600,000 $3,600,000 | $7,200,000 $7,200,000 | $9,000,000 $9,000,000 | $19,800,000 $19,800,000 | $15,984,974 $15,984,974 |
Total benefits (risk-adjusted) | $4,855,098 $4,855,098 | $9,985,735 $9,985,735 | $12,482,169 $12,482,169 | $27,323,003 $27,323,003 | $22,044,439 $22,044,439 | |
Evidence and data. Interviewees said Andela’s services significantly shortened the time to hire technical talent for their organizations. In particular, the recruiting and screening stages were most streamlined. Andela shared curated lists of potential matches with the organizations based on what support their team sought; this process effectively eliminated the need to create a job posting and reach out to prospective talent to join their company.
Andela’s roster of available talent comes certified in specific technical skills and specialties, with emphasis on application engineering, AI, cloud computing, and data and analytics. The breadth of Andela’s talent marketplace helped the interviewees’ organizations find the right matches for the hiring teams’ needs and thus minimized the time spent reviewing applications and screening candidates for roles.
Hiring employees then primarily came down to a round of interviews and a skills test. For companies where the interview process traditionally took upwards of two months, it took less than two weeks with Andela.
The head of engineering at a CPG organization said: “We’re able to get through interview rounds really fast. Once we built a track record and trust with Andela, we’re not doing five rounds of interviews to reach a decision, we’re doing two or three. I’ve gotten turnaround of two weeks versus six.”
Interviewees said they appreciate how Andela pulls talent with diverse skill sets from around the world. The global executive director at an advertising and marketing company said: “Andela has a unique advantage because they’re looking at the entire world for talent. With Andela, we speak to one person who identifies a candidate that fits our criteria, and they help us move 70% faster with hiring for certain roles.”
Beyond faster hiring, Andela helped relieve hiring teams of securing a PEO or manager to oversee admin work for the external hires, including payroll and tax compliance. The VP of worldwide partner and expert services at a technology company said: “There’s not a lot of back and forth. We tell them we need someone with a background in high tech, and they come back with someone. We say yes or no, but if all looks good, then we say yes, and after a few days, Andela has onboarded them, and they’re in our system. [Andela is] kind of a blessed partner.”
Base: 30 representatives of organizations that are Andela customers
Note: Showing top 5 responses
Source: A commissioned study conducted by Forrester Consulting on behalf of Andela, May 2024.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Factors that could impact the size of this benefit for organizations include:
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $753,000.
For , this benefit may have a three-year, risk-adjusted total PV of .
66%
Accelerated time to hire technical talent
The following table shows custom results for .
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
A1 | Talent from Andela supporting projects annually | CompositeComposite | 2020 | 4040 | 5050 |
A2 | FTEs involved in hiring talent | CompositeComposite | 88 | 88 | 88 |
A3 | Time spent per FTE on hiring per contract talent without Andela (hours) | Interviews/ survey | 2020 | 2020 | 2020 |
A4 | Total time spent on hiring talent before Andela (hours) | A1*A2*A3 | 3,2003,200 | 6,4006,400 | 8,0008,000 |
A5 | Subtotal: Acceleration in time to hire | Interviews/ survey | 66%66% | 66%66% | 66%66% |
A6 | Time spent per FTE on hiring per contract talent with Andela (hours) (rounded) | A3*A5 | 6.86.8 | 6.86.8 | 6.86.8 |
A7 | Total time spent on hiring with Andela (hours) | A1*A2*A6 | 1,0881,088 | 2,1762,176 | 2,7202,720 |
A8 | Time saved on hiring contract talent (hours) | A1*A2*(A3-A6) | 2,1122,112 | 4,2244,224 | 5,2805,280 |
A9 | Blended, fully loaded hourly rate for an employee on the hiring team | TEI standard | $75 $75 | $75 $75 | $75 $75 |
A10 | Savings on time spent hiring talent | A8*A9 | $158,400 $158,400 | $316,800 $316,800 | $396,000 $396,000 |
A11 | PEO service costs per employee before Andela | Interviews/survey | $1,500 $1,500 | $1,500 $1,500 | $1,500 $1,500 |
A12 | Avoided PEO costs with Andela talent | A1*A11 | $30,000 $30,000 | $60,000 $60,000 | $75,000 $75,000 |
At | Hiring cost efficiencies | A10+A12 | $188,400 $188,400 | $376,800 $376,800 | $471,000 $471,000 |
Risk adjustment | ↓10% | ||||
Atr | Hiring cost efficiencies (risk-adjusted) | $169,560 $169,560 | $339,120 $339,120 | $423,900 $423,900 | |
Three-year total: $932,580 $932,580 | Three-year present value: $752,892 $752,892 |
Evidence and data. Interviewees said faster time to hire talent for their organizations’ technical teams meant they could quickly scale up support on projects as needed to move them along. The high-quality work delivered by Andela talent ensured that teams not only met deadlines, but they completed projects well ahead of expected delivery.
When interviewees first started working with Andela talent, they recognized that individuals were more prepared to support technical teams from the start. The head of engineering at a CPG company said: “Whenever I interview a candidate from Andela, they already know the role. The candidates spend time trying to find out more about us because they consider it a long-term engagement.” This was further evidenced by surveyed Andela users: 68% agreed their organization saw accelerated ramp-up speed on projects with Andela talent.
The VP of worldwide partner and expert services at a technology company shared that after adding two talents from Andela to start on a Wednesday, they’d heard from team members that the individuals were already adding value by Friday. For projects leveraging Andela talent, the interviewee identified that the average development timeline was cut in half from between six to 12 months to between three to six months.
The quality of support provided by Andela talent was a key factor in pushing projects over the finish line. Less rework occurred because the hires wrote code and carried out tasks correctly on their first attempt. Three in five survey respondents agreed that Andela talent helped reduce the amount of project rework/fixes. In addition, 10 of the survey respondents identified that time spent on rework per project was reduced by at least one week.
The high level of performance among Andela talent established trust across technical teams. The global executive director at an advertising and marketing company said: “We’re doing more projects with fewer complaints and higher client satisfaction. When a client comes to us with a solution they want put together, we’re more likely to deliver against it than we would have in the past.” Projects at the interviewee’s organization that had taken three months on average to complete now took one month.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Factors that could impact the size of this benefit for organizations include:
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $2.3 million.
For , this benefit may have a three-year, risk-adjusted total PV of .
33%
Shortened project timelines
$13.8 million
Additional revenue recognized
“Andela stood out because they were more than a vendor, helping us to find people to write code and deliver it. They were keenly interested in helping us get the project over the finish line and to help refine ways of ensuring that happened.”
Chief technology officer, information technology
The following table shows custom results for .
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
B1 | Technical projects requiring external support on average | CompositeComposite | 1010 | 2020 | 2525 |
B2 | Project team members (including Andela talent) | CompositeComposite | 66 | 66 | 66 |
B3 | Length of projects before Andela (weeks) | InterviewsInterviews | 3636 | 3636 | 3636 |
B4 | Subtotal: Length of projects with Andela (weeks) | Interviews / SurveyInterviews/survey | 2828 | 2424 | 2424 |
B5 | Average annual revenue for an employee | CompositeComposite | $400,000 $400,000 | $400,000 $400,000 | $400,000 $400,000 |
B6 | Subtotal: Additional revenue recognized from accelerated project completion (rounded) | (B5/52 weeks)*(B1*B2*(B3-B4)) | $3,692,308 $3,692,308 | $11,076,923 $11,076,923 | $13,846,154 $13,846,154 |
B7 | Profit margin | TEI standard | 11%11% | 11%11% | 11%11% |
Bt | Increased project value from accelerated productivity | B6*B7 | $406,154 $406,154 | $1,218,462 $1,218,462 | $1,523,077 $1,523,077 |
Risk adjustment | ↓10% | ||||
Btr | Increased project value from accelerated productivity (risk-adjusted) | $365,538 $365,538 | $1,096,615 $1,096,615 | $1,370,769 $1,370,769 | |
Three-year total: $2,832,923 $2,832,923 | Three-year present value: $2,268,481 $2,268,481 |
Evidence and data. By working with Andela, interviewees’ organizations avoided handling paperwork around classifying the work status of international contractors and any reviews of the legal compliance of contracts. This helped interviewees to limit the risk of fines their company may have faced if it misclassified an employee or failed to meet compliance standards, which can total thousands of dollars depending on the severity.
In some cases, interviewees’ organizations worked with multiple offshoring partners to handle work related to taxes for workers from different countries. Keeping track of employees around the world and related paperwork made it difficult for managers to stay on top of documentation and ensure everything was filed correctly. The executive director at an advertising and marketing company said that Andela “derisks” their organization by handling that work and helps it avoid creating policies and procedures to onboard that talent.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Factors that could impact the size of this benefit for organizations include:
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $640,000.
For , this benefit may have a three-year, risk-adjusted total PV of .
The following table shows custom results for .
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
C1 | Talent from Andela supporting projects annually | A1 | 2020 | 4040 | 5050 |
C2 | Potential likelihood of contractor misclassification error | CompositeComposite | 15%15% | 15%15% | 15%15% |
C3 | Cost per employee misclassified | InterviewsInterviews | $30,000 $30,000 | $30,000 $30,000 | $30,000 $30,000 |
C4 | Subtotal: Avoided fines from misclassification errors | C1*C3 | $90,000 $90,000 | $180,000 $180,000 | $225,000 $225,000 |
C5 | Avoided legal and tax contract review per talent hired | CompositeComposite | $3,000 $3,000 | $3,000 $3,000 | $3,000 $3,000 |
C6 | Subtotal: Avoided legal and tax contract review per talent hired | C1*C5 | $60,000 $60,000 | $120,000 $120,000 | $150,000 $150,000 |
C7 | Subtotal: Avoided policy and procedure efforts | Interviews | $50,000 $50,000 | ||
Ct | Avoided compliance infraction costs | C4+C6+C7 | $200,000 $200,000 | $300,000 $300,000 | $375,000 $375,000 |
Risk adjustment | ↓10% | ||||
Ctr | Avoided compliance infraction costs (risk-adjusted) | $180,000 $180,000 | $270,000 $270,000 | $337,500 $337,500 | |
Three-year total: $787,500 $787,500 | Three-year present value: $640,346 $640,346 |
“Andela takes away risk from our organization. We don’t have to deal with global staffing paperwork that include taxes or transfer pricing, all that is out the window. Andela’s service level agreement to handle that removes those risks.”
Global executive director, advertising and marketing
Evidence and data. Interviewees said technical projects sometimes experienced delays from unexpected departures and/or poor employee performance requiring replacement, leading to tangible value loss for their organizations because they could not get work done. Hiring teams were able to get ahead of unplanned exits by hiring talent from Andela to work the length of projects or on a finite timeline. Their satisfaction with the performance of Andela talent also helped them avoid the pitfall of having to replace poor-performing employees.
Each interviewee’s organization has been working with Andela for at least two years and has hired dozens of workers from Andela, and the interviewees saw consistent performance across the hires. The advertising and software interviewee reported satisfaction with 95% of the talent their organization hired; meanwhile, the VP, worldwide partner and expert services in software said their company only had one instance where a worker didn’t meet expectations.
The head of engineering at the CPG organization said confidence in the performance of Andela’s talent led their company to shift the percentage of Andela talent supporting projects from 30% of the team to 60%. The organization also kept talent on board for over a year based on their performance. This shift also helped them to mitigate the number of unexpected departures among full-time employees that could delay projects. The head of engineering said: “We’ve been able to make that shift because of the stability the Andela hires bring to the team. … I forget that key people on my team come from Andela. I’ve got feature leads on our mobile team that come from Andela. It’s been awesome.”
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Factors that could impact the size of this benefit for organizations include:
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $2.4 million.
For , this benefit may have a three-year, risk-adjusted total PV of .
The following table shows custom results for .
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
D1 | Talent from Andela supporting projects annually | A1 | 2020 | 4040 | 5050 | |
D2 | Turnover rate with talent before Andela | CompositeComposite | 10%10% | 10%10% | 10%10% | |
D3 | Avoided talent replaced (rounded) | D1*D2 | 22 | 44 | 55 | |
D4 | Avoided cost per talent replaced | E2*1.5 | $300,000 $300,000 | $300,000 $300,000 | $300,000 $300,000 | |
Dt | Avoided talent replacement cost | D3*D4 | $600,000 $600,000 | $1,200,000 $1,200,000 | $1,500,000 $1,500,000 | |
Risk adjustment | ↓10% | |||||
Dtr | Avoided talent replacement cost (risk-adjusted) | $540,000 $540,000 | $1,080,000 $1,080,000 | $1,350,000 $1,350,000 | ||
Three-year total: $2,970,000 $2,970,000 | Three-year present value: $2,397,746 $2,397,746 |
“It’s an expensive process to replace someone. The fact that we keep [Andela] talent with us for over a year is a big indicator of our success with them.”
Head of engineering, CPG
Evidence and data. At interviewees’ organizations where budgets were either tight or shrinking, hiring managers didn’t have the available funds to add the technical talent necessary to complete projects. By working with Andela, the hiring managers were able to maximize remaining talent budget to best support in-house workers. The global executive director at an advertising and marketing company said: “It helps our morale when we have people on the team who are actually helping our in-house teams’ lives get better. We’re tracking employee experience around this continuously because it helps us make the case for using Andela.”
Fluctuating business performance at the interviewees’ organizations also meant managers would have to make cases for more budget or face eliminating positions if budget suddenly disappeared. By working with Andela, managers avoided some of these painful conversations around asking for budget or relaying bad news to an employee. Technical teams were also spared the negative morale impact from sudden changes to their team.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Factors that could impact the size of this benefit for organizations include:
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $16.0 million.
For , this benefit may have a three-year, risk-adjusted total PV of .
The following table shows custom results for .
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
E1 | Talent from Andela supporting projects annually | A1 | 2020 | 4040 | 5050 | |
E2 | Average cost for a full-time support employee | TEI standardTEI standard | $200,000 $200,000 | $200,000 $200,000 | $200,000 $200,000 | |
E3 | Average cost of support with Andela | Interviews | $120,000 $120,000 | $120,000 $120,000 | $120,000 $120,000 | |
E4 | Avoided cost per talent with Andela | E2-E3 | $80,000 $80,000 | $80,000 $80,000 | $80,000 $80,000 | |
Et | Worker cost efficiency | E1*E2 | $4,000,000 $4,000,000 | $8,000,000 $8,000,000 | $10,000,000 $10,000,000 | |
Risk adjustment | ↓10% | |||||
Etr | Worker cost efficiency (risk-adjusted) | $3,600,000 $3,600,000 | $7,200,000 $7,200,000 | $9,000,000 $9,000,000 | ||
Three-year total: $19,800,000 $19,800,000 | Three-year present value: $15,984,974 $15,984,974 |
“Being able to get some cost leverage where we need it was important. With our account manager, there were no delays. We communicate our needs, and they respond with, ‘Here’s what we can do.’”
VP, worldwide partner and expert services, software
Interviewees and survey respondents mentioned the following additional benefits that their organizations experienced but were not able to quantify:
“The biggest thing I’ve noticed that’s different with Andela is that they’re advocates for their talent. They can identify diverse sets of skills that make for a good, balanced team that can best support our needs.”
Head of engineering, CPG
The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement Andela’s services and later realize additional uses and business opportunities, including:
Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).
66%
Project acceleration with MSP
“We’ve seen better success rates with the managed service program (MSP) model. It was a perfect fit for what we needed and what we're looking to do more of.”
Chief technology officer, information technology
The following table shows custom results for .
Ref. | Cost | Initial | Year 1 | Year 2 | Year 3 | Total | Present Value |
---|---|---|---|---|---|---|---|
Dtr | Andela service costs | $0 $0 | $2,520,000 $2,520,000 | $5,040,000 $5,040,000 | $6,300,000 $6,300,000 | $13,860,000 $13,860,000 | $11,189,482 $11,189,482 |
Total costs (risk adjusted) | $0 $0 | $2,520,000 $2,520,000 | $5,040,000 $5,040,000 | $6,300,000 $6,300,000 | $13,860,000 $13,860,000 | $11,189,482 $11,189,482 | |
Evidence and data. Costs varied for interviewees’ organizations based on the skill sets of workers they added from Andela. There were not any additional costs from leveraging Andela’s services beyond paying for the talent itself.
Modeling and assumptions. Based on the interviews, Forrester assumes the average rate for the mix of talent brought over from Andela is $10,000 per month.
Risks. Factors that could impact the size of this benefit for organizations include:
Results. To account for these risks, Forrester adjusted this cost upward by 5%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $11.2 million.
For , assuming an average monthly rate of for talent hired with Andela, these costs may have a three-year, risk-adjusted total PV of .
The following table shows custom results for .
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|---|
F1 | Projects per month | A1 | 2020 | 4040 | 5050 | |
F2 | Average monthly rate for talent | TEI standard | $10,000 $10,000 | $10,000 $10,000 | $10,000 $10,000 | |
Ft | Andela service costs | F1*F2*F3*12 months | $0 | $2,400,000 $2,400,000 | $4,800,000 $4,800,000 | $6,000,000 $6,000,000 |
Risk adjustment | ↑5% | |||||
Ftr | Andela service costs (risk-adjusted) | $0 | $2,520,000 $2,520,000 | $5,040,000 $5,040,000 | $6,300,000 $6,300,000 | |
Three-year total: $13,860,000 $13,860,000 | Three-year present value: $11,189,482 $11,189,482 |
The financial results calculated in the Benefits and Costs sections can be used to determine the ROI, NPV, and payback period for the composite organization’s investment. Forrester assumes a yearly discount rate of 10% for this analysis.
These risk-adjusted ROI and NPV values are determined by applying risk-adjustment factors to the unadjusted results in each Benefit and Cost section.
The following table shows custom results for .
Year 1 | Year 2 | Year 3 | Total | Present Value | ||
---|---|---|---|---|---|---|
Total costs | ($2,520,000)($2,520,000) | ($5,040,000)($5,040,000) | ($6,300,000)($6,300,000) | ($13,860,000)($13,860,000) | ($11,189,482)($11,189,482) | |
Total benefits | $4,855,098 $4,855,098 | $9,985,735 $9,985,735 | $12,482,169 $12,482,169 | $27,323,003 $27,323,003 | $22,044,439 $22,044,439 | |
Net benefits | $2,335,098 $2,335,098 | $4,945,735 $4,945,735 | $6,182,169 $6,182,169 | $13,463,003 $13,463,003 | $10,854,957 $10,854,957 | |
ROI | 97%97% | |||||
Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.
Benefits represent the value delivered to the business by the product. The TEI methodology places equal weight on the measure of benefits and the measure of costs, allowing for a full examination of the effect of the technology on the entire organization.
Costs consider all expenses necessary to deliver the proposed value, or benefits, of the product. The cost category within TEI captures incremental costs over the existing environment for ongoing costs associated with the solution.
Flexibility represents the strategic value that can be obtained for some future additional investment building on top of the initial investment already made. Having the ability to capture that benefit has a PV that can be estimated.
Risks measure the uncertainty of benefit and cost estimates given: 1) the likelihood that estimates will meet original projections and 2) the likelihood that estimates will be tracked over time. TEI risk factors are based on “triangular distribution.”
The present or current value of (discounted) cost and benefit estimates given at an interest rate (the discount rate). The PV of costs and benefits feed into the total NPV of cash flows.
The present or current value of (discounted) future net cash flows given an interest rate (the discount rate). A positive project NPV normally indicates that the investment should be made unless other projects have higher NPVs.
A project’s expected return in percentage terms. ROI is calculated by dividing net benefits (benefits less costs) by costs.
The interest rate used in cash flow analysis to take into account the time value of money. Organizations typically use discount rates between 8% and 16%.
The breakeven point for an investment. This is the point in time at which net benefits (benefits minus costs) equal initial investment or cost.
The initial investment column contains costs incurred at “time 0” or at the beginning of Year 1 that are not discounted. All other cash flows are discounted using the discount rate at the end of the year. PV calculations are calculated for each total cost and benefit estimate. NPV calculations in the summary tables are the sum of the initial investment and the discounted cash flows in each year. Sums and present value calculations of the Total Benefits, Total Costs, and Cash Flow tables may not exactly add up, as some rounding may occur.
Role | Industry | Region | Number of employees |
---|---|---|---|
VP, worldwide partner and expert services | Software | HQ in North America, global operations | 3,000+ |
Global executive director | Advertising and marketing | Global operations | 10,000+ |
Chief technology officer | Information technology | North America | 1,500+ |
Head of engineering | CPG | HQ in North America, global operations | 130,000+ |
Base: 30 representatives of organizations that are Andela customers
Note: Percentages may not total 100 because of rounding.
Source: A commissioned study conducted by Forrester Consulting on behalf of Andela, May 2024.
Related Forrester Research
Maximize The Impact Of Service Providers In Delivering High-Performance IT, Forrester Research, Inc., June 4, 2024.
How To Recruit, Develop, And Retain The Best Digital Talent, Forrester Research, Inc. March 21, 2024.
How To Tackle Your Emerging Tech Skill Gaps, Forrester Research, Inc., December 7, 2023.
1 Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.
Forrester provides independent and objective research-based consulting to help leaders deliver key transformation outcomes. Fueled by our customer-obsessed research, Forrester’s seasoned consultants partner with leaders to execute on their priorities using a unique engagement model that tailors to diverse needs and ensures lasting impact. For more information, visit forrester.com/consulting.
© Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies.
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