The Total Economic Impact™ Of Andela
Cost Savings And Business Benefits Enabled By Andela
A Forrester Total Economic Impact™ Study Commissioned By Andela, June 2024
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.
“Which of the following benefits has your organization experienced as a result of your investment in Andela?”
Base: 30 representatives of organizations that are Andela customers
Source: A commissioned study conducted by Forrester Consulting on behalf of Andela, May 2024.
Key Findings
Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
- Accelerated time to hire talent by 66%. Andela’s services significantly shorten the time to hire technical talent for the composite organization. In particular, the recruiting and screening stages are streamlined so the organization no longer has to create job listings, reach out to candidates, and sort through them. The organization saves 106 hours on hiring efforts per talent brought on board, totaling over 2,000 hours saved in Year 1 and over 5,200 by Year 3. The organization also avoids professional employee organization (PEO) costs by working with Andela. Altogether, these benefits total $753,000 in value.
For , this benefit might be worth over three years.
- Accelerated timelines and high-quality work resulting in millions of additional revenue. The composite organization quickly scales up the number of talent supporting projects, and the quality of work they bring helps accelerate project timelines by 33%. With a faster time to market and less rework or fixes due to talent performance, the organization recognizes value on projects sooner. In Year 1, the organization brings in $3.7 million in additional revenue; by Year 3, this grows to $13.8 million. With operating margin applied, the three-year present value totals $2.3 million for the organization.
For , this benefit might be worth over three years.
- Avoided compliance infraction risk costs of $640,000. By working with Andela, the composite organization avoids handling paperwork around contractors and reviews of legal compliance of the contracts. Andela assumes this responsibility and limits the organization’s exposure to the risk of misclassifying employees, thus helping them avoid incurring significant fines.
For , this benefit might be worth over three years.
- Avoided $2.4 million in costs for replacing talent. The organization avoids challenges that come from unexpected departures and/or poor employee performance, like loss of knowledge, training, and loss of productivity on projects. By adding talent to support specific projects, who also perform satisfactorily, the organization avoids turnover that would otherwise cost $300,000 per employee.
For , this benefit might be worth over three years.
- Recognized cost savings of $80,000 per talent hired from Andela. The organization maximizes hiring budget limitations by adding talent from Andela that is 40% more cost efficient than if they hired talent themselves. More workers are added to support projects than could be afforded previously, helping employees meet project delivery goals.
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:
- Ability to scale talent up and down. Andela enables greater flexibility to add or remove talent based on project needs. The speed with which Andela satisfies requests for talent shortens the window to bring people on board. Meanwhile, Andela’s management of the talent relationship helps with shifting workers to support other projects. The organization can bring in the right talent and produce better outcomes faster and more cost effectively.
- Diversity of talent supporting projects. Andela’s global reach helps the organization to leverage talent from around the world, incorporating their perspectives into day-to-day work to produce richer outcomes. This diverse talent composition helps organizations to better reflect their global customer base and create more informed, well-rounded deliverables.
- Andela’s support to clients. Andela’s understanding of business context and ability to skill match, including through the use of AI capabilities, helps the organization to quickly find the right talent to support projects. This helps technical teams to move forward quickly and confidently with their work. Positive interactions help foster a strong partnership between the companies.
Costs. Three-year, risk-adjusted PV costs for the composite organization include:
- Andela’s talent services costs. These costs vary based on the skill sets of workers available through Andela. For the composite organization, the mix of Andela talent costs $10,000 per month on average.
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%.
Key Statistics
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Return on investment (ROI):
97%97%
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Benefits PV:
$22.0M$22.0M
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Net present value (NPV):
$10.9M$10.9M
Benefits (Three-Year)
Hiring cost effectiveness Increased product value from increased productivity Avoided compliance infraction costs Avoided talent replacement costsTEI Framework And Methodology
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.
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Due Diligence
Interviewed Andela stakeholders and Forrester analysts to gather data relative to Andela.
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Interviews And Survey
Interviewed four representatives and surveyed 30 respondents at organizations using Andela to obtain data about costs, benefits, and risks.
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Composite Organization
Designed a composite organization based on characteristics of the interviewees’ and survey respondents’ organizations.
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Financial Model Framework
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.
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Case Study
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.
Disclosures
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
Drivers leading to hiring Andela’s talent
Key Challenges
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:
- Lengthy hiring practices. The in-house hiring teams at the interviewees’ organizations spent months going through interview and testing cycles to find the right hires to support their various technical projects. Searches for employees to fill skill gaps (e.g., core engineering, cloud APIs, AI, generative AI [genAI], etc.) prolonged these cycles because of high industry demand and limited talent availability. These hiring teams consisted of multiple team members sharing input and sign-off, which hindered productivity that could have been dedicated to project work. The global executive director at an advertising and marketing agency said: “Speed to hire was our primary issue. It took too long from when a role was open to being filled. The longer it took, the more team members took on extra work. And then we have the team conducting a ton of interviews. ...You can’t make revenue goals because speed is an issue.”
- Inability to scale up talent on projects as needed. Slow hiring timelines made it difficult to add workers to projects that needed support to meet delivery timelines. In addition, budget constraints made it difficult for technical teams to scale up talent until they received approvals. Managers were often reallocating their limited resources to support more projects than they had bandwidth to do, which led to a lack of focus and diminishing quality in project outcomes.
- Underperforming hires resulting in poor project quality. Technical teams at the interviewees’ organizations acquired underperforming talent because they lacked the bandwidth to fully evaluate new-hire talent and had limited budget to recruit attractive hires. New hires were either slow to meet delivery timelines or turned in work that wasn’t on par with established staff, meaning projects weren’t finished on time — and those that were required extensive rework.
- Regular hire turnover. Interviewees’ organizations regularly faced attrition on their teams which meant that, in addition to hiring net new talent, they were also regularly working to backfill vacancies. Missing team members further delayed projects and negatively impacted employee morale. Even after hiring replacements, it took time to train them and reach the productivity levels of prior talent.
- New-hire management and paperwork. For organizations hiring offshore talent, it meant hiring a manager to oversee those employees or paying a PEO to manage those operations. Alongside these costs, the organizations had to file paperwork stating where the hires worked and details of their work status. Potential incorrect filing of this paperwork exposed organizations to regulatory and compliance errors, leading to fines totaling thousands of dollars.
“Which of the following business challenges did your organization face before your investment in Andela?”
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.
Investment Objectives
The interviewees’ and survey respondents’ organizations searched for a solution that could:
- Accelerate the hiring process through faster sourcing of certified technical talent.
- Offer the ability to quickly scale up talent support for projects.
- Introduce talent that shortens project timelines and delivers high quality work.
- Maximize talent budget available for technical projects.
- Manage operational and administrative tasks for global talent hired.
Composite Organization
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.
Quantified benefit data as applied to the composite
The following table shows custom results for .
Total Benefits
| 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 | |
Hiring Cost Efficiencies
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.”
“For roles requiring technical expertise (e.g., analysts, developers, engineers), has your organization experienced time efficiencies in any of the following areas as a result of using Andela?”
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:
- In Year 1, 20 Andela talent are onboarded to support projects. After initial experiences go successfully, the number of talent supporting projects grows to 40 in Year 2 and 50 in Year 3.
- The full-time equivalent (FTE) of eight employees are involved with hiring talent, each spending 20 hours per candidate they hire.
- Andela accelerates the hiring process by two-thirds (66%), reducing time spent hiring per FTE on each hire down to 6.8 hours.
- The fully loaded hourly rate for employees on the hiring team is $75.
- For each hire made through Andela, the organization avoids spending $1,500 on them that would have gone toward a PEO for support.
Risks. Factors that could impact the size of this benefit for organizations include:
- The amount of talent hired through Andela.
- The number of employees and time spent on hiring talent without Andela.
- The average costs of staff and PEO support.
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 .
The following table shows custom results for .
Hiring Cost Efficiencies
| 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 | ||||
Increased Project Value From Accelerated Productivity
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:
- In Year 1, the composite organization brings on Andela talent to support 10 projects. Following successful experiences with those projects, the number of projects that Andela supports grows to 20 in Year 2 and to 25 by Year 3.
- The average number of people supporting each project is six team members. Among those teams, Andela talent represents roughly one third of the members.
- The average length of each project is nine months before working with Andela talent. After onboarding talent in the first year, the timeline shrinks to seven months. With Andela talent more fully established within team workflows, the timeline on projects is six months by Year 2.
- Each employee at the composite organization is responsible for approximately $400,000 in revenue. With the project timeline efficiencies, employees can bring in revenue much more quickly.
- The operating margin for the organization is 11%.
Risks. Factors that could impact the size of this benefit for organizations include:
- The number of projects supported by Andela talent at the organization.
- The number of people involved in the projects and average project length.
- The organization’s annual revenue and operating margin.
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 .
The following table shows custom results for .
Increased Project Value From Accelerated Productivity
| 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 | ||||
Avoided Compliance Infraction Costs
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:
- For each of the talent brought onboard, the hiring team faces a 15% likelihood of potentially misclassifying contractors’ employment status if they try to handle the paperwork in-house. Each misclassification carries an average cost of $30,000. Andela enables the organization to avoid this risk.
- By working with Andela, the hiring teams avoid work involving legal and tax contract reviews which totals $3,000 of effort per talent onboarded.
- With Andela’s services, the organization does not have to create policy and procedure efforts around hiring offshore talent which totals $50,000 of effort.
Risks. Factors that could impact the size of this benefit for organizations include:
- The number of fines the organization faces for misclassifying contractors.
- The amount of time spent reviewing contracts for talent.
- The policy and procedures for contractors that may already be in place at an organization.
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 .
Avoided Compliance Infraction Costs
| 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 | ||||
Avoided Talent Replacement Costs
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:
- Hiring talent from Andela helps the organization avoid the average 10% talent turnover rate.
- The average cost to replace talent is 150% of an employee’s salary, including loss of knowledge, training, and loss of productivity during ramp-up.
Risks. Factors that could impact the size of this benefit for organizations include:
- The average turnover rate at the organization.
- The average salary and cost to replace to an employee.
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 .
Avoided Talent Replacement Costs
| 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 | |||||
Worker Cost Efficiency
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:
- For each Andela talent the organization hires, it avoids paying the annual salary of $200,000 for a full-time employee that would be beyond its budget.
- The organization allocates $120,000 toward talent from Andela, creating an $80,000 cost efficiency per talent the organization hires. This is approximately 40% less than it would have otherwise paid directly.
Risks. Factors that could impact the size of this benefit for organizations include:
- The average salary of technical employees.
- The types of roles technical teams are seeking to fill.
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 .
Worker Cost Efficiency
| 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 | |||||
Unquantified Benefits
Interviewees and survey respondents mentioned the following additional benefits that their organizations experienced but were not able to quantify:
- Ability to scale talent up and down. Interviewees said a key factor in working with Andela was the ability to add and remove talent based on project needs. The VP of worldwide partner and expert services at a software company said: “Andela’s quickness to respond to requests is helpful. If I call my account manager at Andela, I might be able to get somebody within two weeks and have them contributing within a couple days.” They said they feel confident that Andela can provide support without proposing an “outrageous” rate and long lead time. The global executive director at an advertising and marketing company spoke to efficiency with offboarding support: “Andela gives us the flexibility to add and subtract staff based on business demands. Since Andela manages the relationship with talent, they can help move them on to work with other clients.”
- Diversity of talent supporting projects. Andela’s reach of talent helped interviewees’ organizations to build diverse technical teams with different perspectives on work. The chief technology officer at an information technology company said: “[Andela exposes] us to talent in different regions and countries that we wouldn’t necessarily have exposure to. What we’ve seen with diversified talent is there’s different thought processes coming to the table and different approaches to troubleshooting and working through common projects. We’ve seen good outcomes with those team members.” The head of engineering at a CPG company added: “We have talent coming out of Africa and Latin America that bring an interesting balance based on their cultures. An engineer from one country who might be more outspoken might work better with one who’s quieter and from a different background, but just as brilliant of an engineer. This mix has worked really well for us.”
-
Andela’s support to clients. Interviewees spoke highly of Andela’s ability to quickly follow up on their requests and find the right talent to support them. The VP of worldwide partner and expert services at a software company said, “Of the external partners I’ve worked with, [Andela has] done an excellent job of fostering that partnership by making personal connections with us.”
The chief technology officer at an information technology company appreciated Andela’s collaborative approach: “Andela is always open to feedback and evolving their approach to fit our culture. Having a partner that you can grow with is key for us.”
Flexibility
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:
- Satisfaction with workers compared to previous experiences. Interviewees that worked with competing staffing agencies compared Andela favorably to those organizations. The head of engineering at a CPG company said: “Andela is twice as effective as what I’ve seen with other firms when it comes to shortening cycle times and managing opportunity costs.” In terms of quality, the global executive director at an advertising and market company said, “The quality isn’t even close with some of our partners. We have better quality talent by working with Andela.”
-
Managed service program (MSP) drives greater time and cost efficiencies. The chief technology officer at an information technology company ran test cases with Andela’s MSP approach, where a team consisting entirely of Andela talent managed end-to-end delivery of a project. The interviewee said that the work carved out for one of the projects would have taken nine months for their internal team to complete; with Andela, the project was delivered in three months while meeting the company’s quality standards.
Andela provided a right-sized team to handle the work so efforts on the project were cost efficient. The interviewee added: “It’s a better way to work, having a fixed amount of workers to focus on specific areas that you carve out. … We’ve already grown our team tremendously and now we’re evolving with MSP support to add to that.”
Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).
Quantified cost data as applied to the composite
The following table shows custom results for .
Total Costs
| 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 | |
Andela Service Costs
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:
- The type of skill sets the organization is seeking to add.
- The number of workers the organization is seeking to add.
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 .
Andela Service Costs
| 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 | |||||
Consolidated Three-Year, Risk-Adjusted Metrics
Cash Flow Chart (Risk-Adjusted)
Total costs Total benefits Cumulative net benefits-
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 .
Cash Flow Analysis (Risk-Adjusted)
| 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% | |||||
Appendix A: Total Economic Impact
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.
Total Economic Impact Approach
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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 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.
Appendix B: Interview And Survey Demographics
Interviews
| 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+ |
Survey Demographics
“Which of the following best describes the industry to which your company belongs?”
“In what country are you located?”
“Using your best estimate, how many employees work for your firm/organization worldwide?”
“Which title best describes your position at your organization?”
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.
Appendix C: Supplemental Material
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.
Appendix D: ENDNOTES
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.
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