
African tech workers push back on U.S. startup built to help them - kantrowitz
https://bigtechnology.substack.com/p/im-disturbed-african-tech-workers
======
injb
I'm not sure what the actual story is here. The important bit seems to be:

"“The one third is fictitious,” Andela CEO Jeremy Johnson told Big Technology
in a candid interview last week. Some developers make less than a third of
what clients pay, some make more, varying by country and seniority level. But
the number never accurately described how Andela compensates its developers.
“We absolutely bear responsibility for the miscommunication,” Johnson said.
“Without question.”"

\- CEO

So that's it? They miscommunicated what their developers get paid? The article
doesn't allege any wrongdoing on the part of the company, beyond making this
mistake, or suggest that anyone is being paid unfairly.

The title line

"....but life inside the company can be less than ideal."

might as well say "it's a perfectly normal company, nothing to see here".

Did I miss something?

~~~
realtalk_sp
It seems like it's about the optics in the present BLM-heavy climate.

But you're absolutely right that the market sets rates. And did no one wonder
why the hell Andela would exist and be so valuable if there wasn't significant
arbitrage to be had? They're a business not a charity.

I'm reminded of a story about child laborers and Nike. In an almost Kafkaeque
twist, locales where this was happening ended up experiencing significant
economic setbacks when Nike decided to close up certain offending factories.

This is just another classic case of people reacting emotionally, biasing
towards their own set of experiences and points of view.

~~~
caymanjim
I've spent much of my career as a software consultant. I usually make about
1/3 of my client billing rate. The rake is high. Part of that is normal
overhead of employer-side taxes, benefits, expensable items (hardware,
business lunches, continuing education), infrastructure/support (office space,
office staff/HR/non-owner management). We can generously call that another 1/3
of the client bill rate. That leaves the final 1/3 to the company for profit
and business development. There's nothing remotely unusual about this
arrangement.

~~~
WalterBright
Back when I worked for Boeing, the accounting figure was that it cost Boeing
about 45% over and above my salary to pay for my benefits package and taxes
paid on my behalf (things like health insurance, retirement plan
contributions, the so-called "employer's contribution" of Social Security
taxes, etc.).

This is why when one sees salary comparisons, they are misleading. A correct
comparison would compare what is called "total compensation" which includes
that 45%. For example, whenever you hear about public teacher salaries being
low, no mention is ever made of the total compensation, which is pretty
generous.

Those "free" benefits aren't free at all. They come out of the employee's
pocket.

~~~
caymanjim
> For example, whenever you hear about public teacher salaries being low, no
> mention is ever made of the total compensation, which is pretty generous.

This is disingenuous. It's perfectly acceptable to compare teacher salary to
any other salary. The default assumption is that you're comparing W2-with-
benefits to W2-with-benefits. When people talk about low teacher salary,
they're talking about it in comparison to another salary with the exact same
overhead. It's not necessary to assign cash value to employer-paid taxes and
benefits when making an apples-to-apples comparison.

~~~
WalterBright
It is not disingenuous because the public teacher benefits package is much
better than typical in the private sector.

The teachers' unions have been quite clever about this, in negotiation for
much of their pay in the form of benefits, so it looks like their pay is low.
The newspaper, for example, often runs comparisons of salaries but never total
compensation.

~~~
mgkimsal
Does it particularly matter? In most cases, people take whatever 'benefits'
they're given - they don't have much leverage to take something else. Whether
I want or need "great" health insurance, it might be something my employer
provides, and would be part of my 'total comp'. It may not actually benefit me
at all, and I have no choice in it. And likewise, if the insurance is crap,
most people have no leverage to replace it with anything better anyway.

Most people can only make choices with the take home portion of salary,
regardless of what 'total comp' is.

~~~
s1artibartfast
Im not sure what you are saying here.

Benefits absolutely play a role in the jobs people take. I have been offered
two jobs with identical salaries, but one had a significant employer
contribution to my 401k and stock options. you can guess which job I took.

Likewise, my mother was a teacher and one of the main reasons was the
incredible healthcare. She could have gone somewhere else with her 2 masters,
but it was worth a ton with a sickly husband. A full salary pension is worth a
lot of direct salary compensation too.

~~~
WalterBright
I saw a figure once (they're hard to come by) that the value of the health
insurance benefit for WA public school teachers was $36,000/year.

[https://www.seattletimes.com/education-lab/with-a-price-
tag-...](https://www.seattletimes.com/education-lab/with-a-price-tag-
of-900-million-washington-state-will-soon-take-over-all-school-employee-
health-care-plans/)

[https://www.hca.wa.gov/about-hca/school-employees-
benefits-b...](https://www.hca.wa.gov/about-hca/school-employees-benefits-
board-sebb-program/sebb-fact-sheets)

Those links provide facts and figures, but no figure on what the value of the
employee benefit is.

I'd encourage anyone interested to ask their employer's HR dept what the value
is of their employer provided health care benefit, and compare.

~~~
filmgirlcw
Yeah, my benefits are valued at $22,500 in Seattle at a Big Tech firm. I don’t
have children so that impacts the value, but we have a very good benefits
package and it’s still 1/3 less than teachers, if the numbers you cite are
correct. My take home and stock are obviously ridiculously better than what I
could expect as an educator, even with a Ph.D and the highest tier of
experience (the CBA cap for non-administrators is ~$120k for the 20-21 school
year in Seattle), so I have no regrets, but yeah HR calculates my benefits as
considerably less.

~~~
WalterBright
And the value I cited was just for health care - not including the retirement
and all the rest.

------
lsllc
I have no doubt that they were exploited. Not necessarily because they were
based in Africa but because they came from a position of inequality.

In my career, I have worked with very over paid and not so good engineers and
I've also worked with very underpaid and very good engineers from "poorer"
countries such as Israel, India, China or Iran who have been highly exploited
(e.g. in the US on an H1B, they are contractors that we are paying $120/hr for
but it turns out they are only getting ~$20/hr).

As far as the "market" is concerned, it's just arbitrage. Buy low/sell high.
It doesn't matter who you are or where you come from, you _will_ be exploited.

------
DeonPenny
I think this is a example of fire fast, hire slow. The fact is they saw since
2014 that their "Bench" had to many junior engineers. I find its not money but
a lack of opportunity that breeds complete resentment in people, and thats
exactly how it played out.

The only line that disturbed me is this one. “Why is it the private sector
that needs to come in and innovate? Why can't schools, governments, etc, do
that job?”

If I had any advice for these junior engineers is for one of them to start
their own company to solve this problem because an individual can solve this
problem not a government. Life's hard but it would only take one of you to
find a solution to make at least some of those people life easier.

------
lgleason
I remember when this first started, back then it was apparent that this was a
for profit coding school/low cost outsourcing play. They tried to get an in
into some volunteer tech training work I was doing down in South Africa, but I
turned them down because it seemed exploitative. The social justice angle
pulled in all of the people who were too naive to look past the hype. Nice to
see that people are finally waking up to this. There are lots more where that
came from including in the US not for profit space that use lofty mission
statements as a thin veil for the upper middle class and rich to line their
pockets in the name of otherwise noble causes.

------
prepend
Isn’t 1/3 higher than most offshore body shops? Last firm I used was a few
years ago and our gross rate was $45 with devs getting between $4-12.

~~~
jake_morrison
Ratio of bill rate to salary of 2.5 to 3.5 is pretty typical in consulting
companies. Billing has to cover lots of things, e.g. training, utilization,
supervisors, sales, office, computers, accounting, etc. I expect they have
particularly high overhead relative to the costs of labor in Africa.

------
jake_morrison
The company seems to be mixing up things that should be separate. The major
challenges when you have a lot of junior developers is having enough seniors
to manage them and work that is appropriate for them to do.

Andela raised a lot of money based on social justice capital, which is fine.
The problem is that consulting is not a particularly good way to spend it. The
best strategy, I think, is to combine a school, consulting company and a
venture capital operation.

The school may be more or less self supporting, paid for by students or with
scholarships. It can be challenging keep programmers engaged as teachers, as
they can make good money for less hassle, and they need to have a particular
set of interpersonal and teaching skills which is rarer in programmers.
Subsidy can help to set up the school and pay teachers well.

The consulting company is a for-profit enterprise, and needs to have the right
balance of skills, not too many juniors. The best graduates of the school may
be hired by the consulting company.

The VC operation funds business opportunities executed using local tech teams.
The business side might be local, targeting an opportunity in Africa, or
remote. The VC provides seed funds for a large number of projects, and the
consulting company executes. The seed round gives them money to develop an
initial product and test the market. Then they are evaluated and may get
another round or shut down. If they move forward, then the developers continue
working full time with the startup, otherwise they go back into the consulting
pool for another project.

This provides a nice, sustainable synergy between the parts. The consulting
company gets a continuous stream of projects without a lot of risk. The school
graduates get practical experience supervised by seniors, then a potential
full time job. The seed VC gets early access to good deals, and some will work
out well.

The system is financially self supporting, but can take advantage of subsidies
or overseas investment.

The key problem in all of this is actually delivering projects with junior
people, which means you need to make it attractive for senior people to get
involved and stay engaged. They need to be paid well or have some significant
share of the upside.

With the virus, we are entering a new age of remote work which will open up
opportunities for people around the world. It is difficult for companies in
the US to identify, nurture and manage remote talent in emerging markets. In
some sense, that's the primary value of the consulting company, but it needs
to be part of an ecosystem.

~~~
paulcole
> they need to have a particular set of interpersonal and teaching skills
> which is rarer in programmers

This is a very Western belief and one that is rooted in a lot of bias. Maybe
people who have a particular set of interpersonal and teaching skills aren’t
becoming programmers because the people entrenched in the field don’t value
interpersonal and teaching skills?

~~~
jake_morrison
I do see the value in interpersonal and teaching skills. The best developers
have them and are interested in helping others. In my experience, though,
programmers tend to be introverted. One definition of introversion is that
interacting with people drains them of energy. So being a teacher is harder
work than just writing code and probably pays less money. That's why I said
especially that it needs to be explicitly paid for in this scenario. Otherwise
the developers will go elsewhere.

A similar problem exists in consulting companies. It's hard to find people who
are great at programming, great at managing people, great at doing sales, and
great at running the business. The rare person can do it all, but you can't
hire for it. Everyone like that is running their own business.

So you end up with a split between the technical part of the team and non-
technical managers. In this case it's usually the non-technical managers who
make all the money :-)

------
neilv
There's a long and brutal history of Western countries and businesses
exploiting African people and resources.

Is Andela an NGO/charity, or it is a VC-backed unicorn-track startup?

If it's a startup, have the employees been getting equity?

The article mentions some employees taking a pay cut to join.

~~~
jariel
Giving people jobs when there are other options is opposite of 'exploitation'.

------
ejanus
I think their core problem is that they moved so fast and they don't have
defensible and unique product. They grabbed people off the street and
attempted to turn them into coders. That can't work! Engineers are not made in
the classrooms(diligent message) but people with great ability and curiosity.
This kind of mentality cannot be developed when they package IT and DevOp as
shortest cut to enormous wealth.

I would not blame Andela for everything happening out there. Most of the
developers have never worked with US based companies before. They don't
understand the rigor, efficiency, and cold blooded capitalism of such
enterprises. Capitalism hears one message, and that message is profit and
value creation for shareholders.

I see opportunities for the continent if they try to develop locally and solve
local problems.

Why can't Andela pivot to consultancy and compete with the likes of Wipro and
Tata?

Disclaimer: I am African(live there) and I have no relationship with Andela.

------
aaron695
If we try really hard we can destroy this company. Fingers crossed I guess?

To go in and create professional ecosystem's like IT in places where it
doesn't exist is a NGO's fantastical dream, it _might_ be possible for Andela
to pull this off, but hit pieces like this, where they are just doing industry
standard don't help.

Personally I'd bet against Andela, much as we want them to succeed, without an
existing ecosystem, IT developers just can't get off the ground. People talk
about self learning IT, but so much of that works because of the people around
them, without the critical mass it's not possible. You can't just magic it up
online either. If you could find a process that gets it to work, that'd be
pretty amazing and world changing, but it's probably related to getting MOOCs
to work, it's still missing something.

