Apr 24, 2023 - Business

Red Hat lays off 4% of its workforce

A visitor walks past US software company Red Hat logo at the Mobile World Congress (MWC), the telecom industry's biggest annual gathering, in Barcelona on February 27, 2023. Photo: PAU BARRENA/AFP via Getty Images

Raleigh-based software company Red Hat is laying off 4% of its global workforce, the company's CEO Matt Hicks told the company in an email.

Driving the news: Red Hat, an open-source software services maker owned by IBM, announced the layoffs on Monday, saying the cuts would affect those in general and administrative roles.

  • Hicks noted the layoffs would not affect those directly selling to customers or building products.

Why it matters: Up to this point, Red Hat — one of the Triangle's most influential tech companies — had avoided cutting its workforce, while many of its peers announced layoffs.

What they're saying: Hicks, who became CEO last year and is based in Boston, said the company tried to avoid the layoffs but they became necessary "to ensure Red Hat's ability to compete in a new environment."

  • "I know it is hard to reconcile that we are a successful, growing company and still need to take these hard actions," he wrote. "At the core of this decision is the need to rebalance where we are investing to enable Red Hat’s future."
  • "Most of our own investments, whether resources, budget, headcount, or time, should prioritize innovation in our products and with our customers, not on the internals of how we work together, which should be focused and efficient," he added.

Zoom in: Red Hat has been an important revenue driver for IBM's hybrid cloud business. The company's revenue grew 8% in the first quarter of the year, according to IBM's financial filings.

  • Yes, but: That was a slowdown. The previous three quarters saw growth of 10%, 12% and 12%.

Details: Red Hat said the layoffs would happen across different countries.

  • Workers in the U.S. would be eligible for severance, three to six months of medical insurance and that they would be eligible for quarterly bonuses.

What we're watching: It's unclear how the Raleigh office is being affected by the cuts. Red Hat declined to share a breakdown of where the cuts would be.


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