Red Hat Layoffs Help Company ‘Compete In a New Environment’

Tech layoffs have come to open-source software developer Red Hat.

Early Monday morning, Matt Hicks, who has served as the company’s president and CEO for less than a year, sent a company-wide email announcing the Red Hat layoffs.

Red Hat’s Matt Hicks

“There have been several occasions where we’ve had to make tough decisions at Red Hat, but no decision has been harder than the one I must communicate to you today,” Hicks wrote.

With that, he announced that Red Hat is shedding 4% of its workforce. That amounts to about 760 people.

Most of the losses will come in the general and administrative category throughout the company.

“We will not reduce roles directly selling to customers or building our products,” Hicks wrote.

The Red Hat layoffs will take place over the next few months, starting today in some countries, and last through the end of the second quarter.

Red Hat Layoffs: Why Now?

Red Hat’s decision comes at an interesting time. The company continues to report revenue growth. It’s turned OpenShift into a go-to solution for that buzzy cloud offering, platform as a service. In fact, many analysts call Red Hat the bright spot at IBM; a struggling IBM bought Red Hat almost four years ago. So why is Red Hat joining the tech layoffs craze? Hicks’ answer?

“[T]o ensure Red Hat’s ability to compete in a new environment.”

And that environment, of course, is cloud.

“Red Hat has a tremendous opportunity around open hybrid cloud with the evolution of public cloud and edge, and in specific industries like telecommunications and automotive, but the market opportunities will not wait for us,” Hicks wrote. “What’s become evident is that we must adapt and make this change to ensure we’re able to invest in ways that will enable Red Hat to do this, including how we align budget and headcount.”

What remains unclear is exactly how Red Hat has yet to adapt to cloud computing in ways that it hasn’t already. In a somewhat convoluted attempt to explain, Hicks seemed to point to internal structures, rather than cloud computing advancements, as the inhibitors to progress.

“Red Hatters are contributors by nature,” he said. “We’ve pursued many interesting ideas and initiatives across all our teams. When we add people to something, they want to contribute to it, they want to make things better than they were before, and naturally, they want to see the things they contribute to persist and grow. Often, we create more without removing other things from the system. Once things exist, we rarely revisit them and earnestly question if they are delivering what we need them to with measurable impact.

“Sometimes,” he continued, “even when things are performing well, we must still make an intentional decision to simplify and focus. Each added priority results in more complexity over time, and as big teams get bigger, we start investing more in the process than the outcome of the process. We need to focus on the outcome, which is making open source innovation consumable for our customers.”

What’s Next for Red Hatters

As such, the people who aren’t falling prey to this latest round of tech layoffs must prepare to operate in new ways, Hicks said.

“We must continue to sharpen our focus and do fewer things better,” he said. “Our ways of operating must evolve — there will be a required change in the work we all do. We must be willing to engage and learn the intersections between our teams and to manage them more directly, with fewer layers of interface. This is not work we can delegate to others; instead, we must put our energy into simplifying our structure. This structural change needs to be accompanied by a cultural change as well: we must choose to work and prioritize differently, or we will simply recreate the challenges that got us here.”

For the people impacted by the Red Hat layoffs, Hicks laid out a separate plan. Employees in the United States will receive what he called “above-market” severance pay, as well as medical coverage that could continue for up to six months. Red Hat also will pay first-quarter bonuses at 100% of target and second-quarter bonuses at 100% on a prorated basis. Finally, Red Hat will provide six months of career transition support. Benefits outside of the United States vary by country and region.

“The core of Red Hat is our people,” Hicks concluded. “It is cliche to say that decisions like this are not personal. For everyone impacted, this is personal. Your contributions helped make Red Hat what it is, and I’m grateful for everything you brought to this company. I’m genuinely sorry we weren’t able to find ways to incorporate your talents here longer.”

Never-Ending Tech Layoffs Chaos

The Red Hat layoffs represent the latest volley in the ongoing chaos that is tech job cuts. So far in 2023, 609 tech firms have jettisoned 174,220 employees, according to a check of Layoffs.fyi on Monday afternoon. Channel Futures tracks many of those developments in our regular Layoff Tracker. Earlier this month, Kyndryl, Rackspace, Microsoft, Veeam, Accenture, Amazon and Wipro stood out among the companies recently pink-slipping workers.