Red Hat, a software company based in Raleigh, is set to lay off 4% of its global workforce, according to an email sent by the company’s CEO, Matt Hicks. The layoffs, which were announced on Monday, will impact general and administrative roles, but will not affect employees involved in direct customer sales or product development.
This is a notable move for Red Hat, as the company had previously avoided workforce reductions while many of its peers were implementing layoffs. Red Hat was acquired by IBM in 2019, and in January of this year, IBM announced plans to lay off approximately 3,900 workers. However, Red Hat’s layoffs will be smaller in scale, as the company currently employs around 19,000 people globally, with approximately 2,000 based in Raleigh.
In his email to employees, Hicks acknowledged the difficulty of the decision, but stated that the layoffs were necessary to ensure Red Hat’s ability to compete in a changing business environment. He emphasized the need to prioritize innovation in products and customer engagement, rather than internal operations.
Red Hat has been a significant revenue driver for IBM’s hybrid cloud business, with the company’s revenue growing 8% in the first quarter of this year, according to IBM’s financial filings. However, this growth rate represents a slowdown compared to the previous three quarters, which saw growth rates of 10%, 12%, and 12%.
Details of the layoffs were not provided by Red Hat, and it remains unclear how the Raleigh office will be affected. Workers in the US who are impacted by the layoffs will be eligible for severance, three to six months of medical insurance, and quarterly bonuses, according to the company.