Red Hat cutting hundreds of jobs, CEO says in letter to employees
wraltechwire.com
wraltechwire.com
What you see from IBM:
- Cut expensive (old) employees.
- Market everything as the New thing. (Watson)
- Audit your customers. Settle by forcing them to buy the New thing even if they don’t need it.
- Current and former execs go on book tours.
- Buy back shares.
This is all rational when you can’t put capital to good use anymore. It just sucks to be a customer or employee of them.
Anyone have tips to avoid this? I keep getting promotions and raises and it's all very nice but makes me worried about being closer to the top of the list when the next round of cuts needs to happen... Just this year I got an unsolicited bump because I was "below market avg TCO." You can't just say "no thanks" to that.
Given that most people here are high-ish earners, I’d say a traditional 401(k) is still the most appropriate choice because of the tax arbitrage. If you need to tap it, a 401(k) loan is an imperfect but probably decent enough choice.
The only real security you have is your own assets and financial discipline.
1. He doesn't have to change his spending habits at all. He just needs to direct the extra income into a saving account, maybe check on it one a month/quarter/year and move it someplace like CDs, Bonds, or ETFs.
2. His goal is to continue to work. Having a healthy savings account can keep you secure while looking for another job.
Relevant recent thread: https://news.ycombinator.com/item?id=35514464
It's a lot more reasonable to have a goal of, say, having 2 years' of life expenses saved up in case you want to take a faux-sabbatical mid-career. If you're in tech in the US, this is really not hard if you aren't spending extremely lavishly.
Personally, I've been in the position for about 5 years now where I could have ended up mostly retiring if that's what was in the cards. And it's a very liberating feeling even if you don't have to or choose not to exercise it. Makes it far more of a non-event (for you personally) when layoffs come knocking.
For every dollar that comes in, take 10% and stick it somewhere that's hard for you to get your hands on it. Then forget that it exists.
In less than a year, you'll have a year's worth of pay stacked up that way. Then keep doing it, forever.
FTFY
Personal rant: I've been saving up 20-50% of my salary for the last 5 years for a downpayment, and then in the past year 18% inflation hit, interest rate doubled, food price inflation is in top 10 worst in Europe, property prices in increased by 50% in 4 years. My savings obviously cannot keep up with the economy.
I'm glad I wasn't too stringy and spent some money to complete all necessary dental work in the past couple of years (dental is never covered by the insurance here), now I wouldn't be able to afford it.
Oh, and there's also a war in my home country and my family lost almost all of their income (thank god they aren't displaced (yet)), now I'm awaiting a decision from my company whether I get the boot or not. Fun times. I wish I invested in mental health and therapy too, I would still end up broke as I am now but at least I'd have some resilience.
Civil-service rules make it very difficult to fire most employees anyway, but that dovetails nicely with an appreciation for institutional knowledge.
Always be interviewing, Q1->Q3 is the best time.
Personally if I were aware, I'd report them because I don't want to be either complicit or a liar if it comes out and I'm asked.
Now, I'm in it for me and only me. Fuck these companies, they don't care about you so why should I care? I perform to the expectations of my job description but forget going above and beyond.
If they had to replace you with a new hire at the same level, they would have to pay the new hire a lot more than they pay you.
Make your self invisibly essential to the company. Do things or have skills that nobody else does. The sorts of niche items that the company needs, but not enough to hire a second person to do them.
But also be "invisible" — as in, higher-up bean counters won't know you do them, so they can't be outsourced or reassigned. But still remain known to your immediate managers, and one level above, that you're the person who takes care of some mission-critical task, and so will ensure you don't get cut.
It's hard to find that thing, and not every company has this particular weakness. Volunteering to help out with projects in other departments is one way to explore the company for these flaws.
As a broad illustration, think about all of the thousands and thousands of employees that financial services companies have shed over the last decade. Then remember that they're still eagerly hiring COBOL devs.
I echo the other comment saying just save up as much money.
Never depend on your job for your livelihood. Depend on your network. Make sure your skills are in sync with the wider market. Keep your resume up to date and your “career document”. Always be interview ready.
Of course, save and invest money and live in a position of f%%% you.
How many companies this year started layoffs with recruiters, HR, and admin staff and are now turning to laying off software engineers?
I've worked several union and/or government jobs. Yes, it sucks that you end up carrying some of your co-workers. But knowing that your family isn't going to starve because your new manager doesn't like your outfit is nice.
For instance the staff level who was with the company from junior and climbed the ranks is probably making alot less than the staff who came in as a staff, because climbing the ranks means you get percentage based increases or reset to the floor for the rank, and the staff who came in could negotiate higher than that. (You cant really negotiate comp for a promotion, its take it or leave it). Even though the junior to staff probably has more institutional knowledge, domain knowledge and political connections to get stuff done in the company.
But of course the principle is true that if you hanging around make sure you get real market adjustment raises. Some companies/managers are better about this than others.
Generally speaking though, people i've seen promoted to Staff are more effective at the role than people who come in at the role, because Staff seems heavily weighted towards being able to influence at most companies. And being a known quantity counts for a lot. (also to become a staff someone higher in the food chain had to have already vouched for you and be willing to grant you some degree of patronage)
Also the value prop for what you are saying of "new pattern or practice" only applies if the staff gets to do green field dev, its rare a brand new staff without political capital can force a pivot on an already in development product that has patterns already set. In short its rare it gets to manifest, and when it does get to manifest it can take a year or 2 to manifest, and people who are willing to jump into staff roles probably have their next spot picked up for their next salary hike already picked out ;)
Avoid? No. It probably can't be avoided in the long-run. But you can mitigate the effects. A great take on this can be mined from this little rant by John Goodman's character in The Gambler:
https://www.youtube.com/watch?v=rJjKP8vYjpQ&pp=ygUTZ2FtYmxlc...
Don't think this way. Get all the promotions and pay raises you can. Unless you're way out of line salary wise, most layoffs are somewhat random. From the big companies standpoint who sees layoffs saving millions+, no one cares about another 50k-100k. And in semi-random times, it may help you because higher ups who have no idea who you are see title and salary as likely to know more and be able to keep things running with fewer people.
Inefficiency, which will spread to customers, who will then need more products and services?
It is possible (but certainly not guaranteed) that eventually, after years, some competitor to RH will arise and get enough of these customers to switch to make a real dent in RH's profitability, but by then the execs will be long-gone and cruising on their yachts.
Roles affected will be "general and administrative" (apparently this is a GAAP - Generally Accepted Accounting Practices - term), and folks directly involved in developing or selling products (my interpretation: software engineers and sales) are safe.
Source: am Red Hatter, opinions/interpretations are my own.
I'm only hearing people mention (a). So maybe (b) is less relevant than I'm imagining?
CORRECTION: I think I stated (b) exactly backwards. IIUC, previously a company could fully expense the cost of software development in the year it occurred, but now it must be amortized over 5 years.
And cashflow is incredibly important, Free Cash Flow metrics etc. are all fairly critical within the investing world.
I see interest rates being the number 1 excuse for layoffs, but there has to be something else on why Software is getting screwed so much in this down cycle. I used to think AI/LLMs, but who knows.
Im not seeing as many layoffs internationally but that might be biased, one would thought climbing interests rates would have more of a first order global effect
2: As much as we know the Biden Administration is largely responsible for our rampant inflation, to point out their significant part into our trashed economy only invites retaliation from them and their cronies. This administration is quick to attack anyone who even slightly besmirches or questions them (much like their masters in the CCP).
> (much like their masters in the CCP).
A lot of loss-making / future growth speculative tech business models make a lot less sense when you can make about 5% risk free.
It doesn't get discussed much, but during the boomiest tech hiring days of COVID.. interest rates weren't just 0%.. they were, in real terms, negative.
Circa 2021 the treasury/risk free rate was about 1.5% while inflation ended the year at about 7%. So you were getting paid 5.5% to take risk. This incentives speculation as parking your money in a safe CD/bond/whatever loses real-money with time.
Now inflation & risk free rate are at about parity.
Old people (50+) and troublemakers (PIPs) comprised the entirety of my own company's most recent layoff round. They're not even trying to hide it anymore.
My hunch is that [America] is laying off domestic engineers so we can outsource more of the positions to India during the next hiring phase. If anything, AI is playing middleman in flattening a lot of the communication hurdles.
A lot of companies clearly overhired in the last few years, and had access to cheap money if needed to help with that. Perhaps that is most of what explains it? It was also biased to US companies, so would make sense that the reversal would be larger there also.
I've worked in large and small companies in my career, and nearly every large company desperately wanted devs to count as much time as possible as capex (vs. opex). Reason being that, if you're a growing software company, counting dev salaries (often your largest expense) as capex can make you look a ton more profitable, which is of course good for your stock price and valuation (indeed, counting opex as capex is one of the oldest frauds in the book - it's what brought down WorldCom 20 years ago). It's just that, in a modern software company, it's really hard to separate any individual dev's time into separate capex vs opex buckets. The reason I hated capitalizing my time as a software engineer is because the line between capex vs. opex is gray beyond belief for modern SaaS companies that do continuous delivery.
The 4% figure they have given is a very low figure compared to other tech firms doing 10% ~ 20%, and while one might optimistically say the progressive nature of Red Hat trying to keep the percentage low, while the pessimist might say this is just the first round. So it's possible that during Q2 performance is being looked at closely, and now is the time to shine.
As usual, all opinions are my own personal.
I know Oracle has a reputation for this, but I didn't realize IBM does as well.
They're pretty much last to the layoff race, and with smaller numbers
This legend needs to stop. It has been demonstrated time and time again that employees that stay the longest are the leaat paid.
https://www.forbes.com/sites/cameronkeng/2014/06/22/employee...
IBM, Intel and RedHat should never touch eachother.
And this is coming from someone who spawned LinuxCare.
Looks like the enshittification of Red Hat is hitting its stride.
#GoldenParachute
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- 8% growth is not good when inflation is 8%
“We will not reduce roles directly selling to customers or building our products,” Hicks wrote.
Also see louniks comment about what Hatters were told directly:
Red Hat have always been on the low end around salary / TC, their draw has been seeing them as the good guys who care for their people, its a nice culture setup. This is the first set of layoffs they have ever carried out in their 30 year existence.
They will likely need to start paying more when things can't pick up, as they can't play the good guy card as much anymore.
When I was there the gimmick was that you either relocated to a third world country and took a local wage, or you resigned.
As good a time as any to fold RH into the regularly-scheduled “Resource Action” cadence and deflect upset onto general economic factors.
No matter the sense of autonomy given by IBM, acquired companies will inevitably be subject to the mighty “RA” (aka layoff) cycle.
I've never been accused of being a RH fanboy. Layoffs are tragic to hear and observe. This one seems limited.
He is Elon, if Elon was slightly less crazy and ran only one company.
Plus GNOME 3 introduced the concept of extensions, which are as powerful as the old Firefox extensions were. You can change literally anything about the shell to suit your needs.
I know people love the idea that CentOS was somehow bringing business to Red Hat and/or the change to CentOS Stream caused Red Hat to lose revenue but ... not so much.
If people moved from CentOS to Rocky or Alma, they weren't likely to hand money to Red Hat in any event. I have no idea whether or how many people were converted from CentOS 8 to RHEL, but I doubt that was a huge bump either.
(Full disclosure: Former Red Hatter, no longer there as of last year. Not directly or even peripherally involved in CentOS for a lot longer than that.)
> “We will not reduce roles directly selling to customers or building our products,” Hicks wrote.
They are not touching development or sales. Sounds like they are trimming some fat.
I don't think you can say that with such certainty. This could lead to developers spending more time doing admin, that was previously done by other people.
Regardless, it sucks for the people being lade off, even if they are not touching development or sales.
The rest of your argument can be true, or not. It all depends on how useful the work of the lade off people was. You know there are positions in large corporations who basically just don't do anything, don't you?
Sure, but my default assumption isn't that layoffs effectively target folks pretending to be busy.
But I'm also sure that you can't really judge perfectly on a case by case, so absolutely good people will be affected by this.
What does "building" mean here?
If an enterprise running RHEL has an urgent mission-critical problem, can they get the same world-class experts parachuting in?
“We will not reduce roles directly selling to customers or building our products,” Hicks wrote.”
Would be interested in more information on that.
I believe it has accelerated since then and there are now multiple manufacturers making virtio devices.
IBM is a behemoth. They bought Red Hat in 2019 for $34B. At that point Red Hat had an annual revenue of ~$3.4B.
How much is $34B for IBM? That year their annual revenue was $77B. They literally spent less than half of their annual revenue that year to buy the company.
Even if we assume that the revenue stemming from Red Hat in IBM has doubled since then, that's still less than 1/10th of IBMs revenue the year they bought Red Hat (it's about $60B today).
So no, IBM is not "just Red Hat".