News: IBM-owned Red Hat to lay off 4% of workforce, 760 employees to be affected

Strategic HR

IBM-owned Red Hat to lay off 4% of workforce, 760 employees to be affected

IBM completed the acquisition of Red Hat in 2019, making it one of the largest software acquisitions in history with an estimated cost of $34 billion. As part of the deal, IBM pledged to uphold the company’s neutrality.
IBM-owned Red Hat to lay off 4% of workforce, 760 employees to be affected

Red Hat, an open source solution provider owned by IBM, has recently announced job cuts, joining the trend among IT companies. The company plans to lay off approximately 4% of its global workforce, which amounts to about 760 employees. Red Hat, headquartered in North Carolina, currently employs around 19,000 individuals worldwide.

Red Hat CEO Matt Hicks conveyed news of the impending job cuts to employees via an email. In the email, Hicks referred to the decision as one that the leadership team had hoped to avoid, but deemed necessary to ensure Red Hat's competitiveness in a changing business landscape.

Hicks specified that the job cuts would primarily impact “general and administrative positions,” while roles involved in customer-facing sales and product development would not be affected. He also mentioned that employees in certain countries would be notified of the layoffs on Monday, April 24, while others would be informed during the current fiscal quarter.

In 2019, IBM acquired Red Hat for an estimated $34 billion, making it one of the largest software acquisitions in history. As a part of the acquisition deal, IBM committed to maintaining Red Hat's neutrality.

IBM recently revealed its intention to lay off approximately 3,900 employees from its worldwide workforce of 260,000. These job cuts are a consequence of the spinoff of Kyndryl, its IT infrastructure services provider business, and restructuring within the 'Watson Health' artificial intelligence (AI) unit.

IBM's first-quarter revenue fell short of Wall Street expectations due to reduced corporate spending on IT services and the impact of a strong dollar. As a result, the company revised its full-year consulting revenue growth forecast to a range of 6%-8%, down from earlier projections of high single-digit percentage growth.

"We are seeing softness in certain components of our discretionary based offerings in consulting," Chief Financial Officer James Kavanaugh told Reuters about the US market.

IBM's first-quarter revenue fell short of Wall Street expectations due to reduced corporate spending on IT services and the impact of a strong dollar. As a result, the company revised its full-year consulting revenue growth forecast to a range of 6%-8%, down from earlier projections of high single-digit percentage growth.

IBM, whose software and consulting business units account for over 75% of its revenue, reported an 8.2% increase in consulting revenue at constant currency, totaling $4.96 billion for the quarter ending March 31. Software revenue also rose by approximately 6%.

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Topics: Strategic HR, #HRCommunity, #Layoffs, #HRTech

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