From what we were told this morning, this is a purely Red Hat decision not influenced by IBM, primarily intended to reduce our spending and save cash in light of the increased cost of money caused by rising interest rates.
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.
For the causes of R&D layoffs, I'm curious about the split between (a) increased interest rates, vs. (b) changes to U.S. tax code that disallow 5-year amortization of software-development costs.
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.
There is so much misunderstanding about the amortization of software dev costs rule (and yes, I see your correction).
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.
Now that you put it that way, maybe (b) is the ugly truth, and (a) is just the prettier (everyone else is doing it) scape goat.
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
Conversely, I think it should make sense that the growthiest of growth areas, tech, would see the biggest pullback once money starts costing money again.
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.
AI is too nascent to be the sole reason for so many layoffs. Emulating HR is about all it can be trusted to do autonomously.
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.
Management in the Red Hat's Support organization said recently they were hiring new support engineers out of India to help alleviate burnout. A hiring freeze in all countries except India effectively is outsourcing.
But why would companies want to say (a) and not (b)? Seems like “you lost your job because the government raised taxes” would be a pretty popular explanation and PR strategy to get the change reversed.
1: "government" would likely be a large customer, and putting blame on one of your large customers is not a good business plan.
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).
> there has to be something else on why Software is getting screwed
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.
This change will have a real impact to cashflow, in the sense that you are paying more (in taxes) in the first year than you would under the previous model.
And cashflow is incredibly important, Free Cash Flow metrics etc. are all fairly critical within the investing world.
Yeah, but also keep in mind the previous quarter announcement about the complete revamp of performance evaluation, and bonus payout. They have setup a situation where it's much easier for managers to under-evaluate employees. They are creating the future where it's much easier to layoff so-called "under performing" associates, while making it much easier to label average folks as under performing, or performing folks as average.
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.
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.
Whats weird is that I've heard the opposite too. That being an old employee is a suckers game for taking the 2 to 4 percent each year.
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.
Otoh: I’ve seen new-staff bring more maturity and diverse experience and broader knowledge of patterns and practices than the junior-to-staff, so the value prop may not be as clear cut as it seems.
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.
Sure, there's also the point that while the junior to staff has connections, they might have also earned enemies too which will seek to impede stuff they want done. Where as the new staff has a fresh slate with everyone.
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 ;)
Frankly, companies who cut you for being older are not companies that are worth putting your faith into because they don’t respect your historical, institutional knowledge. Also if you’re getting unsolicited bumps from your employer you should be more concerned you’re underselling vs overselling yourself
> 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
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.
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.
Keep in contact with everyone who thinks highly of your work. A strong recommendation (“you must hire person X, they’re perfect”) is the best defense against age discrimination. You can’t help it if your employer moves your job to India. You can lay the ground to make the transition faster.
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:
At least where I used to work, older engineers were kept on payroll by working only 3-4 days a week. Some of them also got lower title. I'd imagine the title 'adjustment' happened when there was a round of layoffs and some were offered to stay on conditionally.
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
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.
Eh, good advice but I have seen "essential" people or teams get laid off, even at the detriment of the company. Management and C-suite don't care - they face no consequences.
I echo the other comment saying just save up as much money.
Make it a Roth 401k so when unusual things like housing collapse you can pull your principal back out to make a purchase without penalty. Assuming the stock market didn't crash simultaneously.
That is the rule with a Roth IRA - pull out up to your contribution value without penalty. Early withdrawals from a Roth 401(k) are different: if your account is 80% contributions and 20% earnings, any early withdrawal you make will be prorated to be 80% contributions and 20% earnings. The earnings chunk will be added to your gross income and subject to a 10% penalty (in this case, 2% of the overall withdrawal).
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.
I'd say either way, keep your retirement savings and home buying savings separate. Sure, it will be nice to own a home when you're retired. But you're still on the hook for property taxes, repairs, and food.
Before the recession, it was a well-known secret among coworkers who was doing this, now when budgets are being slashed these folks are the first to be let go. Please don't do this, you're ruining remote work for everyone. If you really want to, become a contractor and be honest about your situation.
I was fired from my last job partially because a lot of people were doing this and the company decided to make my job be 100% in Office in response. Since the office of my job was literally on the other side of the planet and people there spoke the local language (one I don't know), I got fired.
I assume people who are sufficiently self-centered that they've convinced themselves that this is fine because it obviously is if you can get away with it are incredibly selfish and not nearly as clever as they think they are in many other ways as well.
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.
I can't wait until you get laid-off/fired unjustly. I had this same attitude until I got laid off even though I was a high-performer (4/5 and 5/5 on all my bi-yearly reviews).
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.
I honestly don't understand why someone with your attitude doesn't become a freelancer/consultant. If I hated working for companies that much, pretty much no amount of incremental salary would persuade me to not go my own way.
That was my eventual attitude for a certain three-letter tech company I worked a string of contract assignments at. My thought was if/when I found a better/permanent position elsewhere, I would give them exactly the same advance notice they were giving me (effectively "I'm not coming back on Monday, where do you want me to send your laptop?")
This is the best answer ITT. Union-busting tech people is easy though since they appeals to them as uniquely intelligent people who gain nothing from the support of others works most of the time.
Yeah there's a general anti-union sentiment in tech, but I think this is slowly changing as companies continue to screw over tech workers, and we as tech workers start to realize that we actually aren't safe from the fall out of incompetent executives.
How many companies this year started layoffs with recruiters, HR, and admin staff and are now turning to laying off software engineers?
Yes, I think you're right and Gen-Z in general seems more open to it.
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.
This! FIRE as fast as you can so you’re not at the whim of this class of people (management class, broadly speaking). There is no security, no one is coming to save you except you. I speak from experience.
FIRE is obviously nice. I do think "bank the extra" is significantly more attainable, while providing a lot of extra security.
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.
I'm not advocating for FI (edit: removed RE) because one wishes to not work (although that is an entirely reasonable goal to target), but so that you can still live a decent life if you want to work but cannot find employment. I have read many trying anecdotes lately (both here and on Reddit) of engineers who are very capable who cannot succeed against the current hiring gauntlets. What good is a desire to contribute and perform meaningful work if you can't make it through the hiring circus? That is what you're derisking against. The labor market can remain irrational longer than you can remain solvent. I am advocating for efforts to become radically solvent; not to do nothing, but to be able to do anything and at high level, have agency one does not have by default.
This. "Bank extra and make sure you have savings" is way more reasonable than the "aim to retire by 35" FIRE cult. Out of a sample size of 4, 75% of the people I know who have done "FIRE" regret it. (The one who doesn't comes from a wealthy family who bought him a house right after university, so the sacrifices he made are a lot less.) Among the 3, the common theme was realizing they wasted the best years of their life solely focused on maximizing their money instead of enjoying their youth. Two became severely depressed alcoholics. The other went back to work as a FTE 6 months after "retiring".
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.
Even with the benefit of hindsight--and admittedly ignoring some periods when I wasn't really happy where I was--given a somewhat arbitrarily large amount of money in the bank, maybe I'd have taken a couple sabbaticals but I'm not sure that, in retrospect, I'd really have been happy retiring much before my late 50s.
This. My plan is being financially independent enough to take several months of breaks in between jobs and having the time to look for environments I really enjoy working in.
FIRE has so much MMM and other baggage associated with it, I prefer to avoid the term. What is true is that, as you get late career, it's probably simultaneously more difficult to land a new job, starting something brand new may be less appealing, and you may be in a position to not work full-time as an employee even if the move isn't quite on your own terms.
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.
Rates of pay are so high in tech that I wonder if there will come a crisis when many people take early retirement. (Obviously I'm not saying this is a bad thing)
The amount of new grads and people coming in from other trades because they want a piece of the cake is high enough to keep supporting the flywheel. It would be interesting to see median age of engineers at tech companies, here it's definitely well under 35.
Anecdotally, I see some people in their 40s or early 50s who made very serious money and worked really hard (founders, CEOs, and the like) end up doing some of the on-the-side type of work that gets thrown at people in that position (boards, "advisors," and the like). But I don't actually see a huge number of late career regular employees (even fairly well-compensated ones) retiring way early.
This is the only true security. "You're on your own, asshole (TM)" has been the bank motto since 2008... Company security and longevity is oh so valued during interviews but only when you're coming into the club, not when you're leaving the club. Companies are like Tony Soprano, only loyal if they find you useful, and expect you to kill for them to get in. Won't hesitate to whack you. Metaphorically speaking.
I don't get this sentiment. The number of large companies that deny their middle managers promotions while parachuting in outside executives is not that many.
If I earn $1000$/m, and I save $100/m - in a year, I'll maybe have $1200 saved up.
10% is so little for most you might as well spend it.
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.
I randomly picked the very first article I could find because I was on my phone, but it remains true no matter what. In the very best case scenario your company's stock explodes over the (typically) 4 years of your vest, but after that it will be adjusted down, so you will be earning less than new joiners again.
The product will degrade and customer service will worsen, but all RH's institutional/government customers will stick with them anyway because they have policies mandating the use of RH. This will cause RH to be more profitable, and their execs to get bigger bonuses.
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.
When I was at Mirantis and implementing Openstack for a customer... it was IBM partnered with RedHat and Intel and the absolute ridiculousness of IBM (old) engineers/PMs attempting to translate deployment into their language was nothing short of suicide inducing.
IBM, Intel and RedHat should never touch eachother.
And this is coming from someone who spawned LinuxCare.
> The layoffs come after IBM reported last week that Red Hat quarterly revenues had increased 8%. However, that was far below recent performances. “Red Hat had been averaging at least a 15% revenue growth, every quarter since IBM purchased it in 2019,”
Looks like the enshittification of Red Hat is hitting its stride.
Care to elaborate? Why do you blame enshittification instead of the macroeconomic factors that have caused everyone else's revenue growth to slow, too?
As if high level growth could be perpetual. Capitalism expectations are unachievable by default and yet people use them as an excuse for shit decisions and everybody are supposed to accept this craziness as “rational”.
How long must a company own a product before we can safely say it’s just business and/or market conditions and not the result of new owners? Is 4 years not enough? How about 10?
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.
I didn't notice Matt Hicks became CEO of Red Hat. Congrats to him. We worked together on the Docker / Red Hat Partnership 10 years ago when he was in Engineering leadership. From an Engineer to CEO. Says a lot about Red Hat and its priorities.
Hicks has what would otherwise be an impressive ability to say absolutely nothing, even when responding to direct questions. He describes the RH purpose as "a north star", which is about as useful as the real cowboy in City Slickers saying "one thing"; its circus tent level preaching of empty platitudes. He believes going from intern to CEO was something other than luck, which is about the most dangerous position I can imagine. Zero humility, zero self awareness.
He is Elon, if Elon was slightly less crazy and ran only one company.
Jim Whitehurst was such a good CEO. I honestly had hoped he would take over as IBM CEO, but no, that would have been to good a move for IBM. So they pushed him out.
I hope it doesn't hurt any open source projects, but if there's there's one project that has bloat to trim it's GNOME. It's good that there's experimentation happening with Linux desktops, but that experimentation should not be happening on an "enterprise" distribution. The default RHEL desktop should be boring and reliable, not flashy and experimental like GNOME.
GNOME is maintained (also) by a small number of Redhat employees. That is far from what can be called bloat. The latest 44 version was released just recently and is much more "evolution than revolution". GNOME development is mature, UI changes require designers approval and far from what could be called "flashy and experimental".
Look, I soured on GNOME when GNOME 3 was released. But it's unfair to call GNOME "flashy and experimental". Modern GNOME looks contemporary to its peers. GNOME 2, in contrast, would look very dated.
GNOME these days is pretty great. Quick tap of the super key and then type to launch something. Super left, right, or up arrow to snap to the side or maximize. Ctrl-alt left/right to switch workspaces. Doing that while holding shift will move the current selected window to the next workspace.
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.
It is pretty great and I use it daily, but there are some questionable things... Like how we can't Alt+Space+N to minimize a window anymore. That has been a hotkey on every Windows and Linux OS since forever.
I'm sure this is mostly due to the economy but I would be interested to find out how much of this is due to lack of funding after the CentOS Stream thing.
So all the $0 that CentOS brought in wasn't replaced by the $0 charged for CentOS Stream?
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.)
Just muscles and bones without fat is also dangerous. I think we should get out this thinking that only thing needed is engineering and sales. It works for a company just starting up.. but as you grow larger, there are many other roles that are equally critical.
I would assume there is a lot of overlap in these "general and administrative" roles between IBM and RedHat. I'd guess more of this work will be moved to existing roles within IBM?
Very little. At least, not yet. RHers have access to IBM hotel/flight rates, but not even IBM email/calendar directories let alone even basic "everyone" wikis and document dumps.
> 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.
I don't think I said it with any certainty. I said "sounds like".
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?
“Many businesses have been coping with the emerging attitudes of workers – particularly young workers – about the work-life balance. As the economy rapidly expanded after the pandemic and a labor shortage emerged, companies accommodated the new attitudes in order to attract workers,” Walden told WRAL. “Now that he labor shortage has narrowed – indeed, as many firms have released workers – companies no longer need to be as accommodating.
This isn't going to affect virtio at all. The drivers are vitally important to virtualization and anyway the layoffs affect back office staff like IT, not product development or customer support. In fact it's rather the opposite, virtio is being implemented in more and more hardware.
IBM (without RedHat) still have hundreds of thousands of employees doing work and generating tens of billions of revenue. Whether it's of value depends on how cynical you feel today but IBM is very far from being just RedHat.
> Do they actually do anything of value anymore or are they just Redhat now?
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).
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.