Red Hat forced to hire cheaper, less senior engineers amid budget freeze

Email tells bosses to down-level open positions to control costs


Exclusive Next year, IBM's Red Hat plans to cut back on hiring senior engineers in an effort largely aimed at controlling costs.

An internal email sent on Wednesday by Timothy Cramer, SVP of software engineering, to Red Hat managers directs hiring requisitions to be made at a lower level of seniority than usual.

"All new plan reqs should be opened at a level below senior (e.g., Associate Software Engineer or Software Engineer)," the message says.

"While this change allows us to use our budget more effectively, it also helps us balance the organization as we have many engineers with senior titles. We recognize that this will mean we need to plan for training and mentoring, promotions, and internal mobility as well, and we are here to support you in that."

All new plan reqs should be opened at a level below senior

The hiring budget update also says that current requisitions and backfills – positions vacated that need to be filled – should be offered at a reduced level.

"All current reqs and future backfills will be down-leveled by one level by default (e.g., Senior Software Engineer to Software Engineer)," the memo explained.

The email was provided to The Register by an anonymous individual claiming to be a Red Hat employee, and was confirmed to have come from Cramer by a Red Hat spokesperson.

Our source expressed concern that this decision, which applies to new hires, will harm the company. If Red Hat is unable to offer competitive pay or hire senior people, our source suggested, that's likely to limit the company's access to talent and to make it more difficult to retain existing skilled employees.

"The best talent wants to work with other like-minded and skilled people," our source said.

A set of FAQs prepared to address employee concerns about the situation indicate that Red Hat managers understand the staff retention risk the decision creates. The response to a question about how the policy will affect employees who want to move jobs within Red Hat but don't want a title and pay demotion acknowledges the challenge of implementing this policy.

The reply notes that "moving reqs a level lower could hamper [employee mobility]" and says the managers involved can make an exception request if necessary.

Cramer's memo describes the situation as "a great challenge for [calendar year] '22."

"We need to deliver on our 3-year strategy (where we are the tip of the spear) while balancing a lean budget increase (essentially, $0) and continuing to invest in our current associates as a priority," he wrote.

We need to deliver on our 3-year strategy ... while balancing a lean budget increase (essentially, $0)

This represents a significant change from IBM's latest quarter when Red Hat's parent was "aggressively" hiring to "[bring] in technical talent in Red Hat," as CFO Jim Kavanaugh described the situation during IBM's Q3 investor briefing.

A spokesperson for Red Hat confirmed the authenticity of the leaked email though said the message lacked important context.

"Tim’s group represents one function in Red Hat that had a tremendous amount of growth this year," Red Hat's spokesperson said. "We are excited to see his team incorporate and leverage the almost 1,000 new hires they brought on board while we invest in the other aspects of the business.

"As a whole, Red Hat has added more than 2,200 new associates this year to help us meet demand for hybrid cloud technology and to grow in areas like managed services and edge. As we continue to invest in those areas and beyond, we anticipate continuing that growth across Red Hat."

In 2022, that figure is currently set at around 200.

"Even with an almost flat budget, we still aim to hire around 200 additional associates next year, with more than 25 per cent of them scaling up our SRE organization to align with our 3-year strategy goals around managed services," said Cramer in his memo.

Red Hat has been described as a financial bright spot amid IBM's more beleaguered lines of business. The Linux biz, acquired for $34bn in July 2019, grew 17 per cent, according to IBM's Q3 2021 earnings report.

Though IBM does not break Red Hat's results out from the rest of its Cloud and Cognitive Software segment, up 2.5 per cent to $5.7bn in Q3, our source told us that Red Hat booked almost $1bn in business for the quarter, which was about 90 per cent of IBM's target.

Whatever IBM is doing with Red Hat's rising revenue – now at an annual run rate that's likely above $4bn – those results aren't showing up in Red Hat's hiring budget. ®


Other stories you might like

  • Lonestar plans to put datacenters in the Moon's lava tubes
    How? Founder tells The Register 'Robots… lots of robots'

    Imagine a future where racks of computer servers hum quietly in darkness below the surface of the Moon.

    Here is where some of the most important data is stored, to be left untouched for as long as can be. The idea sounds like something from science-fiction, but one startup that recently emerged from stealth is trying to turn it into a reality. Lonestar Data Holdings has a unique mission unlike any other cloud provider: to build datacenters on the Moon backing up the world's data.

    "It's inconceivable to me that we are keeping our most precious assets, our knowledge and our data, on Earth, where we're setting off bombs and burning things," Christopher Stott, founder and CEO of Lonestar, told The Register. "We need to put our assets in place off our planet, where we can keep it safe."

    Continue reading
  • Conti: Russian-backed rulers of Costa Rican hacktocracy?
    Also, Chinese IT admin jailed for deleting database, and the NSA promises no more backdoors

    In brief The notorious Russian-aligned Conti ransomware gang has upped the ante in its attack against Costa Rica, threatening to overthrow the government if it doesn't pay a $20 million ransom. 

    Costa Rican president Rodrigo Chaves said that the country is effectively at war with the gang, who in April infiltrated the government's computer systems, gaining a foothold in 27 agencies at various government levels. The US State Department has offered a $15 million reward leading to the capture of Conti's leaders, who it said have made more than $150 million from 1,000+ victims.

    Conti claimed this week that it has insiders in the Costa Rican government, the AP reported, warning that "We are determined to overthrow the government by means of a cyber attack, we have already shown you all the strength and power, you have introduced an emergency." 

    Continue reading
  • China-linked Twisted Panda caught spying on Russian defense R&D
    Because Beijing isn't above covert ops to accomplish its five-year goals

    Chinese cyberspies targeted two Russian defense institutes and possibly another research facility in Belarus, according to Check Point Research.

    The new campaign, dubbed Twisted Panda, is part of a larger, state-sponsored espionage operation that has been ongoing for several months, if not nearly a year, according to the security shop.

    In a technical analysis, the researchers detail the various malicious stages and payloads of the campaign that used sanctions-related phishing emails to attack Russian entities, which are part of the state-owned defense conglomerate Rostec Corporation.

    Continue reading
  • FTC signals crackdown on ed-tech harvesting kid's data
    Trade watchdog, and President, reminds that COPPA can ban ya

    The US Federal Trade Commission on Thursday said it intends to take action against educational technology companies that unlawfully collect data from children using online educational services.

    In a policy statement, the agency said, "Children should not have to needlessly hand over their data and forfeit their privacy in order to do their schoolwork or participate in remote learning, especially given the wide and increasing adoption of ed tech tools."

    The agency says it will scrutinize educational service providers to ensure that they are meeting their legal obligations under COPPA, the Children's Online Privacy Protection Act.

    Continue reading
  • Mysterious firm seeks to buy majority stake in Arm China
    Chinese joint venture's ousted CEO tries to hang on - who will get control?

    The saga surrounding Arm's joint venture in China just took another intriguing turn: a mysterious firm named Lotcap Group claims it has signed a letter of intent to buy a 51 percent stake in Arm China from existing investors in the country.

    In a Chinese-language press release posted Wednesday, Lotcap said it has formed a subsidiary, Lotcap Fund, to buy a majority stake in the joint venture. However, reporting by one newspaper suggested that the investment firm still needs the approval of one significant investor to gain 51 percent control of Arm China.

    The development comes a couple of weeks after Arm China said that its former CEO, Allen Wu, was refusing once again to step down from his position, despite the company's board voting in late April to replace Wu with two co-chief executives. SoftBank Group, which owns 49 percent of the Chinese venture, has been trying to unentangle Arm China from Wu as the Japanese tech investment giant plans for an initial public offering of the British parent company.

    Continue reading
  • SmartNICs power the cloud, are enterprise datacenters next?
    High pricing, lack of software make smartNICs a tough sell, despite offload potential

    SmartNICs have the potential to accelerate enterprise workloads, but don't expect to see them bring hyperscale-class efficiency to most datacenters anytime soon, ZK Research's Zeus Kerravala told The Register.

    SmartNICs are widely deployed in cloud and hyperscale datacenters as a means to offload input/output (I/O) intensive network, security, and storage operations from the CPU, freeing it up to run revenue generating tenant workloads. Some more advanced chips even offload the hypervisor to further separate the infrastructure management layer from the rest of the server.

    Despite relative success in the cloud and a flurry of innovation from the still-limited vendor SmartNIC ecosystem, including Mellanox (Nvidia), Intel, Marvell, and Xilinx (AMD), Kerravala argues that the use cases for enterprise datacenters are unlikely to resemble those of the major hyperscalers, at least in the near term.

    Continue reading

Biting the hand that feeds IT © 1998–2022