Red Hat targets $5-b revenue in five years

Open-source technology firm Red Hat Inc, which hit the $2-billion revenue milestone two quarters ago, is looking to achieve $2.4 billion in FY 2017 and $5 billion in the next five years.

The company is betting on India, its second largest operation outside the US, as one of the key growth engines to help achieve its aspirational revenue goal of $5 billion by 2021.

“India is a bright spot for Red Hat for three reasons,” Rajesh Rege, Managing Director, Red Hat India, told BusinessLine.

Three key factors

“First, India with its high projected GDP growth rate, remains a bright spot from the market standpoint with huge opportunities in both the public and private sectors, with initiatives like Digital India, Make in India, modernisation of Railways, payment banks, e-commerce firms etc. Second, we have key assets in India, including engineering teams based out of Pune and Bengaluru. One of our three global support teams is in Pune, which also handles back-office functions. Third is our focused engagement with the growing open-source developer community, which is working on projects that fit into our overall strategy.”

Geo-expansion strategy

With a direct presence in India for over 10 years, the Red Hat India team has 1,000 people in the company’s global headcount of 9,850 employees. The company has ramped up its India headcount by 40 per cent in the last nine months in roles across sales, pre-sales, technical and developer evangelists to drive its geographic expansion strategy to achieve revenue growth.

“A year ago, we saw a lot of scope outside of the top five cities of Mumbai, Delhi, Bengaluru, Hyderabad and Chennai and decided to invest in people and partners to drive growth in the next 15 cities, including State capitals like Jaipur, Bhubaneshwar, Patna, Lucknow and other cities like Pune, Ahmedabad, Coimbatore. We are serving the Sri Lanka market from Chennai and the Bangladesh market from Kolkata and over the next 18 months will hire resources for those markets,” said Rege.

The company has deepened its partner relationships with HP, IBM, Cisco, Dell, Lenovo, Wipro, HCL, TCS and Tech Mahindra to increase its geographic reach and offer niche solutions.

On the benefits of open-source technology vs proprietary technology, Sarangan Rangachari, V-P and General Manager, Storage and Big Data Business Unit, Red Hat Inc, said: “With open-source technology, there is no software licence to pay; no vendor lock-ins; and innovation is not restricted within the organisation’s team but enabled through global collaboration across academia, corporates, researchers, students and developers.”

Globally, Red Hat has been witnessing 20 per cent YoY growth over the last seven years and garnered $600 million in Q2 of FY 2017, ended August 31, 2016.

Ninety per cent of its revenue is subscription (annual) driven.