A US-based cloud software program firm has informed its 5,100 staff that they won’t obtain annual salary hikes in 2026, because the agency is redirecting compensation budgets towards artificial intelligence (AI) investments.
In accordance with a report by Enterprise Insider, cloud analytics and knowledge platform firm Teradata knowledgeable staff in January that annual pay will increase could be paused this yr. The choice was outlined in an inner memo from CEO Steve McMillan, which has not too long ago come to mild.
Within the memo, McMillan mentioned the corporate’s main focus for 2026 is to “win out there with AI” and that attaining this purpose would require elevated spending on AI expertise, experience and innovation.
“We are going to fund this AI funding by reallocating the finances from 2026 annual wage changes,” he wrote, as per Enterprise Insider.
The transfer successfully suspends the corporate’s regular yearly wage will increase, which staff mentioned usually ranged between 2% and 4%, though they weren’t assured.
Bonuses and fairness to proceed
Regardless of the pause in wage hikes, staff should be eligible for performance-based bonuses and fairness awards, in keeping with the memo. The coverage applies to employees in international locations the place laws don’t require employers to make market-aligned wage changes.
An organization spokesperson informed Enterprise Insider that Teradata is actively investing in AI to boost its services and stay aggressive in a quickly evolving expertise panorama.
Not the one firm making AI-related cuts
In accordance with the outlet, Teradata will not be alone in linking worker compensation adjustments to AI spending.
Enterprise course of outsourcing and expertise providers agency TTEC not too long ago paused 401(ok) retirement contributions for its US staff by way of the tip of 2026. Inside communications reportedly mentioned the financial savings could be used to fund AI-related instruments, coaching and capabilities wanted for the corporate’s future technique.
Notably, the selections come at a time when many corporations are balancing rising AI funding calls for in opposition to tighter budgets. Companies throughout sectors have been coping with inflation, tariffs and supply-chain challenges whereas concurrently growing spending on AI applied sciences.
Each Teradata and TTEC have reported declining revenues of their most up-to-date monetary years, including stress to prioritise investments that executives imagine might drive future development.