A -based cloud software company has told its 5,100 employees that they will not receive annual in 2026, as the firm is redirecting compensation budgets toward (AI) investments.
According to a by Business Insider, cloud analytics and data platform company Teradata informed employees in January that annual pay increases would be paused this year. The decision was outlined in an internal memo from CEO Steve McMillan, which has recently come to light.
In the memo, McMillan said the company’s primary focus for 2026 is to “win in the market with AI” and that achieving this goal would require increased spending on AI talent, expertise and innovation.
“We will fund this AI investment by reallocating the budget from 2026 annual salary adjustments,” he wrote, as per Business Insider.
The move effectively suspends the company’s usual yearly salary increases, which employees said typically ranged between 2% and 4%, although they were not guaranteed.
Bonuses and equity to continue
Despite the pause in salary hikes, employees may still be eligible for performance-based bonuses and equity awards, according to the memo. The policy applies to workers in countries where regulations do not require employers to make market-aligned salary adjustments.
A company spokesperson told Business Insider that Teradata is actively investing in AI to enhance its products and services and remain competitive in a rapidly evolving technology landscape.
Not the only company making AI-related cuts
According to the outlet, Teradata is not alone in linking employee compensation changes to AI spending.
Business process outsourcing and technology services firm TTEC recently paused 401(k) retirement contributions for its US employees through the end of 2026. Internal communications reportedly said the savings would be used to fund AI-related tools, training and capabilities needed for the company’s future strategy.
Notably, the decisions come at a time when many companies are balancing growing AI investment demands against tighter budgets. Businesses across sectors have been dealing with inflation, tariffs and supply-chain challenges while simultaneously increasing spending on AI technologies.
Both Teradata and TTEC have reported declining revenues in their most recent financial years, adding pressure to prioritise investments that executives believe could drive future growth.
