A US-based cloud software company has informed its 5,100 workers that they will not receive annual pay increases in 2026 because the company will be investing in artificial intelligence.
Teradata CEO Steve McMillan stated in an internal memo that the company's goal for 2026 is to "win in the market with AI", necessitating greater investment in talent and capabilities in the field. The statement was made in January, but the incident has only recently come to light, according to a Business Insider story.
According to McMillan, "we will fund this AI investment by reallocating the budget from 2026 annual salary adjustments."
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The company's annual compensation increases, which employees reported typically ranged from 2-4 per cent and were not guaranteed, are effectively halted by the ruling.
Teradata stated that employees may still get equity-based remuneration and performance-linked bonuses even while base salary increases are not an option. The policy is mostly applicable in areas where market-aligned compensation changes are not required by regulators.
The business stated that it is still aggressively investing in AI to spur product innovation but declined to comment further on the ruling. Teradata is not the only company to associate changes in employee pay with AI expenditures.
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Due to the requirement to finance AI tools, training, and infrastructure, TTEC, another technology services company, has suspended 401(k) retirement contributions for US employees (almost comparable to EPF in India) through 2026, according to Business Insider.
The change occurs at a time when many businesses are dealing with tighter budgets due to supply chain interruptions, tariffs, and inflation. There is more pressure to give high-impact investments priority after Teradata and TTEC both reported decreased revenues in their most recent fiscal year.
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