5,100 employees won’t get salary hikes as Tech CEO says company is spending on AI instead
Cloud software company Teradata has informed its 5,100 employees that they will not receive annual salary increases in 2026, according to a report by Business Insider. The company instead plans to direct these funds towards expanding its AI capabilities.
The decision has sparked debate about how far companies are willing to go to stay competitive in the AI race and whether employees should pick up some of the bill.
Why Is Teradata Freezing Salary Increases?
In an internal memo cited by Business Insider, Teradata CEO Steve McMillan said the company’s top priority for 2026 is strengthening its position in the growing artificial intelligence market.
He reportedly told employees that the company plans to invest more in AI capabilities, products and technology.
“We will fund this AI investment by reallocating the budget from the 2026 annual salary adjustments,” McMillan said, according to Business Insider.
The move means money usually used for annual salary increases will instead be spent on AI-related initiatives.
How Much Can Employees Lose?
While annual salary increases are never guaranteed at Teradata, employees told Business Insider that annual salary increases typically range from 2 percent to 4 percent.
For many workers, these adjustments help offset rising costs of living and inflation.
The decision means employees may have to wait another year before seeing an increase in their base salary.
Will Employees Receive Extra Wages?
The company has not completely eliminated all forms of employee rewards.
According to the report, workers may still have the following rights:
- Performance based bonuses
- Equity compensation
- Other incentive programs
However, their annual fixed salaries are expected to remain unchanged in 2026.
This policy applies mainly to countries and regions where employers are not legally required to make market-based salary adjustments.
Artificial Intelligence Spending Becomes Top Priority
Teradata isn’t the only company making difficult financial decisions to invest in AI.
Business Insider reports that technology services company TTEC is pausing retirement contributions for U.S. employees through 2026 to help fund AI tools, infrastructure and employee training.
In the technology industry, companies are rapidly increasing their spending on artificial intelligence.
A recent survey of IT leaders found that 90 percent of organizations plan to increase their investments in AI in 2026, with some projects costing millions of dollars.
Why Are Companies Investing So Heavily in Artificial Intelligence?
Many business leaders believe that artificial intelligence will play a crucial role in future growth.
Companies use artificial intelligence for the following purposes:
- Improve customer service
- Automate repetitive tasks
- Analyze large amounts of data
- Develop new products
- Increase productivity
As competition intensifies, businesses are under pressure to adopt AI quickly or risk falling behind their competitors.
For many companies, investing in artificial intelligence is no longer seen as optional.
Challenging Economic Conditions Increase Pressure
The shift to AI comes at a time when many companies are facing financial challenges.
High inflation, global trade tensions, supply chain disruptions and slowing economic growth have forced businesses to make difficult choices about where to spend money.
According to Business Insider, both Teradata and TTEC reported declining revenue in their last fiscal years.
This has increased pressure on management teams to focus their spending on areas they believe will generate future growth.
Employees Face a New Reality in the Age of Artificial Intelligence
Teradata’s decision underscores a growing trend in the technology industry.
For years, many workers have expected annual wage increases to become a standard part of employment. But as companies pour billions of dollars into AI, some workers may find budgets previously allocated to pay raises are diverted elsewhere.
While business leaders argue that AI investments are necessary for long-term success, employees may question whether the benefits will eventually trickle down to the workforce.
What Does This Mean for the Future of Work?
The debate around Teradata’s decision reflects a larger question facing businesses around the world: How should companies balance investment in technology with investment in people?
As AI becomes a larger part of corporate strategy, more organizations may be forced to make similar choices.
For now, Teradata’s decision offers a glimpse into how the AI boom is reshaping workplace priorities and how employees may increasingly feel its impact beyond the office computer screen.
