Teradata told 5,100 employees they won't receive annual salary raises in 2026 as the company redirects budget toward AI investments. CEO Steve McMillan explicitly stated in an internal memo that the company will "fund this AI investment by reallocating the budget from 2026 annual salary adjustments." This decision applies to employees in countries where regulators don't require market-aligned salary adjustments.

Teradata isn't alone in prioritizing AI over worker compensation. Technology firm TTEC recently paused 401(k) matches for US employees through 2026 to fund AI tools and training. A survey of 117 IT professionals found 90% of companies plan to increase AI spending in 2026, revealing a growing trend of companies cutting worker benefits to fund AI initiatives across industries.

While AI spending represents just 1.7% of revenue for most companies according to BCG's 2026 AI Radar, many firms are choosing to fund these investments by reducing compensation rather than through debt or other measures. This approach sends a concerning message to employees about their value and future in the organization, potentially undermining trust during a period when companies need workers to embrace AI.