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US-based cloud software company Teradata has suspended annual salary increases for its workforce in 2026 as it channels more resources into artificial intelligence initiatives.
The decision was communicated to the company's 5,100 employees through an internal memo issued in January by Chief Executive Officer Steve McMillan, according to a Business Insider report. The memo stated that Teradata's key objective for 2026 is to strengthen its position in the AI market by investing more heavily in AI talent, expertise and innovation.
McMillan said the company would finance these investments by reallocating funds that would otherwise have been used for annual salary adjustments in 2026.
The move pauses the company's regular salary review cycle for the year. Employees cited in the report said annual increases typically ranged between 2% and 4%, although such raises were not guaranteed.
Also Read: Google layoff: Cloud, Threat Intelligence and Mandiant teams hit as AI pivot reshapes workforce
Despite the freeze on salary revisions, employees may still qualify for performance-linked bonuses and equity-based compensation. The policy applies in markets where local regulations do not mandate market-based salary adjustments.
A Teradata spokesperson told Business Insider that the company continues to invest in AI as part of efforts to improve its products and services and remain competitive.
Teradata is not the only company linking workforce compensation decisions to AI spending. Business process outsourcing and technology services company TTEC has also paused 401(k) retirement contributions for its US employees through the end of 2026. Internal communications reportedly indicated that the savings would support investments in AI-related tools, training and capabilities.
The decisions come as companies across industries increase spending on AI technologies while operating under tighter budgets. Businesses have also been navigating inflation, tariffs and supply-chain pressures alongside rising technology investments.
Both Teradata and TTEC reported revenue declines in their latest financial years, adding to pressure on management teams to prioritise investments they believe could support future growth.
Read More: GitLab layoff: Company cuts ~350 jobs, exits 22 countries to pivot toward AI-driven “agentic era”
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