Companies are now cutting worker pay to fund AI investment- Teradata, TTEC slash employee benefits as AI spending surge

Published 5 June 2026 · finance

Artificial intelligence is no longer only a threat to jobs. It is now eating into the pay packets and benefits of workers who still have

Artificial intelligence is no longer only a threat to jobs. It is now eating into the pay packets and benefits of workers who still have them, as companies across the US begin openly redirecting compensation budgets towards AI transformation, Business Insider has reported. Teradata freezes annual salary raises to fund AI investment Teradata, a global cloud software company with approximately 5,100 employees, told its workforce in January not to expect annual salary increases this year, according to an internal memo seen by Business Insider and not previously reported elsewhere. Also Read | Copper stocks emerge as an indirect bet on India's AI boom The company's chief executive, Steve McMillan, wrote in the memo that Teradata's focus for 2026 is to "win in the market with AI," and that achieving that goal would require increased investment in AI talent and expertise. "We will fund this AI investment by reallocating the budget from 2026 annual salary adjustments," McMillan said. A spokesperson told Business Insider that the company is actively investing in AI to innovate its products and services. Two US-based Teradata employees, both of whom have been at the company for over a decade, told Business Insider they had generally received annual salary increases of between 2% and 4%, though they noted such increases were not guaranteed each year.

Under the new arrangements, employees may still receive performance-based bonuses and equity shares. The decision applies to staff in countries where regulators do not require market-aligned salary adjustments. TTEC pauses retirement benefits as second firm links AI spending to compensation cuts Teradata is the second company Business Insider has reported is openly telling employees it is prioritising AI spending over workforce investment. TTEC, a midsize technology and services firm, recently paused 401(k) matches for its US employees through the end of 2026, citing in internal communications that the move would help fund the tools, training, and capabilities required for its AI ambitions. Also Read | Alphabet jumps, Meta tumbles as US Big Tech stocks trade mixed in premarket The directness with which corporate leaders are now naming AI as the reason for scaling back employee compensation represents a notable shift in workplace communication, according to Jennifer Moss, a workplace strategist and author of “Why Are We Here? Creating a Work Culture Everyone Wants.” How companies are financing their AI transformations Both TTEC and Teradata operate in technology services, a sector where failure to adapt to AI is widely regarded as carrying particular commercial risk. Their decisions reflect a broader pattern. A recent survey of 117 IT professionals conducted by RBC Capital found that 90% of respondents planned to increase AI spending in 2026, spanning companies with annual revenues ranging from under $250 million to more than $25 billion.