CEO of one of the world's biggest cloud storage company Teradata to its 5000-plus employees: No salary hike this year, as to win in the market, we need to reallocate budget to …

One of the world’s biggest cloud storage companies, Teradata has informed its employees that they will not be getting any salary hike this year. According to a report by Business Insider, in an internal memo, Teradata CEO Setve McMillan told the company’s 5,100 employees that there will be no annual salary adjustments in 2026. The decision made by the company reflects its strategy to “win in the market with AI” by diverting funds from compensation to investments in artificial intelligence talent and expertise. McMillan explained that the company will fund its AI initiatives by reallocating the budget from annual salary hikes, a move that breaks with past practice where employees typically received 2 to 4% hikes. While the base pay increases are off the table, the employees will still get performance based bonuses and equity shares. The policy also applies in countries where regulators do not mandate market-aligned salary adjustments.Teradata is not the only company alone which is giving importance to AI over employee benefits. Another midsize technology company TTEC, recently paused around 401(k) matches for U.S. employees through 2026 to free up funds for AI tools and training. A workplace strategist Jennifer Moss told Business Insider that company leaders are now openly naming AI as the reason for job cuts, marking a rhetorical shift in corporate communication.Companies across industries are ramping up their AI spending. A recent survey by RBC Capital revealed that the around 90% of CIOs plan to increase their AI budgets in 2026, with costs ranging from small pilot projects to multimillion-dollar enterprise transformations. Yet experts believe that cutting down the compensation is a choice and not a necessity. Alternatives include debt financing, executive pay adjustments, or phased investments. Alphabet, for instance, announced plans to sell $80 billion in stock to fund AI infrastructure.Teradata’s headcount has already fallen by 21% since December 2023, with 1,400 jobs cut as part of its growth strategy. Analysts warn that sidelining employee compensation could erode trust at a time when companies need workers to embrace new AI tools. Oxford economist Jan-Emmanuel De Neve described the move as a “short-term mindset,” projecting decisive leadership but signaling insecurity to employees.