More than 5,000 workers at a global software company won’t be getting raises this year because the money will instead be spent on artificial intelligence, according to a report Thursday.
Teradata CEO Steve McMillan dropped the bombshell decision in a memo that said it was driven by a desire to “win in the market with AI,” Business Insider said.
“We will fund this AI investment by reallocating the budget from 2026 annual salary adjustments,” he wrote.
In a statement to The Independent, Teradata spokesperson Jennifer Donahue said, “We don’t comment on internal business decisions but remain confident in the direction of the company..“
Two longtime Teradata employees who work in the U.S. reportedly said they’d generally received annual raises of 2 to 4 percent during their ten-plus years with the publicly traded company, which is based in San Diego, California, and has nearly $1.5 billion in recurring revenues.
Despite the salary freeze, McMillan’s January memo said that some employees may still receive performance-based cash bonuses and shares of company stock, and that workers in countries that mandate market-aligned raises won’t be affected, Business Insider said.
The revelation — which comes amid a surge in tech layoffs this year — followed a May report that tech firm TTEC, based in Austin, Texas, had stopped matching 401(k) contributions by its employees through the end of the year so it could reallocate the money to investments in AI.
Workplace strategist Jennifer Moss — author of last year’s “Why Are We Here? Creating a Work Culture Everyone Wants” — said that tying the cutbacks to AI signaled a change in corporate communications.
“Whether that’s more honest or more cynical depends on your read, but it does mark a real shift in what leaders are willing to say in public,” Moss told Business Insider. “And what becomes sayable tends to become more doable.”
Teradata’s website shows more than 150 job opportunities, primarily in engineering.
The company reported a first-quarter operating loss of $36 million, according to its most recent filing with the Securities and Exchange Commission.
The loss was fueled by a 71 percent increase in operating expenses — due largely to legal fees tied to the company’s $480 million settlement of litigation with German software giant SAP — but was “partially off-set by lower employee compensation expense” resulting from “restructuring actions” last year.
Teradata shares were trading at $35.22, up nearly 1 percent, on Monday morning.