Key facts
- Teradata informed employees that annual salary raises will be canceled to fund AI investments.
- TTEC paused 401(k) matches until the end of 2026 to invest in AI certifications, training, and tools.
- A survey found over half of business leaders plan to cut employee compensation to invest in AI.
- Companies are cutting bonuses, equity awards, and raises to gain a competitive advantage through AI.
- Experts suggest companies may not fully understand their future workforce needs due to the AI race.
Companies are increasingly shifting budget allocations away from employee compensation towards artificial intelligence investments. Teradata informed its 5,100 employees that annual salary raises would be canceled for 2026, with the funds being reallocated to AI investments. CEO Steve McMillan stated the company's goal is to 'win in the market with AI.' Similarly, TTEC announced it would stop 401(k) matches for its 15,000 U.S. employees until the end of 2026 to invest in AI certifications, training, and tools. A survey of 866 business leaders revealed that over half plan to cut employee compensation, including bonuses and equity awards, to fund AI initiatives, believing it will drive revenue growth and competitive advantage. Experts like Stacie Haller from Resume Builder caution that companies may be acting without fully understanding their future workforce needs in the race to implement AI. Jared Pope, an employment law attorney, noted a trend where pay raises are becoming more tied to immediate, measurable business impact rather than longevity. Global AI spending is projected to reach $2.53 trillion in 2026 and $3.34 trillion in 2027.