While you may be worried about AI replacing you, it may already be taking a toll on your paycheck.
Teradata, a global cloud software company, told its 5,100 employees in January that they would not receive raises this year as the company redirected its budget toward AI investments. business insider Reported.
In an internal memo to employees, CEO Steve McMillan said the focus for 2026 is to “win in the marketplace with AI.” “We plan to fund this AI investment by reallocating budget from the 2026 annual salary adjustment,” he added. Teradata employees typically receive raises of 2% to 4% annually.
Similarly, TTEC told its 15,000 U.S.-based employees in April that it would suspend 401(k) matches through the end of 2026. The suspension will “protect the long-term strength” of the customer experience technology and services company, Laura Butler, the company’s chief human resources officer, said in an April 30 memo. By reducing matching, companies will have more flexibility to invest in AI certifications and training, as well as AI-enabled tools and automation, the company said. business insider.
In fact, a recent Resume Builder survey of 866 business leaders found that more than half of respondents plan to reduce employee compensation and redirect that spending toward AI. Companies reported cutting bonuses, stock compensation, and pay raises, believing that investing in technology will ultimately lead to increased revenue and competitive advantage.
However, Stacie Haller, Chief Career Advisor at Resume Builder, says her 30 years of recruiting experience shows that companies cut staff without considering the long-term impact.
“There’s a big push for companies to stay on the cutting edge and adopt AI, and companies think it’s going to cut down on employees and save money on all this,” she said. luck. “Everyone is vying for a competitive advantage, but then you have no idea what you’re going to need in the workforce.”
Haller said salary increases and benefits cuts could be a move to create some attrition instead of implementing mass layoffs in the name of AI productivity. He explained that while companies use job hugs in a labor market with fewer jobs and fewer layoffs, raising wages and cutting benefits can backfire on employers in the long run.
“People have long memories. They’ll remember a time when they didn’t get a bonus because: [AI spending]And if it doesn’t work out in the end, I don’t think it’s going to be a happy ending for some companies,” Haller said.
Teradata spokeswoman January McHold declined to comment on the decision to suspend raises, but said the company is “aggressively investing in AI” across both its products and services, including its new autonomous agent platform.
“These are tangible investments in product innovation and in the customers and industries that rely on Teradata for their most critical workloads. We are confident in the direction of our business,” Machold said. luck In a statement.
TTEC did not respond Fortune’s Request for comments.
Jared Pope, an employment law, benefits and human resources attorney and founder of Work Shield, a workplace misconduct research firm, said a year of no raises in an economy with 3.8% inflation is essentially a pay cut, but it’s indicative of how companies are changing.
“In the past, pay raises were tied to longevity,” he says. “Where we are today, or at least where we’re headed, if you’re making a measurable business impact on the company in the immediate and short-term, if not long-term, then you’re the one who gets paid more.”
Employers are focusing on workers who can help them in the next three months, rather than the next two years, he explained.
Teradata’s move comes as companies are making significant investments in AI. According to business and technology insight firm Gartner, global AI spending is expected to reach $2.53 trillion in 2026 and a whopping $3.34 trillion in 2027.
Pope said the problem isn’t that employers are cutting raises, but how big changes are communicated.
“If communication is done correctly, you’ll get more buy-in from your team members. But if communication is lacking, your organization will end up with a lot of dissatisfied team members,” he explained.
He added that even if that’s true, directly telling employees that regular wage increases will go toward AI could lead to turnover.
Another approach to reducing the workforce is voluntary layoffs, a measure that rewards loyal workers.
“The voluntary redundancy option allows employers to say, ‘Not that I don’t think you’re doing a good job, but if you do, it’s time for me to move on. We need to downsize, and I’m going to encourage you to do that,'” said Domenic Camacho Moran, a partner and attorney at employment law firm Farrell Fritz. luck In April.
