By default, Microsoft Teams will create a default avatar for you using the first character of your first name and last name as saved in your user account.
If your IT administrator has set the use of pictures using Outlook, then any picture set in this way will be inherited by Teams.
If not, you can choose to replace or add your picture directly from the Teams client. Simply click on your avatar and then from the drop down menu hover over the default and click

Here you can choose to remove any previous image, or upload a new one

You can choose from a JPEG or PNG image. Images that are 1:1 ratio work best. Gif’s are not supported. When you are finished, press save

Privacy
Your picture will be visible to everyone within your organisation on your contact card, your conversation and when you join conferences without video.
Your picture is not shown to external participants or contacts from other organisations.