Tech debt hampers business growth, efficiency and innovation

05 June 2025 Consultancy.uk

Even though eight-in-ten business leaders say they believe AI could help modernise their businesses, most have left this as a hypothetical statement. A new study from Publicis Sapient suggests that if a larger number of firms are to actually scale their AI projects, they will first have to reckon with “tech debt” – which currently holds back their innovation efforts.

Tech debt is the cost and effort required to keep IT systems up-to-date and aligned with business needs. In software development and other information technology fields, this constitutes the implied cost of additional work in the future, resulting from choosing an expedient solution over a more robust one. As a result, the monetary debt it is analogous to, tech debt comes with interest – as while it can accelerate development in the short term, it may increase future costs and complexity.

Digital transformation specialist Publicis Sapient has partnered with HFS Research, to explore how tech debt is holding back efficiency and innovation, in the supposed age of AI. Based on insights from more than 600 IT and business leaders globally across various industries, the report suggests that many are struggling to keep up with the pace of change – thanks to the burden of their previous technology investments.

Modernizing core applications is sucking up big investment, yet only 30% of firms say they are fully modernized

Source: Publicis Sapient

Modernisation – including adopting the latest in automation and AI technologies, to downsize staff costs and streamline working processes – takes up nearly 30% of IT budgets. However, just three in 10 organisations told Publicis Sapient they have successfully modernised their core applications as a result. For the rest, the researchers suggest, transformation has become little more than “a euphemism for putting lipstick on a legacy pig”.

Pig in lipstick

According to estimates from HFS Research, the Global 2000 enterprises are carrying between $1.5–2 trillion in accumulated tech debt – and that is not just preventing them from moving beyond being “legacy-heavy” or “at risk of obsolescence” when it comes to simply treading water. It is also holding back their adoption of important new innovations. So, while 80% of enterprise leaders believe AI will improve modernisation outcomes, a mere 22% said they were scaling AI across multiple functions.

At the same time, 27% said they were exploring AI in IT, but had not yet begun to implement it, while 33% were simply “experimenting” with it in select functions. Publicis Sapient did not explain the impacts that the 22% fully implementing AI had enjoyed, so it is unclear what the rest might be missing out on. Some may still be experimenting because those benefits aren’t clear at all – and some firms would like to look before they leap with a technology for which the hype has rarely matched the reality.

Everyone’s excited about AI in IT, but few are fully prepared to act.

Source: Publicis Sapient

However, the report found that there were many more barriers to AI adoption than simply fear of the unknown. In particular, one aspect of tech debt has been a sustained dependence on outsourcing. While this has provided quick access to skills firms have been unwilling to bring on board full-time, it is a model that has ceased to work for many companies. While 55% of leaders said they had a shortage of skilled talent to implement and manage AI as a challenge to AI adoption, three in four enterprise leaders expect a pivot from staff augmentation models to services-as-software.

Similarly, old vendor models are holding them back. Only 10% of enterprise leaders said that their vendors are proactively helping them transition to AI-powered delivery, leading 71% of enterprise leaders indicated that they’re ready to switch providers for better AI execution and/or leadership.

“The scale of tech debt facing enterprises is staggering, and overcoming it demands more than incremental change. What’s needed is a fundamental shift in how organisations approach transformation. AI is not just a tool – it’s a catalyst for reimagining delivery models and accelerating modernisation,” said Nigel Vaz, CEO of Publicis Sapient

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