In the software world, the term “technical debt” is common, but its impact is often underestimated by business leaders. It’s a metaphor, but also a real-world burden. 

What is Technical Debt?

Staying on outdated systems for too long can introduce inefficiencies and vulnerabilities, adding to what’s known as technical debt, which we’ll explore in more detail below.

When development teams take shortcuts—perhaps to meet a deadline or launch a product quickly—they often produce code or systems that need to be fixed or rebuilt later. Like financial debt, it accrues “interest” in the form of inefficiency, rising costs, and missed opportunities.

And that interest adds up. A 2022 report from the Consortium for Information & Software Quality (CISQ) estimated that the principal of technical debt in U.S. companies had reached $1.52 trillion. Even more striking, the total cost of poor software quality—including maintenance and downtime—is estimated at $2.41 trillion annually.¹ That’s a figure that’s difficult to ignore.

Other Ways It Impacts Your Business

Time is another currency consumed by technical debt. Developers report spending between 33% and 42% of their working hours on rework, bug fixes, and maintenance.² It’s the equivalent of paying a full salary and getting only two-thirds of productive output. In business terms, it’s waste—and much of it remains invisible.

Research by McKinsey suggests that 10 to 20% of IT budgets are swallowed by technical debt repayments.³ In some sectors, such as logistics and healthcare, the proportion is even higher. Funds intended to drive innovation or improve the customer experience are instead diverted to simply keeping systems operational.

For businesses running on legacy software—or those struggling to modernise—the effects of technical debt can be especially severe. It slows the delivery of new features, increases the risk of system failures, and reduces responsiveness to changes in the market. Companies burdened by technical debt often find it harder to scale or attract investors. After all, nobody wants to inherit outdated, high-maintenance code.

What To Do

So what can a business leader do about it? The first step is to make the invisible visible. Track how much of your team’s time is spent on maintenance versus innovation. If you’re not a technical founder, ask your IT lead or software provider to help assess the current state of your systems. A growing number of tools now exist to measure software quality and code maintainability.

Once you have a clear picture, prioritise the areas of greatest impact—performance bottlenecks, recurring bugs, or known security issues—and begin chipping away at the debt. Think of it like refinancing a financial loan. A structured, phased approach is far more effective than trying to fix everything at once.

Reducing technical debt isn’t just about code. It’s a cultural and operational choice. Teams must be given the time and mandate to clean up legacy systems—not just to ship the next feature. Some organisations now set aside part of each development sprint or IT budget specifically for debt remediation, treating it as an ongoing business obligation.

The benefits are significant. Cleaner systems lead to faster development, more innovation, greater job satisfaction for developers, and better outcomes for customers. Businesses that invest in addressing technical debt often see measurable gains in both agility and productivity.

Technical debt might not appear on your balance sheet, but it can weigh heavily on your company’s growth. The good news is that it’s manageable. Like all forms of debt, it requires attention, intention, and a bit of long-term thinking.

1. 1. Consortium for Information & Software Quality (CISQ) – The Cost of Poor Software Quality in the US: A 2022 Report.

2. 2. Stripe Developer Report via McKinsey & Company – Tackling Tech Debt to Improve Developer Velocity.

2. 2. McKinsey Digital – Measuring and Managing Technical Debt.