Uncategorised

The Real Price of Technical Debt

Published: 27 March 2025
Technical Debt

For understandable reasons, businesses often prioritise speed over software quality. While this can accelerate delivery in the short term, it frequently results in technical debt—a hidden cost that accumulates when quick fixes, outdated systems, and inefficient code compound over time.

Left unchecked, technical debt does not just impact software teams; it escalates costs, slows down development, and weakens market competitiveness. According to BlueOptima’s Global Drivers of Performance: Quality report, organisations that fail to address code quality issues resulting from technical debt early suffer from higher operational costs and reduced agility.

This article explores how technical debt impacts business performance, highlights the warning signs, and discusses the financial benefits of tackling it proactively.

The Cost of Ignoring Technical Debt

Technical debt operates much like financial debt. When used irresponsibly, interest payments accumulate in the form of inefficiencies, maintenance overhead, and slowed innovation. The numbers paint a stark picture of what can happen when technical debt becomes overleveraged.

CodeScene estimates that developers spend up to 42% of their time dealing with technical debt rather than new feature development, significantly reducing overall productivity. This represents a substantial financial burden. For one multinational insurance company examined by McKinsey, technical debt amounted to anywhere from 15 to 60% of the IT budget across all its systems. Gartner predicts that organisations struggling with such high levels of technical debt will experience up to 50% slower service delivery, delaying product releases and diminishing their ability to compete in fast-moving markets.

A Billion-Dollar Burden?

A 2023 study from McKinsey highlighted a large B2B company which aimed to unlock a $2 billion margin expansion through modernisation but discovered that 70% of the initiatives relied on outdated, overly complex systems that would cost $400 million. Forced to scale back, the firm reduced its spend to $300 million, abandoning a quarter of the opportunity. Two years later, unresolved technical debt continued to undermine progress, with only half the planned work completed due to persistent system issues.

This example illustrates that technical debt isn’t just a technical issue: it is also a financial one. Failing to identify and contain technical debt early can derail even well-funded strategic initiatives. 

Warning Signs of Growing Technical Debt

Many organisations underestimate their technical debt until it begins to disrupt delivery timelines and inflate costs. Common symptoms include:

  • Delayed feature releases caused by tangled, inefficient codebases that make every update more complex than it should be.
  • Rising maintenance costs as teams patch issues reactively rather than implementing lasting improvements.
  • Developer frustration and turnover as engineers grapple with legacy systems and convoluted workflows.

A clear red flag is when over 15% of development time is spent on unplanned work, like urgent bug fixes, rather than planned feature delivery. Left unchecked, these patterns form a cycle of declining agility and rising operational risk, making it harder for teams to innovate or scale efficiently.

The ROI of Addressing Technical Debt

Fixing technical debt requires upfront investment, but the payoff is substantial. BlueOptima’s report shows that even modest improvements in code maintainability lead to measurable gains in productivity and efficiency. High-quality, maintainable code reduces the need for rework and firefighting, allowing developers to focus on innovation rather than troubleshooting recurring issues.

A real-life example of this comes from a McKinsey study of a tech company that decided to address its concern that over 50 legacy applications were driving its technical debt. Analysis revealed, however,  that just 20 assets and four debt types accounted for 50 to 60% of the impact. This clarity helped uncover up to $300 million in trackable benefits over five years, enabling leadership to recognise the strategic value of tackling technical debt.

Strategies for Addressing Technical Debt

Effectively managing technical debt requires more than reactive fixes. It demands a long-term, strategic approach. As BlueOptima’s report demonstrates, sustainable productivity gains come from embedding maintainability and quality into development culture from the outset. One key strategy is to implement regular code reviews and continuous refactoring to catch inefficiencies early and maintain architectural integrity. Brainhub similarly advocates for disciplined practices such as avoiding hard-coded values, documenting legacy systems, and regularly updating libraries, all of which reduce hidden costs and risks over time.

IT decision-makers are encouraged to allocate a portion of their IT budget, often 10 to 20%, specifically for paying down technical debt at targeted, high-impact areas rather than attempting to resolve everything at once. Consistently tracking metrics like time spent on unplanned work can guide these decisions. Automation and DevOps practices also play a vital role, ensuring new code meets standards and preventing debt spirals. As the report highlights, even skilled developers are limited by poor-quality codebases.

Addressing technical debt proactively empowers teams, accelerates delivery, and strengthens your organisation’s strategic position.

Explore BlueOptima’s Global Drivers of Performance: Quality report to gain data-driven insights on how leading enterprises candreduce software costs, improve productivity, and achieve sustainable development velocity.

Related articles...

Article
Debunking GitHub’s Claims: A Data-Driven Critique of Their Copilot Study

Generative AI (GenAI) tools like GitHub Copilot have captured the…

Read More
Article
Top 4 AI Source Code Detector Tools for Enterprises

Why we need AI Source Code Detection Tools In the…

Read More
Article
ROI of Digital Transformation in Software Engineering: Adding Software Development Efficiency as a Key Factor

Introduction Digital transformation is fundamentally changing businesses by integrating digital…

Read More
abstract02@2x

Bringing objectivity to your decisions

Giving teams visibility, managers are enabled to increase the velocity of development teams without risking code quality.

0

out of 10 of the worlds biggest banks

0

of the S&P Top 50 Companies

0

of the Fortune 50 Companies