The hidden costs of tech debt: What CTOs need to know

“Move fast and break things” might sound enticing, but it often results in tech debt that can be costly for a business. While some costs of tech debt are obvious, others are hidden. Understanding the true impact of tech debt is critical — not just for maintaining smooth software operation, but also for ensuring the long-term health of a business.

Let’s dig into the costs of tech debt and why they need to be on every CTO’s radar.

What is tech debt?

Technical debt, or tech debt, is all the shortcuts taken during software development in order to deliver features quickly—at the expense of future flexibility and maintainability. Think of it as a “loan” you take to speed up development today, with interest that accumulates over time. While not always negative, tech debt becomes problematic when left unmanaged.

Initially insignificant code patches, quick fixes, or outdated architecture can eventually snowball into a serious barrier to innovation, scalability, and efficiency.

The visible costs of tech debt

1. Reduced developer productivity

Tech debt makes codebases more complex, cluttered, and difficult to navigate. Developers spend more time working around convoluted code instead of building new features. Accumulated tech debt turns every minor change into a time-consuming, risky endeavor.

Cost example: A small change that usually takes a few hours may end up taking days due to poorly structured code, draining valuable development resources and delaying product launches.

2. Longer onboarding and training

Tech debt often creates an unintuitive development environment, making it challenging for new hires to ramp up. Senior developers become bogged down with explaining complex workarounds, architectural decisions, and legacy code to new team members.

Cost example: Instead of having a fully productive developer within a few weeks, you end up spending several months onboarding, delaying their contributions to the project due to tech debt.

3. Higher maintenance costs

With more debt, the need for constant patching and firefighting grows. Bug fixes are more frequent, as are outages and downtime. Your team becomes reactive, putting out fires instead of focusing on growth and innovation.

Cost example: Instead of contributing to new projects, a development team is focused on patching and maintaining broken or inefficient systems—an ongoing operational expense that balloons over time.

The hidden costs of tech debt

1. Missed opportunities

Tech debt doesn’t just eat into your budget—it limits your ability to innovate. When the majority of your development team is tied up fixing legacy issues, they’re unable to focus on strategic initiatives, explore new technologies, or push the envelope on product enhancements.

Cost example: A competitor might seize market share by introducing a cutting-edge feature faster than you because your team is busy addressing foundational problems that should have been resolved long ago.

2. Low talent retention rate and morale issues

Developers want to create, innovate, and solve problems. When they have to deal with outdated systems and a messy codebase, it affects their job satisfaction. Substantial tech debt can frustrate your most talented engineers, leading to burnout, disengagement, and ultimately, quit.

Cost example: Replacing top engineering talent is not only expensive but also time-consuming. In addition, high turnover can leave your team in a perpetual state of underperformance and disarray.

3. Poor user experience

Frequent downtime, slower performance, and unresolved bugs that seep into customer-facing applications do not make your users happy. In a competitive landscape, poor user experiences can cause customers to flee to competitors that offer more stable and polished solutions.

Cost example: In a SaaS business, an uptick in customer churn due to slow-loading applications or recurring bugs can quickly erode revenue and brand reputation.

The compound interest of tech debt

Much like financial debt, tech debt accumulates interest over time. The longer it lingers, the harder and costlier it becomes to address it. What might have been a small shortcut months ago could now require an entire team to fix. Unresolved tech debt also reduces your ability to scale, which is crucial in today’s growth-driven tech environment.

Proactive management: The key to success

To keep tech debt under control, CTOs must develop a proactive strategy that balances short-term needs with long-term goals. Some best practices include:

• Regular code audits: Routinely assess the quality of your codebase to identify areas where tech debt is growing. Address small issues before they snowball into larger, unmanageable problems.
• Invest in refactoring: Dedicate time and resources to cleaning up legacy code, optimizing architecture, and streamlining workflows, even when it doesn’t bring immediate benefit.
• Prioritize quality from the start: Set clear development standards that prioritize clean, maintainable code, even if it leads to slightly longer development cycles. The time saved in the long run is often worth the upfront investment.
• Build a documentation culture: Ensure that every decision, whether a shortcut or a long-term solution, is documented, so developers can quickly understand why certain decisions have been made.

Conclusion

The true cost of tech debt goes far beyond just development delays. It affects every layer of the business, from employee satisfaction to customer retention and from operational efficiency to innovation potential. Ignoring tech debt is like ignoring a ticking time bomb; eventually, it will blow up.

By actively managing tech debt, you can strike the right balance between speed and sustainability, creating an environment where highly productive teams deliver groundbreaking products. The cost of not addressing tech debt? Much too high.