What is technical debt, and how do you manage it? A guide for businesses

Short answer

Technical debt is the higher maintenance and development cost that short-term code or architecture decisions create once a project ships. It behaves like financial debt: paid off early it’s a small cost, left to accrue interest it becomes a burden that keeps slowing down new features and creating bugs.

This isn’t the same thing as “badly written code.” More often than not, it’s a deliberate trade-off — choosing a solution that works over one that’s perfect, in order to hit a deadline. The real problem is when that decision never gets recorded, and the debt never gets paid back.

What is technical debt and how does it build up?

The engineer who coined the term, Ward Cunningham, borrowed the metaphor from banking: like a loan, technical debt buys you speed now, but charges “interest” later. That interest shows up as extra time spent doing routine work, unexpected bugs surfacing when you add a new feature, or a new developer needing months to get comfortable with the codebase.

Technical debt in software typically builds up in a handful of recurring situations:

• Code written with a “this just needs to work for now” mindset to hit a deadline, and never revisited afterward
• A product or market shifting quickly, and the architecture failing to keep pace
• Development moving forward without tests or documentation
• Team turnover erasing the reasoning behind earlier decisions
• Libraries and dependencies going unpatched, stuck on outdated versions

None of these is a disaster on its own. The real issue is that these small shortcuts pile up unnoticed, and “payment day” never actually arrives.

The interest metaphor: why technical debt grows over time

The most deceptive thing about technical debt is that it’s invisible in the early days. A new project starts clean, and every feature ships fast. But as debt accumulates, each new change starts touching more files, requiring more testing, and carrying more of that “will this break something?” anxiety.

This cost isn’t linear — it compounds, just like interest on a financial loan. If a tangled module’s complexity turns a four-day feature into a six-day one, that two-day gap is the interest being paid. As the debt grows, so does the interest, until the team spends more time firefighting existing problems than shipping anything new. In that cycle, resources that should go toward innovation quietly get absorbed by servicing the debt instead.

The four types of technical debt: deliberate or accidental?

Treating technical debt as a single category is misleading. The distinction widely used in software engineering splits it along two axes: whether the decision was deliberate or inadvertent, and whether it was reckless or prudent.

• Deliberate and prudent: “Let’s solve it this way for now and fix it later” — the team knows the risk and records it. Debt taken on to ship an MVP quickly usually falls here, and it’s generally reasonable.
• Deliberate and reckless: “We don’t know the right way to do this, and we don’t have time” — the risk is accepted, but no real alternative is ever considered.
• Inadvertent and prudent: The team does its best work, but as the project grows, earlier design decisions stop holding up. This gets caught and corrected through experience.
• Inadvertent and reckless: The team isn’t even aware the decision created debt. This is the most dangerous type, because nobody tracks it or budgets for it.

The practical takeaway for a business: deliberate, recorded debt is a manageable cost. Accidental, unnoticed debt is a risk that quietly slows the project down and never shows up in any budget line.

What technical debt actually costs your business

Technical debt isn’t just an engineering concern — it shows up directly in business outcomes:

• Slower delivery speed: A feature of the same scope takes progressively longer to ship. In a fast-moving market, that translates into missed opportunities.
• Higher bug rates: Complex, untested code produces new and unexpected bugs with every change, and that directly affects customer experience.
• Security risk: Unpatched libraries and postponed updates leave known vulnerabilities sitting in the system.
• Team turnover: Developers forced to keep working in a fragile system lose motivation, which accelerates turnover and erodes institutional knowledge.
• Vendor lock-in: An undocumented system that only a handful of people understand creates serious handover risk if those people leave or you switch vendors.

None of these show up as a single line item on an invoice, which is exactly why technical debt tends to be expensive by the time anyone notices it.

How do you spot technical debt?

The warning signs of growing technical debt are usually felt on the business side too — they’re just often misread:

• A simple-sounding feature request gets a “this will take a lot longer than you’d expect” from the development team
• The same bug keeps resurfacing in slightly different forms
• The team says they’re “afraid to touch” a particular module
• A new developer takes far longer than reasonable to get fully comfortable with the project
• A small change unexpectedly breaks something in a seemingly unrelated part of the system

When two or more of these show up at once, technical debt has stopped being a future problem and become an active cost slowing down day-to-day operations.

How do you manage and reduce technical debt?

Getting technical debt to zero isn’t a realistic goal — every active piece of software carries some. The goal is to make it visible and pay it down on a regular basis.

Set aside a fixed budget for refactoring

Dedicating a fixed share of every sprint or development cycle — say, 10 to 20 percent — to improving existing code instead of shipping new features stops debt from accumulating quietly. This is far more effective than “we’ll get to it when we have time,” because it’s a scheduled line item rather than a good intention.

Make code review standard practice

Having every change reviewed by at least one other developer catches bugs earlier and ensures deliberate shortcuts get discussed and recorded within the team. Decisions made without code review tend to fall into the “inadvertent and reckless” category of technical debt.

Cover critical flows with automated tests

Protecting the flows at the heart of the business — payments, sign-ups, orders — with automated tests makes refactoring safe. Without tests, a “cleanup” carries the risk of introducing new bugs, so it usually never happens at all, and the debt just keeps piling up.

Write down every shortcut

When a shortcut is chosen deliberately, documenting why and when it should be revisited — a code comment, an entry in a task tracker — keeps that debt from sliding into the “accidental” category. This small habit stops “why was this done this way?” from going unanswered months later.

Ask about technical debt when choosing a software partner

Before starting work with a software vendor or agency, asking how much time they budget for refactoring, what their testing practices look like, and how they assess technical debt when taking over an existing system tells you a lot about the project’s real long-term cost. We cover this in more detail, under data ownership and vendor transitions, in our corporate software solutions guide.

When should you deliberately take on technical debt?

Avoiding technical debt entirely usually isn’t the right strategy. Shipping an idea fast and gathering real user feedback can be worth more than building a flawless architecture around a feature whose demand hasn’t even been proven yet. What matters is making that call deliberately: writing down up front what’s being shortcut, what risk that creates, and when and how that risk gets closed out.

It’s a principle we apply in our own custom software projects as well: the first version is scoped to be tested against real usage without unnecessary complexity, and which shortcuts are being taken deliberately — and when they’ll be revisited — gets agreed with the client from the start.

Martin Fowler’s Technical Debt article, which expands on the metaphor first coined by software engineer Ward Cunningham, remains a widely cited and current reference for understanding the interest-versus-principal logic behind the concept.

Next step

Technical debt is a reality that grows when ignored but turns into a normal, manageable cost of software development when it’s actively managed. The delivery practices that keep it from accumulating are covered in what DevOps is, and if you are choosing a partner to help, our guide to corporate software companies in Izmir sets out the questions worth asking. If you want to take over maintenance of an existing system, make its technical debt visible and pay it down with a plan, or start a new project with this discipline built in from day one, our group company Web Tasarım Ofisi supports web projects with technical soundness and sustainable maintenance.

To assess the technical debt in your current software or scope a new project on solid foundations, take a look at our custom software service or get in touch with Argo Ajans.