The Compound Interest of Technical Debt

The Vicious Cycle

Imagine you're a software engineer. Your eyes are glued to your computer screens.

Bing.

An email notification pops up. It's from the client team. The email preview displays a single sentence:

“I need an update!”

You glance up and your manager is headed over to your cubicle. The look on his face matches the stress you feel.

He arrives at your desk. You pound away at the keyboard and once again, your eyes are fixated on the double monitors.

“How's it looking?” He asks. “The client needs the system up and running not now, but right now. They can't trade.”

Without even looking his direction you quickly respond. “I know! I know! I just finished. I'm submitting it now.”

After 3 hours of escalated tickets, dozens of emails, and bridge calls, a patch is finally put in. The client can get back to business. Everyone breathes a much needed sigh of relief. Problem solved.

Or is it?

A better question here is what caused the problem in the first place?

Unpaid technical debt compounds over time. High pressure situations like the one described above don’t just happen out of nowhere.

In my corporate career, I’ve been responsible for reviewing workflows, improving processes and troubleshooting system errors to replicate and uncover bugs. In short, I find the root cause of problems and develop a solution. In this article we are going to do some root cause analysis on technical debt, look at the impact, and review some possible solutions.

Root Causes of Technical Debt

Need for Speed

You can see how fast-paced things are now, right? In today’s environment, speed is everything. Clients are more savvy and competition is fierce. Even Nasdaq has adopted a fast-entry rule for big IPOs that shortens the wait time from about three months to just fifteen days.

Artificial Intelligence is also contributing to the need for speed. AI is helping businesses accomplish tasks faster than ever before. What used to take years, now takes months. What once took months can now be accomplished in a matter of weeks.

This now means if you want to stay competitive, then you have to stay fast. There is a constant rush to consistently push out new features and get new products to the market. Even when a feature is already on the roadmap, clients may ask for it sooner and push for private, customized code.

This frequent race to the finish line can put a huge burden on the delivery team.

Why?

Because deadlines are tight and time for thorough review is short. This is especially true for small to mid-sized businesses working with lean engineering teams.

Quick Fixes

Let’s look back at our earlier scenario with our developer. What do you think caused the issue?

A system defect can happen for any number of reasons. Perhaps an update didn’t work properly with existing code. Maybe the error was unique to that client’s environment. It’s even possible the end user ran the function in a way that wasn’t considered for testing. All of these scenarios and more are possible.

What’s important is that the issue is resolved, right?

Wrong.

Our developer was working an escalated client issue for 3 hours straight with zero interruptions. The client could not trade. This means millions of dollars were on the line. Additionally, he was being asked for updates back to back. This is the exact type of scenario that we described in our recent user story post.

That is a high-stress situation which allows little to no time for clear level-headed thinking, or innovative solutions that would solve the problem long term. Instances like this require quick hits that get the client up and running fast. And that’s what he did.

The issue here is that every quick fix today leads to increased risk and reduced speed tomorrow. Quick, urgent fixes often lack proper documentation. This means when new code is pushed out in the future, it’s possible our developer’s fix will not be accounted for during research and testing.

This is one of the reasons why technical debt tends to create a vicious cycle. The effects compound upon each other causing more delays and shortcuts. Research shows software developers spend about 42% of their time reworking code. Stress-induced errors contribute to this cycle and trap developers in frustrating rework.

Burnout

According to Haystack Analytics, 83% of Software Engineers reported feelings of burnout with only 17% reporting no burnout.

When your dev is gripped by high levels of stress, they are mentally exhausted. This isn't something you can see with your eyes. They may say they're on top of things. They may even give you the thumbs up that something is complete. Internally, they feel fried. You don’t want an already burned out dev working on bug fixes or your roadmap. Let me tell you why.

A heavy cognitive load slows things down. It makes it difficult to:

🔹️ Think creatively

🔹️ Plan ahead

🔹️ Stay focused

🔹️ Use working memory

These are all executive function activities of the brain. When these abilities are reduced, so is productivity, innovation, and profitability. Burnout leads to more debugging. More time debugging means attention is snatched away from the roadmap.

High stress also leads to higher levels of absenteeism and tardiness. Organizations with highly stressed employees see their absenteeism and tardiness numbers rise by 34%. High stress and burnout also means higher levels of cortisol. Cortisol is a “stress hormone” and is associated with increased sickness, which means more doctor visits. For your company, this means productivity loss due to absenteeism as well as an increase in healthcare costs. In short, your bottom line takes a hit.

Turnover & Sherlock Holmes

Burnout can often lead to turnover. When your engineers leave they take with them product knowledge, processes, and reasons behind coding decisions. What they often fail to leave with your company is proper documentation.

A lack of documentation for successors makes managing existing code even harder. Research from CAST Software states 45% of global code is currently deemed “fragile” because it was built quickly without adequate documentation.

This drives a lag in productivity for new hires, and can also mean a significant amount of time is spent playing Sherlock Holmes.

What do I mean by that?

Hours will be spent combing through tickets to piece together clues about how and why a change was made. It eats up time for other devs, analysts, and the client who is waiting for a resolution to their problem. Having spent time doing this myself, I can confirm it is a drag on productivity and energy.

“Just like financial debt, technical debt has a way of compounding. Each shortcut taken today makes future work slower, riskier and more expensive, creating pressure for even more shortcuts, leading to more messiness, more delays—a vicious circle.” - Cole Stryker in IBM: Reducing technical debt in 2026

The Downstream Effects

No matter which way you slice it, technical debt has a negative impact on your satisfaction rating with the client. What you may not have considered is how bad it looks and feels internally as well.

Technical debt does far more than just slow down your development cycle. Team morale often takes a beating.

Think about it.

Your client-facing teams have to play both sides of the fence. They are the advocate for the client and the face of the company for that account. Their personal credibility, along with the company's, is on the line when things go sideways. This creates tension between internal teams.

Additionally, delayed deliveries lead to dissatisfied clients. Clients keep track of delays, errors, and projects delivered that didn’t fully meet the scope. When you get hit with a lower satisfaction score from your clients this can lead to higher churn rates.

In my experience, for clients who stay, delays and low service scores provide the client with leverage to negotiate contract terms highly in their favor. According to an IBM article, “Reducing Technical Debt in 2026”, technical debt leads to an ROI decline of 18% to 29%.

As previously mentioned, business pressure and speed at all costs lead to stress and burnout. This significantly reduces clear thinking and the ability to focus on deep work. When your devs finish work for a critical issue, they are still mentally in a state of high-alert. That is not the state of mind you need from someone that now needs to switch back to regular queue management. As we just learned above, stress increases the risk of errors.

Breaking the Cycle

Technical debt is a huge profit killer and its effects are far reaching within your organization. Shortcuts create a vicious cycle of more quick fixes, delays, slower work, and increased risk. Beyond the 29% decline in ROI, it also fuels burnout, turnover, and lowers team morale.

One thing is certain, teams will require support in order to break the cycle of technical debt. Research from Gitnux shows companies with corporate wellness programs report a 13% lower employee turnover rate. This means you retain talent and institutional knowledge. Another benefit to your company is reduced costs associated with turnover and productivity lost during new hire training.

When you provide a support system for your delivery team, you also give them the ability to switch from a high-alert mental state, to a calm, clear-headed state that can be back to regular queue management. This is highly important for avoiding errors and increasing focus. This also ensures performance stays high. If your engineer spends the first half of his day putting out a fire, there needs to be an outlet for that stress. Without it, the rest of the day is likely to be unproductive, which will eventually cause more delays.

The Bottom Line

A collaborative solution. Technical debt eats away at your company's ability to perform at a high level and achieve maximum profitability. The root causes listed above are really only a few of the contributing factors. The truth is, we simply can't fit all of the reasons into one article. This article does not include causes such as skill gaps, poorly designed infrastructure, legacy systems, or inadequate testing.

Solving a problem this massive will require sharing diverse perspectives across your teams and may require the tech industry as a whole to address. Collective wisdom is definitely needed in order to identify and mitigate risks.

What other causes of technical debt have you seen? How has it been addressed at your company? Share your perspective in the comments.

About the Author

Kharron Alderman is the founder of Rejuvenated Mind, a performance consultancy that helps fintech leaders and high-stakes teams optimize their most valuable asset: their nervous system. As the author of Mental Alchemy, Kharron specializes in using science-backed protocols to eliminate decision fatigue, prevent burnout, and protect executive function during rapid scaling.