New Report from Publicis Sapient and HFS Research Underscores Need for AI-Driven Modernization to Tackle $2 Trillion Tech Debt

Insights from more than 600 Global IT and Business Leaders Highlight Demand for AI-led Service Models and a Shift to Services-as-Software to Address Tech Debt and Drive Digital Business Transformation

New York, NY, May 8, 2025 – Publicis Sapient, a digital business transformation company, in partnership with HFS Research, today released a new report, “Smash Through Tech Debt: Why AI Is The Jackhammer,” based on insights from more than 600 IT and business leaders globally across various industries.  The report uncovers a recognition that eliminating tech debt requires a shift in mindset, delivery models, operating architecture and partner expectations.

According to estimates from HFS Research, the Global 2000 enterprises are carrying $1.5–2 trillion in accumulated tech debt.  Key findings include:

• While 30% of IT budgets are spent on modernization, only 3 in 10 organizations have modernized their core applications.
• 80% of enterprise leaders believe AI will improve modernization outcomes, but only one in five of the firms surveyed claimed to be scaling AI across multiple functions.
• Close to half of all firms surveyed have not begun working with AI; 27% of firms reported that they are exploring AI in IT but not yet implementing it and another 15% are skeptical about AI’s impact on IT.

“The scale of tech debt facing enterprises is staggering, and overcoming it demands more than incremental change. What’s needed is a fundamental shift in how organizations approach transformation.  AI is not just a tool — it’s a catalyst for reimagining delivery models and accelerating modernization,” said Nigel Vaz, CEO of Publicis Sapient.  “At Publicis Sapient, we’re helping clients navigate this shift by leveraging AI-led delivery models and our SPEED— Strategy, Product, Experience, Engineering, and Data & AI — capabilities to drive transformation and achieve sustainable growth.”

“Tech debt isn’t just a weight—it’s a ticking time bomb that’s threatening the future of global enterprises. AI isn’t the luxury add-on or a shiny new tool we hope will make things better—it’s the only thing that can defuse this crisis,” said Phil Fersht, CEO and Chief Analyst of HFS Research. “Enterprises need to stop tinkering with outdated models and start smashing through the barriers holding them back. This is the moment to rewrite the rules of modernization, and those who don’t act decisively risk being left behind in the dust.”

Other key findings from the report include:

• Top Barriers to AI Adoption for IT: More than half (55%) of leaders surveyed reported a shortage of skilled talent to implement and manage AI as a challenge to AI adoption. Forty-one percent said that difficulty integrating AI with legacy systems is a challenge. Other barriers to AI adoption that leaders cited include data quality and governance issues (40%), regulatory and ethical concerns (39%), uncertainty around ROI and business value (31%) and resistance to change within the organization (25%).
• Shift to Services-As-Software: There is a demand for new services models that act more like software. A shift to services-as-software, a term coined by HFS Research to describe a shift to technology delivering services and less reliance on human resources, is emerging. Three in four enterprise leaders expect a pivot from staff augmentation models to services-as-software.
• Demand for AI-Led Service Models: The reasons that enterprise leaders said are influencing their organization’s decisions to shift to AI-led service models, including services-as-software, are: existing IT services are focused on maintaining legacy systems rather than driving transformation (49%), faster innovation and time-to-market (46%), operational agility (45%), cost savings (44%), need for a new approach (41%), better customer and employee experiences (41%), their organization is facing significant tech debt and the current service model is not reducing it (36%), competitive pressures (32%), and market or regulatory changes (22%).
• Enterprise Leaders are Ready to Switch Vendors to Achieve AI Transformation Ambitions: Only 10% of enterprise leaders said that their vendors are proactively helping them transition to AI-powered delivery. Seventy-one percent of enterprise leaders indicated that they’re ready to switch providers for better AI execution and/or leadership.
• Disconnects Between IT and Business Leaders That Undermine Progress: The report revealed four critical disconnects between IT and business leaders that can hinder AI success, such as vendor selection disparities, conflicting success metrics, differing AI perceptions, and preparedness gaps. These disconnects must be addressed for successful services-as-software transformation.

The report emphasizes that to unlock the full potential of AI, enterprises must shift from siloed systems to seamless value chains, from governance bottlenecks to embedded guardrails, and from labor management to platform stewardship. The report also outlines five moves that CIOs should make to break free from tech debt. To view the full report, please visit https://www.publicissapient.com/insights/hfs-ai-tech-debt-report.

About HFS Research

HFS Research is a leading global research and advisory firm that helps Fortune 500 companies navigate IT and business transformation with fearless insights and actionable strategies. With unrivaled access to Global 2000 executives, HFS empowers organizations to make confident technology and service decisions that drive competitive advantage. For more information, visit www.hfsresearch.com.

About Publicis Sapient

Publicis Sapient is a digital business transformation company. We partner with global organizations to help them create and sustain competitive advantage in a world that is increasingly digital. We operate through our expert SPEED – Strategy, Product, Experience, Engineering and Data & AI – capabilities which, combined with our culture of curiosity and deep industry knowledge, enable us to deliver meaningful impact to our clients’ businesses through reimagining the products and experiences their customers truly value. Our agile, data-driven approach equips our clients’ businesses for change, making digital the core of how they think and what they do. Publicis Sapient is the digital business transformation hub of Publicis Groupe with 20,000 people across 72 offices worldwide. For more information, visit publicissapient.com.