A new report from Freshworks Inc. outlines the financial and operational impact of increasing software complexity on global organisations. The Cost of Complexity Report, based on a survey of 706 professionals across IT, customer experience (CX), finance and operations, identifies revenue loss, declining productivity and weakened morale as the strongest consequences.
According to the report, software has become a substantial barrier to efficiency and growth. Freshworks notes that organisational and software complexity drains an average of 7% of annual revenue, a figure comparable to a typical R&D budget referenced by EY. Companies waste INR 1.20 for every INR 5 spent on software due to failed implementations, underused tools and unplanned costs. Across India, this translates into an estimated INR 14,60,000 crore in annual economic loss.
Dennis Woodside, CEO of Freshworks, states that many organisations have accepted complexity as a sign of advancement, but it now slows growth. Woodside argues that reducing friction and simplifying systems is essential for competitiveness.
The survey found that more than half of companies have not achieved expected ROI from software investments, and 34% reported revenue leakage linked to delays and missed opportunities. In the past year, 43% experienced implementation cost overruns, and 32% reported unhelpful vendor support.
Employees lose nearly seven hours a week to fragmented tools and processes. On average, workers manage 15 software solutions and four communication channels, while 45% report siloed working and 37% say their organisation lacks a single source of truth. CX teams cite uncustomisable workflows and tool overload as key issues, while IT teams face integration challenges and outdated UX.
Morale is under strain, with 60% of employees somewhat likely to leave within a year. Drivers include organisational complexity, burnout and software difficulties. Nearly one in five employees reported a resignation or burnout tied to an implementation.
Freshworks suggests that simplifying technology stacks can help organisations reclaim productivity, optimise budgets and improve employee experience.
