97% of IT Decision Makers See Significant Risks of Shadow AI, While 91% of Employees See No Risk, Little Risk, or Risk That’s Outweighed by Reward

ManageEngine, a division of Zoho Corporation and a leading provider of enterprise IT management solutions, today released its report, The Shadow AI Surge in Enterprises: Insights from the U.S. and Canadian Workplace. Based on a survey of IT decision makers (ITDMs) and business employees, the report investigates the rise of shadow AI—unauthorized AI tools used for work—and identifies critical gaps that organizations need to close if they want to reduce the risks of shadow AI and turn it into a strategic advantage.

• The rise: 60% of employees are using unapproved AI tools more than they were a year ago, and 93% of employees admit to inputting information into AI tools without approval.
• The risks: 63% of ITDMs see data leakage or exposure as the primary risk of shadow AI. Conversely, 91% of employees think shadow AI poses no risk, not much risk, or some risk that’s outweighed by reward.
• The rewards: Summarizing notes or calls (55%), brainstorming (55%), and analyzing data or reports (47%) are the top tasks employees complete with shadow AI. Generative AI text tools (73%), AI writing tools (60%), and code assistants (59%) are the top AI tools ITDMs have approved for employee use.

“Shadow AI represents both the greatest governance risk and the biggest strategic opportunity in the enterprise,” said Ramprakash Ramamoorthy, director of AI research at ManageEngine. “Organizations that will thrive are those that address the security threats and reframe shadow AI as a strategic indicator of genuine business needs. IT leaders must shift from playing defense to proactively building transparent, collaborative, and secure AI ecosystems that employees feel empowered to use.”

Identifying the Shadow AI Gaps

To turn the use of shadow AI from a liability into a strategic advantage, IT leaders need to close the gaps in education, visibility, and governance revealed by the report. Specifically, a lack of education around AI model training, safe user behavior, and organizational impact is driving systematic misuse. Blind spots continue to grow in organizations, even as IT teams move to approve and integrate AI tools as quickly as possible. Meanwhile, shadow AI proliferates due to inadequate enforcement of established governance policies.

• 85% of ITDMs report that employees are adopting AI tools faster than their IT teams can assess them.
• 32% of employees entered confidential client data into AI tools without confirming company approval, while 37% entered private, internal company data.
• 53% of ITDMs say employees’ use of personal devices for work-related AI tasks is creating a blind spot in their organization’s security posture.
• Only 54% of ITDMs report their organizations have implemented clear, enforced AI governance policies and actively monitor for unauthorized use, while 91% have implemented policies overall.

Pivoting to Proactive AI Management

Proactively managing AI means harnessing employee initiative while maintaining security. It delivers the business value discovered in shadow AI but does so via AI tools that are approved by IT. To that end, ITDMs and employees make several strategic recommendations in the report.

• 63% of ITDMs advise integrating approved AI tools into standard workflows and business applications, 60% suggest implementing clear policies on acceptable AI use, and 55% suggest establishing a list of vetted and approved tools.
• 66% of employees recommend setting clear policies that are fair and practical, 63% recommend providing official tools that are relevant to their tasks, and 60% advise providing better education on understanding the risks.

“Shadow AI is a fatal flaw for most organizations," said Sathish Sagayaraj Joseph, regional technical head at ManageEngine. "IT teams can’t manage risk they can’t see—and they can’t enable business value that users won’t divulge. Proactive AI management unites IT and business professionals in their pursuit of common, organizational goals. That means employees are equipped to understand and avoid AI-related risks, and IT is empowered to help them use AI in ways that drive real business outcomes.”

The full report, The Shadow AI Surge in Enterprises: Insights from the U.S. and Canadian Workplace, is available for download here.

Survey Methodology

In May 2025, ManageEngine commissioned independent market research agency Censuswide to conduct a study of 350 ITDMs and 350 working professionals across the U.S. and Canada, employed in organizations with at least 500 employees and $10M in annual revenue. The survey explored AI usage patterns, security concerns, and governance gaps, with a focus on real-world behaviors across organizations of varying sizes and industries.

About ManageEngine

ManageEngine is a division of Zoho Corporation and a leading provider of IT management solutions for organizations across the world. With a powerful, flexible, and AI-powered digital enterprise management platform, we help businesses get their work done from anywhere and everywhere—better, safer, and faster. To learn more, visit www.manageengine.com.

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