Cloud Waste Climbs to 29% as 70% of Enterprises Pull Workloads from Public Cloud

Repatriation at Scale

Broadcom's Private Cloud Outlook 2025 report, based on 1,800 IT leaders worldwide, quantifies what budget conversations have suggested for months: 70% of enterprises are actively moving workloads from public cloud back to private infrastructure. One-third have already completed those migrations. The shift is not a retreat—93% are running intentional hybrid architectures mixing public and private cloud for what the report calls "optimal performance, cost and control." This is workload optimization, not cloud abandonment, and it changes the math on vendor selection and contract negotiations.

The trust gap is measurable. Over 90% of IT leaders say they trust private clouds more than public clouds for critical security and compliance workloads. That number will be cited in board presentations and audit conversations to justify on-premises builds for regulated data. It also means hyperscalers face harder questions about data locality, auditability, and egress fees—or lose those workloads entirely.

Budgets are not shrinking. Roughly 90% of organizations expect only minor adjustments to cloud spending over the next three years, with both private and public cloud investments growing. The change is reallocation: more money flowing to private infrastructure, hybrid control planes, and cost-optimization tooling, less tolerance for opaque public-cloud bills. The report explicitly cites "fiscal visibility" as a driver, which makes cost transparency and committed-use discounts competitive differentiators in infrastructure RFPs.

Waste Reverses Course

Flexera's 2026 survey of over 750 cloud decision-makers shows cloud waste increased to 29% of spend, the first rise after years of improvement. The number lands as 81% of organizations are already running generative AI workloads and 92% operate multi-cloud strategies. AI training and inference drive unpredictable compute spikes, and multi-cloud architectures multiply the surface area for misconfigured resources, orphaned storage, and underutilized instances. CFOs now have current data to justify FinOps headcount and tooling line-items, and to demand ROI tracking from cloud programs.

Public cloud services are projected to reach $596 billion in 2025, with roughly 60% of IT budgets allocated to cloud-based services and infrastructure. IaaS spending alone is expected to hit $141 billion. Cloud security spend surpasses $19.7 billion in 2025, and AI/ML cloud services are forecast to reach $47.3 billion globally. Those figures validate two things: cloud spending is not slowing, but buyers are demanding more control over where that money goes and what it produces.

What Changes in Architecture and Procurement

The 93% hybrid and 92% multi-cloud numbers make single-cloud architectures progressively harder to defend in technical review. Architects will prioritize portable runtimes—Kubernetes, containers, open data formats, standardized CI/CD—to avoid being trapped as AI and platform services proliferate. Expect more RFPs that require vendors to support non-hyperscaler hosting options and open APIs.

The 70% repatriation figure gives CIOs evidence to pivot away from "all-in public" strategies without being seen as outliers. It favors vendors with strong private or hosted private stacks: Broadcom/VMware, Dell, HPE GreenLake, IBM, Oracle Cloud@Customer, and colocation providers. It also benefits hyperscalers with credible hybrid plays—Azure Arc, Google Distributed Cloud, AWS Outposts—but on more price-sensitive terms than pure public deployments.

Rising waste and aggressive gen-AI adoption benefit cost-optimization platforms (Apptio, CloudHealth, ProsperOps, Zesty, CAST AI) and observability vendors that surface resource inefficiencies. Multi-cloud management favors control-plane vendors (Nutanix, Red Hat OpenShift, HashiCorp) and networking providers that simplify inter-cloud traffic.

Cloud security spending exceeding $19.7 billion in 2025 gives security teams leverage to upgrade from point tools to integrated platforms and to justify zero-trust, data-loss prevention, and posture management projects as part of cloud migrations. Security evaluation criteria will increasingly include native integration with CNAPP, CSPM, and data security controls across hybrid environments.

What to Watch

Watch for vendors to begin reporting "repatriation revenue" or "hybrid attach rates" as a key metric. If 70% of enterprises are moving workloads back, every infrastructure vendor will compete to host those workloads—whether on-premises, in colocation, or in private hosted clouds. Pricing models will shift toward committed capacity and predictable costs, undercutting hyperscaler consumption-based billing.

Watch for FinOps tooling to become a mandatory line-item in cloud contracts. With waste at 29% and CFOs demanding ROI tracking, expect procurement to require cost-visibility dashboards, autoscaling commitments, and quarterly optimization reports as contract terms. Vendors that cannot provide real-time cost attribution and rightsizing recommendations will lose deals to those that can.

Watch for enterprises to hold hyperscalers accountable on data locality and egress fees in regulated industries. If over 90% of IT leaders trust private cloud more for compliance workloads, hyperscalers will need to offer better auditability, committed data residency, and transparent egress pricing—or accept that those workloads will move to private infrastructure and not return.