ManageEngine, a division of Zoho Corporation and a leading provider of enterprise IT management solutions, has released its report, The Shadow AI Surge in Enterprises: Insights from the U.S. and Canadian Workplace. The report highlights the rise of shadow AI—unauthorized AI tools used by employees—and outlines how organizations can mitigate risks while turning shadow AI into a strategic advantage.

The Rise of Shadow AI

  • 60% of employees are using unapproved AI tools more frequently than a year ago.
  • 93% admit to inputting information into AI tools without approval.

Risks vs. Rewards

63% of IT decision makers (ITDMs) cite data leakage or exposure as the primary risk. Yet, 91% of employees perceive no risk, minimal risk, or risks outweighed by benefits. Top tasks completed using shadow AI include summarizing notes or calls (55%), brainstorming (55%), and analyzing data/reports (47%). The most commonly approved AI tools are generative AI text tools (73%), AI writing tools (60%), and code assistants (59%).

Shadow AI as a Strategic Opportunity

“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. IT leaders are encouraged to shift from defense to proactively building transparent, collaborative, and secure AI ecosystems that empower employees.

Identifying the Shadow AI Gaps

  • 85% of ITDMs report that employees adopt AI tools faster than IT can assess them.
  • 32% of employees entered confidential client data, and 37% entered internal company data into AI tools without approval.
  • 53% of ITDMs note risks from employees using personal devices for AI tasks.
  • Only 54% of organizations have fully enforced AI governance policies, despite 91% having policies in place.

Proactive AI Management Recommendations

ITDMs suggest integrating approved AI tools into workflows (63%), establishing clear policies (60%), and maintaining a vetted list of tools (55%). Employees recommend fair and practical policies (66%), access to official tools (63%), and better education on AI risks (60%).

“Shadow AI is a fatal flaw for most organizations,” said Sathish Sagayaraj Joseph, Regional Technical Head at ManageEngine. Proactive AI management aligns IT and business objectives, helping employees safely leverage AI while driving measurable business outcomes.

Download the full report, The Shadow AI Surge in Enterprises: Insights from the U.S. and Canadian Workplace, for detailed insights and recommendations.

Explore ITech360hub for the latest in AI, IoT, cybersecurity, AI tech news, and expert industry insights.