Many businesses don’t seem to have a clear understanding of what they should be spending on their IT.
What’s a good price? How do you compare offerings? Am I spending too much or too little? These are all common questions, so we want to help guide you on what average IT costs are, so you can plan your own budgets effectively.
IT investment in 2025
Across every sector, IT budgets are still rising. Gartner expects global IT spending to increase by around 8% – 10% in 2025, with IT services taking the lead.
This growth reflects a continued shift toward cloud platforms, automation and cyber security. Boards and regulators are insisting on resilience, compliance and proactive protection against growing threats.
In the UK and Europe, similar trends are driving organisations to modernise and secure their digital environments.
What businesses are typically spending on IT
UK businesses typically spend between 3% and 6% of their annual revenue on IT, though the figure varies by sector and size.
According to UK and European benchmarking data, smaller firms often invest a higher proportion, as they have fewer economies of scale, while larger organisations can achieve efficiency at lower percentages.
In financial services, IT spend averages around 8% to 11% of revenue, driven by regulatory requirements and heavy digital investment. Professional services and technology companies generally allocate 5% to 7%, reflecting their reliance on data, software and remote working tools. Retailers and consumer brands typically spend 3% to 5%, focusing on e-commerce and customer platforms. Manufacturers and construction firms usually fall lower, at 2% to 3%, since many rely on established systems and slower digital change.
Overall, UK firms aiming to stay competitive should plan to invest at least 3% of revenue in IT, rising toward 6% or more if growth, security or innovation are strategic priorities.
How IT budgets are changing
Security and compliance costs continue to rise. IDC predicts double-digit growth in European cyber security budgets, particularly in sectors such as finance, aerospace and healthcare. Therefore, dedicating funds to security is not optional; it is essential to business continuity and regulatory assurance.
How to build a balanced IT budget
Start with your revenue baseline. For most service-based SMEs, allocating 3% – 5% of revenue to IT spend is realistic. Once you set a target, adjust for business strategy, growth stage and risk profile.
Next, structure your budget into three categories. The “run” budget covers day-to-day operations such as licences, support and connectivity. The “change” budget funds improvements like automation or migration to the cloud. The “defend” budget focuses on resilience, cyber security and data protection.
This model makes it easier to show how each pound of investment supports the wider business.
It is also helpful to monitor simple ratios such as IT spend per employee or per device. These metrics appear in many UK and European benchmarking studies and can highlight whether your business is under or over-investing.
Planning your IT budget
At Start Tech, we offer strategic IT roadmapping to help organisations structure and prioritise their technology investments. Through quarterly strategic reviews, we track progress, measure ROI and ensure your IT strategy continues to drive business performance.
This approach means Start Tech helps you spend just the right amount on IT: enough to stay competitive and secure, without overspending on unnecessary systems or services.
Book a strategic IT review with Start Tech here.
