IT Budget Percentage of Revenue by Industry: 2027 Benchmarks and How to Set Yours
Quick answer: The typical IT budget percentage of revenue across industries sits near 3%. Avasant’s Computer Economics research found a composite median of 2.9% in its 2025/2026 benchmark study. By industry, the spread is wide: banks and financial firms often spend roughly 4% to 11% of revenue on IT, while manufacturers and construction companies usually spend under 3%. Your right number depends on how much of your business runs on software, data, and digital customer contact.
Key points
- A median is a reference point, not a target; benchmarking specialists warn against copying it blindly.
- The most detailed industry tables, including Gartner’s, sit behind paid subscriptions.
- Smaller companies in the same industry often spend a higher share of revenue than large ones.
- Worldwide IT spending is rising fast in 2027, driven mostly by AI infrastructure.
- Small businesses can build a realistic budget from per employee costs instead of percentages.
What does IT budget as a percentage of revenue mean?
IT budget as a percentage of revenue is your total annual technology spending divided by your annual revenue. A company with $10 million in revenue and $300,000 in IT spending has an IT budget of 3% of revenue.
What counts as “IT spending” matters as much as the math. Most benchmark studies include:
- IT staff salaries and benefits.
- Software subscriptions and licenses.
- Cloud services and hosting.
- Hardware such as laptops, servers, and network gear.
- Outsourced services, including managed IT and consultants.
- Telecom, internet, and security tools.
In practice, many companies undercount because technology spending hides in other departments. Marketing pays for its own software, finance pays for accounting tools, and nobody adds them up. Before comparing yourself with any benchmark, gather every technology line item across the business, not just the IT department’s budget.
IT spending benchmarks by industry
IT spending as a percentage of revenue varies more by industry than by any other factor. The table below includes only figures published publicly by the named source, with their dates.
| Industry or group | Published benchmark | Source and date |
|---|---|---|
| All industries | 2.9% composite median | Avasant Computer Economics, 2025/2026 study |
| All industries | 3.28% average | Deloitte Global CIO Survey, 2016 to 2017 |
| Financial services | About 4.4% to 11.4% (middle half of companies) | Avasant Computer Economics |
| Banking and securities | 7.16% average | Deloitte Global CIO Survey, 2016 to 2017 |
| Discrete manufacturing | About 1.4% to 3.2% (middle half of companies) | Avasant Computer Economics |
| Manufacturing and construction | Below 2% average | Deloitte Global CIO Survey, 2016 to 2017 |
The Deloitte figures are older but remain useful for showing the pattern, which has stayed consistent: financial services near the top, manufacturing and construction near the bottom.
Show Image Financial services firms typically spend the largest share of revenue on IT. Photo: Unsplash
Why do some industries spend more on IT?
Industries spend more on IT when their product is essentially information. A bank’s core business is moving and recording money digitally, so its systems, security, and compliance needs are enormous relative to revenue. An insurer, a software firm, or a professional services firm sits in a similar position.
Industries that spend less tend to have large physical costs. A manufacturer’s revenue is driven by materials, machines, and labor, and a construction firm’s by projects in the field. Their IT may be just as important day to day, but it is small compared with everything else on the income statement, which keeps the percentage low.
Regulation pushes spending up too. Healthcare organizations under HIPAA and financial firms under federal privacy and security rules must invest in documented controls, which compliance management programs formalize.
Show Image Asset heavy industries like manufacturing usually spend a smaller share on IT. Photo: Unsplash
What about Gartner’s IT spending percentages by industry?
Gartner publishes detailed IT spending as a percentage of revenue by industry in its IT Key Metrics Data, but that dataset is available to paying clients. Because of this, many tables online labeled “Gartner 2025” can’t be checked against the original.
What most articles miss is how often those unverified tables get copied from site to site. If you’re making a budget decision, either get the figures directly from a Gartner subscription or use publicly published benchmarks with clear dates, like the ones above.
Gartner does publish its worldwide forecasts openly. In July 2026, it projected global IT spending of $6.37 trillion for 2026, up 14.2% from 2025, with data center systems spending jumping 62.5% as companies build capacity for AI.
Average IT budget by company size
Within the same industry, smaller companies often spend a higher percentage of revenue on IT than larger ones. Avasant notes that small banks may spend more than 10% of revenue on IT, while large construction firms rarely exceed 2%.
The reason is scale. Every company needs a baseline of security tools, software, and support regardless of size. A large firm spreads that baseline across far more revenue, so the percentage falls even as the dollar amount rises. Avasant also reports no meaningful difference in IT spending ratios between US and Canadian regions, or between North America and other developed regions, so geography matters less than industry and size.
IT budget example for a small business
A small business can estimate its IT budget more reliably from per user costs than from industry percentages. Here’s an illustrative example for a 20 person professional services firm with $2.5 million in annual revenue.
| Cost item | Assumption | Annual cost |
|---|---|---|
| Managed IT services | $175 per user per month | $42,000 |
| Microsoft 365 Business Premium | $22 per user per month | $5,280 |
| Laptop replacement | $1,200 per laptop, replaced every 4 years | $6,000 |
| Business software and security extras | Example allowance | $5,000 |
| Total | $58,280 |
That comes to about 2.3% of revenue. The managed IT and Microsoft 365 prices reflect typical 2026 market rates, while the hardware and software lines are example assumptions you should replace with your own numbers.
Most people discover that their real total is higher once they count software bought outside the IT budget. A short IT consulting review can pull every line item into one view.
Show Image Building a budget from real line items beats copying an industry average. Photo: Unsplash
How to set your IT budget as a percentage of revenue
Set your IT budget by starting with what you actually need, then using industry benchmarks as a sanity check rather than a target.
- Total your current spending. Include every technology cost across departments.
- Calculate your ratio. Divide total IT spending by annual revenue.
- Compare with your industry. Use dated, sourced benchmarks for your sector and size.
- Identify gaps. Low spending may mean security, backups, or aging hardware are underfunded.
- Plan for growth. Budget for new hires, locations, and planned projects.
- Separate run and grow. Keep “keeping the lights on” costs apart from investments in new capabilities.
Deloitte’s CIO research found that, on average, 57% of IT budgets went to running business operations, with 16% on business innovation. Tracking that split shows whether your budget is only maintaining the past or building the future.
Is spending less than the benchmark good or bad?
Spending below your industry benchmark isn’t automatically good or bad. It may mean you run efficiently on cloud tools, or it may mean critical work like security, backups, and hardware replacement is being deferred.
The honest trade off is that a low ratio often looks great until something fails. Underfunded IT tends to show up as old laptops, unpatched systems, and reliance on one overworked person. Spending above the benchmark can be equally healthy if it funds digital products, automation, or cloud computing and object storage that drive revenue.
IT budget trends for 2027
IT budgets in 2026 are being pulled in two directions. Gartner’s July 2026 forecast shows strong overall growth driven by AI infrastructure, but it also warns that technology budgets are being strained by inflation, supply shortages, and rising hardware and memory costs.
For typical companies, budget growth is steadier. Avasant’s 2025/2026 study found median IT budget growth of 3.0%, with about 69% of companies increasing their budgets.
Show Image Rising hardware costs affect businesses in every industry. Photo: Unsplash
Frequently asked questions
What percentage of revenue should a small business spend on IT?
There’s no single right number. Building a budget from per user costs, then checking it against your industry’s range, gives a more reliable answer than a flat percentage.
Which industry spends the most on IT?
Financial services and banking consistently rank near the top, because their products are largely digital and heavily regulated.
Which industries spend the least on IT as a share of revenue?
Construction and manufacturing typically rank lowest, because their revenue is dominated by materials, equipment, and labor costs.
Does IT spending include cloud subscriptions?
Yes. Most benchmarks count cloud services, software subscriptions, hardware, IT staff, and outsourced services together.
How do I calculate my IT budget percentage?
Add up all technology costs for the year, divide by annual revenue, and multiply by 100.
Do IT staff salaries count toward the IT budget?
Yes. Salaries and benefits for internal IT staff are usually one of the largest parts of an IT budget in benchmark studies.
What were IT budget benchmarks around 2022?
Published composite medians have stayed fairly stable over recent years, with Avasant describing roughly 2.8% to 3.0% of revenue as a “new normal.”
Is IT spending as a percentage of revenue a good metric?
It’s a useful starting point but incomplete. IT spending per employee and the share spent on innovation versus maintenance add important context.
Does company location change IT spending?
Less than you might expect. Avasant found no significant difference between US regions or between North America and other developed economies.
How much does Pakistan’s government budget for IT?
Pakistan’s Ministry of IT and Telecom was allocated more than Rs. 22.49 billion for fiscal year 2026 to 2027, up 15.8% from the prior year, according to ProPakistani.
Should IT budgets grow every year?
Usually, modestly. Inflation, rising software prices, and growth in headcount push costs up even when priorities stay the same.
How can a business lower its IT spending safely?
Remove unused licenses, consolidate overlapping tools, standardize hardware, and move suitable workloads to the cloud, without cutting security or backups.
Conclusion
For primary data, read Gartner’s July 2027 worldwide IT spending forecast and Deloitte’s CIO Insider report on technology budgets.
