IT Budget for a Mid-Size Company in India: What to Spend
The short version. There is no single correct IT budget for a mid-size company in India. The honest benchmark is 3 to 5 percent of revenue for most sectors, near 3.1 percent on average. The total matters far less than what the money is buying.
By Priya Sharma, Sirius Star. Security and compliance practice.
The email landed at 6:52 on a Tuesday. One line from Sanjay, the finance head at a 200-person logistics-tech firm in Pune. Why is our IT bill higher than last year when we did not add headcount.
I have answered a version of that email for 17+ years. It is a fair question. It is also the wrong first question, and the reframe is the whole point. A good IT budget for a mid-size company in India is not a number you copy from a peer. It is a shape.
Sanjay’s case: the bill only goes up
Sanjay is not wrong to be annoyed. He had three line items in front of him that all grew. The Microsoft 365 renewal went up. A laptop refresh he approved in March landed as one large invoice. And a security tool appeared that nobody on the finance side remembered signing off.
His logic was clean. Same number of people, bigger bill. So somewhere, someone is either overspending or getting sold things we do not need. When a CFO says the IT budget feels high, he usually means it feels unpredictable. That is a different complaint, and it has a better fix than cutting.
I asked him for one thing before we argued about the total. Split the bill into what keeps the lights on and what moves the business forward. He had never seen it that way. Most finance teams have not.
What the number hides
Here is the part buyers get wrong. They treat the IT budget as one bucket. It is really four. People, software, hardware, and the security and compliance line that companies underfund until an auditor asks a question they cannot answer.
I want to be honest about a mistake, because the mistake is the lesson. A few years ago I helped a smaller firm trim a budget I thought was padded. We cut the endpoint monitoring line to save a few lakh. It felt like discipline. Eleven months later their auditor asked who had copied a client file to a personal drive, and the honest answer was that nobody could say. The saving was real. The cost of not having the log was larger. I had read a lean budget as a healthy budget. It was not the same thing.
That is the trap. You can hit a low percentage and still be spending badly, and you can sit at a higher percentage and be spending exactly right. The number is a symptom. The real cost of a data breach for a mid-size Indian company does not care what percentage you budgeted.
So what should a mid-size company in India actually spend
The most useful benchmark is IT spend as a share of revenue, not per head. Gartner’s IT Key Metrics Data 2025 puts the average for mid-size enterprises at around 3.1 percent of revenue. The range by sector is wide, and yours matters more than the average.
| Sector | Typical IT spend as a share of revenue* |
|---|---|
| Trading and distribution | ~2 to 3% |
| Manufacturing and logistics | ~2.5 to 3.5% |
| Professional services | ~3.5 to 5% |
| Insurance | ~5 to 7% |
| Banking and financial services | ~6 to 9% |
| Software and SaaS | ~9% and up |
*Revenue-based medians, blended from Gartner and Avasant’s IT spending and staffing benchmarks. Treat them as a starting line, not a target.
Sanjay’s firm sits in logistics-tech. Part physical operations, part software. A blended 3.5 to 4 percent was healthy for them. He had been comparing himself to a pure trading company at 2 percent and feeling robbed.
What I told Sanjay
Stop defending the total. Start defending the shape. Roughly half of a healthy IT budget keeps the lights on: people, licences, connectivity, the things that fail loudly when you skip them. The rest should be doing something. A refresh that removes ageing machines. A security control your clients now ask about in their contracts. A migration that retires a tool you were paying for twice.
Two of his line items passed that test. The Microsoft 365 move replaced a patchwork of old licences and lowered the per-head cost once we counted everything. The security tool was overdue given the DPDP Act penalties, which reach Rs 250 crore for serious lapses. The hardware invoice was the one to fix. Not because it was wrong, but because it arrived as a shock. That is a timing problem, not a spending problem.
If you are refreshing more than fifty machines in a year, the hardware line is also where Device-as-a-Service quietly changes the maths. It turns one lumpy CapEx invoice into a predictable monthly figure, which is the thing Sanjay actually wanted. We have seen a single large refresh invoice do more damage to a CFO relationship than a whole year of steady monthly billing.
If you are doing this yourself
You do not need a consultant for the first pass. You need one afternoon and a willingness to split the bill honestly.
- Find your sector benchmark first. Use the table above as a starting line, then adjust for how much of your work is software versus physical operations.
- Split every line into keep-the-lights-on or move-the-business. If half your budget is not moving anything forward, you are running maintenance, not IT.
- Age your hardware before it ages you. A fleet quietly getting older is a bill you have not received yet. A simple device lifecycle plan turns that surprise into a schedule.
- Fund the security line before the audit, not after. The cheapest time to buy a log is the year before someone asks to read it.
- Make the total predictable. A CFO can defend a steady number far more easily than a low one that jumps every March.
Frequently asked questions
What percentage of revenue should a mid-size company in India spend on IT?
Most land between 3 and 5 percent, with the average for mid-size firms near 3.1 percent per Gartner. Financial services and software run higher, trading and manufacturing lower. Your sector matters more than the headline average.
Is IT spend per employee a good benchmark?
It is easy to calculate and easy to mislead yourself with. A 200-person software team and a 200-person distribution firm have very different needs. Revenue share travels better across sectors. Use per-head only to sanity-check, not to set the budget.
How much of the IT budget should go to security?
There is no fixed slice, but underfunding it is the most common and most expensive mistake. Treat it as the line your clients and your regulator will test, then fund it to pass. The DPDP Act made that line a board-level number.
How do I stop the hardware bill from arriving as a shock?
Move from buying in lumps to a planned refresh, or shift to Device-as-a-Service so the cost lands monthly. Predictability, not the total, is usually what the finance team is really asking for.
Still deciding what your number should be
If your IT bill feels high and you cannot yet say whether it is high or just badly shaped, that is the exact problem worth an hour. We will split your budget into the four buckets, show you where you sit against your sector, and tell you which lines to cut and which to protect. Free, no card, no sales call. 200-plus Indian businesses trust Sirius Star, delivery pan-India from Vashi, Navi Mumbai, reply within 24 working hours. Get a free IT budget review. WhatsApp +91 91375 93228 or care@siriusstar.in, 10 to 7 IST if you would rather just ask.
P.S. Priya here. Sanjay sent one more email after our call. Same bill. I just know what it is buying now. That was the whole win. The number never changed. His comfort with it did.
