Budgeting for IT support
In 2026, Australian small to mid-sized businesses (10–200 employees) should budget 3–7% of annual revenue for IT support and cybersecurity.
In practical terms, that typically equates to $170–$300 AUD per user per month, or $2,000–$3,600 AUD per employee annually, depending on security maturity and compliance requirements.
For example:
- 20 employees → $40,000–$72,000 per year
- 75 employees → $150,000–$270,000 per year
- 150 employees → $300,000–$540,000 per year
Businesses with higher compliance or multi-site needs should expect budgets toward the upper end of this range. Check out our blog about the costs of Managed IT for further information
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The 4-Part IT Budget Framework
Let’s break the annual IT budget into clear categories:
1️⃣ Managed IT Services (60–75%)
Includes:
- Unlimited helpdesk
- Endpoint management
- Microsoft 365 administration
- Cybersecurity stack (EDR, email filtering backup monitoring)
- Quarterly strategic reviews
2️⃣ Software & Licensing (10–20%)
- Microsoft 365 Business plans
- Backup licensing
- Email security
- Endpoint detection & response
3️⃣ Hardware Lifecycle (10–15%)
- PCs every 3–4 years
- Servers every 4–6 years
- Networking gear every 5–7 years
4️⃣ Strategic Projects (5–10%)
- NBN upgrades or fibre transitions
- Multi-site VPN design
- Azure tenancy restructuring
- Cloud migration
- Infrastructure modernisation
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Budget Benchmarks by Company Size
10–25 Employees
Typical Annual IT Budget: $30,000–$90,000 AUD
- Cloud-first infrastructure (Microsoft 365 + Azure)
- Minimal on-prem hardware
- Basic cybersecurity stack (MFA, EDR, backup)
- Limited regulatory complexity
- Mostly remote support
Smaller Australian businesses often operate lean IT environments but still require structured cybersecurity to meet insurer expectations.
26–75 Employees
Typical Annual IT Budget: $90,000–$250,000 AUD
- Formal cybersecurity stack (EDR, advanced email protection)
- Structured backup and recovery strategy
- Growing helpdesk demand
- Possible multi-site connectivity (NBN + failover)
- IT roadmap planning begins
At this size, IT becomes operationally critical rather than reactive.
76–200 Employees
Typical Annual IT Budget: $250,000–$650,000+ AUD
- Multi-location network complexity
- Dedicated cloud environments (Azure tenancy optimisation)
- Advanced security monitoring
- 24/7 response capability
- Strategic IT roadmap planning
- Executive reporting and budgeting
Larger Australian organisations often require structured governance and greater resilience to meet insurer and client expectations.
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What Causes IT Budgets to Increase?
Common cost drivers in Australia:
- Industry regulatory requirements (Privacy Act, financial services regulations, healthcare obligations)
- 24/7 operations or shift-based workforce
- High employee turnover (onboarding/offboarding overhead)
- Legacy server environments
- Cyber insurance policy requirements
- Multiple physical office locations
- Regional connectivity challenges (NBN reliability, fibre upgrades)
- Data sovereignty hosting requirements
As businesses grow, complexity — not just headcount — drives IT spend.
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What Happens When Businesses Underbudget IT?
Underinvestment in IT often leads to:
- Extended downtime costing thousands per hour in lost productivity
- Ransomware recovery costs exceeding $50,000–$150,000 AUD
- Increased cyber insurance premiums or coverage restrictions
- Lost staff productivity due to recurring support issues
- Emergency capital purchases due to unplanned hardware failure
Reactive VS Proactive spending:
Reactive IT spending occurs when businesses only invest after failures, security incidents, or urgent hardware replacements. While it may appear cheaper initially, it often results in unpredictable costs, increased downtime, and higher operational risk.
Proactive IT spending prioritises prevention through structured monitoring, cybersecurity controls, planned hardware upgrades, and strategic planning.
Although proactive budgets may seem higher upfront, they deliver stable monthly costs, reduced disruption, and stronger long-term resilience.
Real Client Example:
“80-employee legal organisation budgeted $120K/year for IT but experienced recurring outages and lack of transparency with private cloud solutions. After shifting to a structured $135K/year budget (5.2% of revenue), they reduced downtime completely and gained confidence in 24×7 uptime by shifting servers and infrastructure to Microsoft Azure. In addition, regular technical alignment sessions and structure planning keeps the organisation on the front foot with regards to technology.”
Final Thoughts: IT Budgeting Is a Risk Decision, Not Just a Cost Decision
At the end of the day, your IT budget isn’t just an expense line — it reflects your organisation’s risk tolerance and growth strategy within the Australian market. Businesses investing 3–7% of revenue into structured IT and cybersecurity experience fewer disruptions, stronger insurance positioning, and more predictable operating costs. Those who underbudget often pay later through downtime and emergency remediation. Strategic, proactive IT investment turns technology into a long-term competitive advantage.