IT Budget and IT Costs: Forecast 2025

IT budgets will develop less strongly on average in 2025 than in the previous year. The increase from 2024 to 2025 across all sectors will be 2.4 per cent, 1.9 percentage points lower than twelve months earlier. This is a result of the Metrics study ‘2025 IT Agenda’, which we once again conducted together with German IT user association Voice. Since the record year of 2022, in which IT budgets rose by 8.9 per cent, this is now the third consecutive decline in growth.

IT budget as a percentage of revenue

Looking back, there was some movement in the top-level key figure for IT budget as a percentage of turnover. The figure rose from 3.62 per cent in 2023 to 4.75 per cent in 2024. This could primarily be linked to falling revenue - one indicator of this is the leap of construction industry from last place to upper ranks. However, reliable and quality-assured data for individual sectors would have to be collected in a benchmark project.

In view of expected cost increases in IT due to rising suppliers' prices, salaries, new requirements and technologies (AI), it can be assumed that efficiency gains, for example through automation, will not be sufficient - the bottom line may be a reduction in IT services. Alternatively, some cost pressure can be passed on to IT customers, for example via quality of services. Strategies like offshoring and nearshoring are also becoming more relevant again, as this study emphasises.

IT cost optimisation is becoming more important

Our study also surveyed strategic IT topics for 2025. Only one candidate was able to increase its value compared to previous year: IT cost savings. All other evergreens such as security, digitalisation and artificial intelligence (AI) have lost ground, even if they were able to defend their places in the ranking. Sustainability in IT and recruiting IT skills lost most in relevance.

Concerns about extreme increases in IT costs have also eased somewhat. According to our IT Agenda 2025 survey, biggest increases are expected in applications and salaries for IT employees. However, these figures are also below those of previous years. Fees for IT freelancers promise relative easing, while forecasts for external consultants and IT infrastructure are close to inflation rate.

Initiatives to reduce IT costs

As many as 46.4 percent of respondents stated their organisation has a savings initiative for IT costs. In addition, 21.7 per cent expect their management to take such a step. The average savings target is 10.3 per cent - an ambitious figure that can hardly be achieved with homeopathic cost-cutting measures. And cutting costs with a lawnmower is also out of question in order to avoid hitting any critical IT areas.

Measures to reduce IT costs

Some sensible measures for optimising IT costs mentioned by respondents included outsourcing to nearshore and offshore regions, longer hardware lifecycles and the use of generative AI to reduce personnel costs. If we look at structural areas with the highest potential for IT cost reduction, IT projects come out on top. IT processes and IT infrastructure are next in line. They are followed by long-term obligations: Contracts or providers, applications and lastly the IT organisation itself. It will be interesting to see how IT organisations and their customers negotiate effective measures for savings.

2025 Budgets for IT security

The budget trend for IT security is again somewhat different. With a forecast increase of 12.7 per cent compared to 2024, there is still a strong tailwind. However, growth in IT security budgets will no longer come close to the best times of 2021 and 2022, and the increase compared to 2024 will also be slightly lower. In view of current threats, however, it is no wonder that information security, IT security and cybersecurity are once again leading the list of strategic IT fields in our IT Agenda.

Just send me an email if you would like to receive a free evaluation of our 2025 IT Agenda. It will be available from mid-January 2025.