Cost guide
What should a small business spend on IT? An Indian budget, per head
By Samuel Marndi · Updated
The short answer
Budget roughly ₹25,000–₹60,000 per employee per year for steady-state IT in an Indian small business, and two to three times that in a year you fit out an office or replace the hardware fleet. The spread is driven mostly by whether you buy laptops outright and how much of your work runs on paid software.
The number matters less than the shape. Most small-business IT spending is decided one emergency at a time, which is the most expensive way to buy it: nothing is negotiated, nothing is standardised, and the cheapest option is taken under pressure every time. A written annual budget, even a rough one, is worth more than the accuracy of any figure in it.
The per-head budget, line by line
Steady state means a normal year — no office move, no fleet replacement. Figures are per employee per year unless stated, and every range here is published elsewhere on this site with its source.
| Line | Per head, per year | Notes |
|---|---|---|
| Laptop or desktop | ₹12,000 – ₹25,000 | Amortised over a 3–4 year life. Buying outright makes year one spiky |
| Productivity suite | ₹3,000 – ₹9,000 | Microsoft 365 or Google Workspace, by tier |
| IT support / AMC | ₹3,000 – ₹9,600 | At ₹250–₹800 per device per month |
| Line-of-business software | ₹2,000 – ₹30,000+ | The widest line by far — accounting, CRM, design, industry tools |
| Security | ₹1,000 – ₹3,000 | Endpoint protection, password manager, multi-factor |
| Backup | ₹600 – ₹2,400 | Cloud backup of endpoints and the file store |
| Connectivity share | ₹2,000 – ₹6,000 | Leased line or broadband plus failover, divided by headcount |
| Mobile and peripherals | ₹1,000 – ₹4,000 | Headsets, docks, monitors, the things that get replaced quietly |
| Steady-state total | ₹25,000 – ₹60,000 | Before any project work |
Year one is not steady state
A new office or a growing team has capital costs that recur every three to five years rather than annually, and budgeting them as if they were ongoing makes IT look twice as expensive as it is. Budgeting them as if they were free is worse.
For a 25-person office, the one-off lines look like this — and the single biggest of them, the network, is also the one most often discovered late. Every figure below links to the guide that breaks it down.
| One-off line | 25-person office | How often it recurs |
|---|---|---|
| Network: cabling, switching, firewall, Wi-Fi | ₹3,75,000 – ₹9,00,000 | Once per office, per lease |
| Server or NAS, with backup | ₹1,65,000 – ₹4,08,000 | Every 5 years, if you need one at all |
| Laptop fleet, bought outright | ₹10,00,000 – ₹20,00,000 | Every 3–4 years, ideally staggered |
| CCTV and access control | ₹20,000 – ₹58,000 | Once, plus AMC |
| Website | ₹25,000 – ₹8,00,000 | Every 3–5 years, by type |
| Fit-out project management | 8 – 15% of the build | The first line cut, and the one that causes the rest to go wrong |
The five lines most budgets leave out
These are the ones that turn a planned year into an unplanned one. None of them is large on its own; together they are routinely a fifth of real IT spend.
- Software renewals you forgot you bought. Annual licences auto-renewing for tools three people tried once. Audit the card statement, not the asset register — they rarely agree.
- Failure and replacement. Something dies every year. Budget 5–10% of the hardware value and you stop making procurement decisions in a panic.
- Onboarding and offboarding. A laptop, licences, accounts and setup for each joiner; a wipe and a licence reclaimed for each leaver. The second half almost never happens, which is both a cost and a security problem.
- Growth. If you will hire six people, six people need equipping, and that is ₹1.5–3.6 lakh you already know about.
- The thing you will be told to do. A customer security questionnaire, an auditor, a contract clause. Hold 5% for it — it is not an if.
Where the money is usually in the wrong place
Across small Indian businesses the same misallocations recur, and they are rarely about the total. The money is there; it is in the wrong lines.
| Overspent on | Underspent on | Why it happens |
|---|---|---|
| Hardware specification | Backup, and a tested restore | A faster laptop is visible; a restore nobody has run is not — until it is the only thing that matters |
| Antivirus licences | Multi-factor authentication | One is a product somebody sells you, the other is a setting nobody is commissioned to turn on |
| A server bought by default | Microsoft 365 or Google Workspace done properly | "A business should have a server" has outlived the reason for it |
| Emergency callouts | An AMC or managed support | Break-fix feels cheaper until you add up a year of it — see AMC vs managed IT |
| A website rebuild | An audit that says whether you need one | The rebuild is what gets pitched; the diagnosis has to be asked for |
| Cloud capacity | Looking at the bill | Nobody owns the invoice — see what the cloud costs in India |
| New software | Rolling out what you already bought | Buying is a decision; adoption is a project, and only one of them gets a meeting |
A budget you can write in an hour
Six steps. You will not get it exactly right, and that is not the point — a rough written budget beats an accurate reactive one every time, because it lets you negotiate and standardise instead of buying under pressure.
- Count heads, including the ones you plan to hire. Multiply by ₹25,000–₹60,000 for the steady-state baseline.
- List what is out of warranty or over four years old. That is next year's replacement line, and it is knowable today.
- Audit the card statement for software. Cancel what nobody uses. This step reliably pays for the hour.
- Add 5–10% of hardware value for failure, and 5% for the thing you will be told to do.
- Separate capital from recurring, so one office fit-out does not make every subsequent year look like a cut.
- Write down what you are deliberately not doing, and why. That list is the most useful page in the document when somebody asks in March why there is no budget for it.
Every cost guide on this site, in one place
This page is the whole-year number. Each line in it has its own breakdown, with researched Indian market figures and the lines quotes tend to omit:
- Website development cost and what a website costs to run
- Mobile app development cost
- Custom software cost, with the three-year comparison against buying
- AI chatbot and agent cost, with an estimator
- Cloud cost in India
- Server, NAS and backup cost
- Office network setup cost
- CCTV installation cost, with a calculator
- IoT monitoring cost
- IT AMC cost and digital marketing cost
- Freelance developer rates, if you are buying time rather than a finished thing
FAQ
Related questions
How much should a small business spend on IT in India?
Roughly ₹25,000–₹60,000 per employee per year in a steady state — no office move, no fleet replacement — covering the device amortised over three to four years, a productivity suite, support or AMC, line-of-business software, security, backup, a share of connectivity, and peripherals. In a year you fit out an office or replace the laptops, expect two to three times that.
What is a reasonable IT cost per employee?
₹25,000–₹60,000 a year for a small Indian business. The widest line by far is line-of-business software, at ₹2,000 to ₹30,000 or more per head depending on your industry, which is why a single per-head figure is a starting point rather than an answer. The device itself is only ₹12,000–₹25,000 a year once amortised properly.
What do most small business IT budgets leave out?
Five things: software renewals auto-charging for tools nobody uses, hardware failure and replacement (budget 5–10% of hardware value), onboarding and offboarding costs per joiner and leaver, equipping the people you plan to hire, and the compliance item a customer or auditor will require — hold 5% for it, because it is not an if. Together these are routinely a fifth of real spend.
How much does IT cost for a 20-employee company in India?
About ₹5–12 lakh a year in a steady state at ₹25,000–₹60,000 a head. If you are also fitting out an office, add the one-off lines: ₹3.75–9 lakh for cabling, switching, firewall and Wi-Fi on a 25-seat floor, ₹1.65–4 lakh for a server with backup if you need one, and ₹8–16 lakh for twenty laptops bought outright. Those recur every three to five years, not annually.
Should a small business buy laptops or lease them?
Buying is cheaper over three to four years and makes year one spiky; leasing smooths cash flow and costs more in total. What matters more than either is staggering the purchase, because a fleet bought in one month becomes a fleet replaced in one month, and that is a bad quarter you can see coming three years out.
Is it cheaper to hire an IT person or use an AMC?
Below roughly 40–50 devices an AMC or managed support is almost always cheaper, and you get coverage when one person is on leave. A full-time hire wins when the device count is high enough to keep them busy and there is work beyond keeping the lights on. The comparison is worked through properly in IT AMC vs managed IT services.
How do I plan an IT budget without an IT person?
Six steps, about an hour. Count heads including planned hires and multiply by ₹25,000–₹60,000. List everything out of warranty or over four years old — that is next year's replacement line. Audit the card statement for software nobody uses, which reliably pays for the hour. Add 5–10% of hardware value for failure and 5% for the compliance item. Separate capital from recurring. Then write down what you are deliberately not doing, and why.
What is the first thing to fix in a small business IT budget?
Backup, and specifically a restore somebody has actually performed. It is the most consistently underfunded line and the only one where being wrong is unrecoverable. After that: multi-factor authentication on administrative accounts, which costs nothing but the commissioning, and cancelling the software renewals nobody uses, which pays for both.