IT Budgeting & Workforce Planning: What HR & IT Leaders Need to Know

Technology is the backbone of modern businesses as our use of laptops, cloud services, security systems, and collaboration tools has become second nature. But this reliance on IT comes at a cost to businesses, and we need to budget accordingly for these expenses.

A 2025 State of IT report reveals that 64% of companies plan to increase their budgets this year — 33% will keep theirs the same as last year, and only 4% are expected to scale back. But how can companies get the most value out of their budget?

This guide explores IT budgeting in more detail and its close links with workforce planning. You’ll learn what to include in your budget, how to structure it, and some cost-saving strategies you can borrow to keep your tech spending in check.

What is IT budgeting?

IT budgeting is the process of creating a financial plan for your organization’s technology expenses and investments. It involves determining how much money to allocate to different areas of IT, such as your software and hardware inventory, cloud services, and labor costs. You can also use your budget to identify potential cost-saving measures so you can optimize your spending and achieve your business goals.

What does an IT budget include?

The exact line items in your IT budget will depend on the size of your business and your overarching objectives. Some typical areas to include are:

• Hardware and software procurement: Purchasing and upgrading physical devices like computers, servers, networking equipment, and software tools that are critical to business operations.
• Cloud services licenses: Covering expenses for subscription-based SaaS platforms so your employees can access their systems from anywhere, at any time.
• Cybersecurity: Investing in tools and services like firewalls, antivirus solutions, and security monitoring protects the organization from cyber threats and data breaches.
• Asset maintenance and troubleshooting repairs: Funding regular maintenance and repair of IT equipment ensures operational efficiency and reduces downtime.
• IT staff compensation: Allocating salaries and benefits for IT personnel, including specialists, technicians, and managers.
• Employee training and IT education: Providing resources for workforce training and certifications to stay updated on the latest technologies and IT standards.
• IT project budgets: Considering costs associated with planning, executing, and monitoring IT initiatives, such as system migrations or software rollouts.
• Infrastructure costs: Financing bandwidth, data storage, and other essential networking infrastructure to sustain current operations and plan for future growth.
• IT audit costs: Covering expenses for internal or external audits to comply with regulations and maintain data integrity.
• Disaster recovery costs: Allocating funds to prepare for unexpected events, ensuring rapid recovery and continuity through backup systems and recovery plans.
• IT asset requests: Establishing a sinking fund to purchase necessary IT equipment promptly without disrupting budgets or operations.

Why IT budgeting must align with workforce planning

Most employees should be factored into an organization’s IT budget plan in some way, whether through devices, software, or network access. Even in roles with minimal tech use, workforce growth still impacts IT infrastructure, security, and support costs. Speaking on the Business Tech Playbook podcast, William Pote explains:

When IT and workforce planning are aligned, companies can:

• Anticipate their IT costs by planning how many new hires will need laptops, software licenses, and cloud access.
• Avoid last-minute purchases by getting ahead of procurement needs rather than rushing to buy and ship equipment when new employees join.
• Optimize their technology distribution to allocate hardware and software based on hiring roadmaps, eliminating any excess or shortage.
• Support hybrid and remote workers effectively with detailed plans for distributed workforce needs, including VPNs, security protocols, and international shipping costs.

How to structure IT budgets to anticipate workforce needs

At its core, an IT budget is a fixed amount of money you’ll set aside to cover your IT spend over a set period. But determining the structure of your budget, and how much you’ll allocate for each aspect of your IT needs can be challenging. Here’s how to align your calculations with your workforce needs and prevent any budget surprises:

1. Align budgeting periods with workforce planning cycles

As recruitment aligns closely with your IT spend, sync your IT budget with HR’s hiring, promotion, and exit cycles to check your IT spending matches any upcoming workforce changes.

It’s worth including quarterly workforce growth projections in your budget to prevent any last-minute procurement issues. As a best practice, set aside a flexible contingency fund for any unexpected IT needs caused by rapid hiring or restructuring.

2. Forecast IT operational costs based on hiring plans

Work with your HR and talent acquisition teams to map out hiring roadmaps and estimate IT costs per new employee. Typically, this varies based on department or seniority levels; for example, engineers may require high-performance devices and licensed software, while sales teams need CRM tools.

3. Use historical IT spending data to improve forecasting

Instead of using guesswork and gut instinct to shape your budget, use past IT spending data to identify patterns in hardware and software usage, employee onboarding costs, and IT waste. If the data shows you have unused software licenses, expired subscriptions, and surplus hardware, this intel will prevent you from making similar unnecessary purchases in the future.

4. Standardize IT procurement

A pre-approved IT procurement list simplifies your budgeting by selecting standard laptop models and software bundles for each department and attaching a price tag to each asset. Ideally, IT teams will also establish bulk purchasing agreements with vendors to reduce costs and speed up procurement for growing teams.

5. Plan for employee exits and equipment retrieval

It’s easy to overlook how departing employees affect your IT budget, but employee offboarding can add both a cost and provide an opportunity to make savings.

A structured IT offboarding process enables tech teams to recover and reallocate tech assets efficiently, reducing unnecessary spending on fresh equipment. While it’s important to budget for the resources required to refurbish and redeploy any hardware, you can offset this against the cost of new purchases.

Additionally, ensuring swift access removal for former employees also minimizes cybersecurity risks and the associated costs of dealing with a data breach.

See also: Offboarding Devices in Hard to Reach Places: A Complete Guide

How to create an IT budget that scales

The main challenge with developing an IT budget is providing enough room to accommodate any changes to your plans, such as hiring surges, remote work expansion, or market shifts. Here’s how IT leaders can prevent budget overruns and operational bottlenecks with a forward-thinking approach to tech budgeting:

Build a dynamic IT cost model for workforce growth

Instead of using a static budget, where IT costs are locked in based on past spending, adopt a dynamic budgeting model that can adjust as your workforce needs evolve. A flexible IT budget accounts for fluctuating headcount, new technology demands, and infrastructure scaling without causing financial strain.

To achieve this, use tiered cost projections that estimate IT expenses per employee, factoring in hardware, software, security, and cloud services. It’s also important to align IT spend with varying hiring scenarios, including both gradual and rapid expansions, so you’re never in a position where you need to panic-buy equipment.

Design IT budgets that adapt to your distributed workforce

Remote and hybrid workers have different IT budgeting considerations than in-office workers. You might choose to provide your employees with home office stipends or mobile device allowances as a personalized approach.

Remember to allocate funds for remote troubleshooting, repair services, and shipping costs to support distributed teams’ IT needs without requiring expensive in-person fixes.

Plan for scalable cloud and software growth

Many software providers provide scalable subscriptions with discounts for larger headcounts. In terms of cloud services, opt for usage-based pricing models where possible so your IT expenses align with actual consumption rather than a quoted flat-rate fee.

And if you’re paying for cloud storage, regularly prune your data in line with regulatory standards, to prevent performance slowdowns as employee workloads increase.

Future-proof your IT hardware investments ‘

Rather than making large, unpredictable hardware purchases, take a structured approach to IT asset management that promises scalability without financial strain.

Device lifecycle management allows organizations to stagger hardware upgrades over time and prevent sudden budget spikes. One effective strategy is to invest in modular IT infrastructure, such as scalable server capacity and upgradeable networking equipment — you’ll gain the flexibility to expand without requiring costly overhauls.

See also: 10 Best Hardware Inventory Software to Streamline IT in 2025

5 cost-saving strategies for IT budgeting

As IT budgets expand to support new technologies, companies are also under pressure to optimize spending. According to Spiceworks, 92% of organizations plan to implement cost-saving measures related to people, processes, or technology, with most companies adopting an average of four different strategies.

Here’s how organizations manage to cut their IT costs while maintaining efficiency:

1. Reduce software waste

Many companies overpay for subscriptions they no longer use or purchase redundant applications that serve the same purpose. Businesses can actively re-evaluate software usage, consolidate overlapping tools, and optimize license tiers to prevent unnecessary spending.

2. Extend hardware lifecycles

Replacing laptops and devices too frequently leads to unnecessary expenses. Instead of automatically upgrading your hardware on a fixed schedule, organizations increasingly recondition devices and reassign them where possible.

3. Automate IT provisioning

Inefficient provisioning leads to resource waste. Get around this by automating hardware and software distribution to ensure new hires receive what they need without excess spending on unnecessary tools or licenses.

4. Decommission unnecessary infrastructure

Outdated or underutilized infrastructure increases operational costs without delivering real value. For this reason, Spiceworks reports that 38% of businesses are actively decommissioning unnecessary infrastructure, cutting down on maintenance and energy costs.

5. Reviewing vendor contracts and IT spending

Vendor agreements that once made sense may no longer be cost-effective. The 2025 State of IT report also reveals that 37% of organizations are renegotiating vendor agreements, and 28% are putting future IT projects on hold to maintain financial flexibility.

IT budgeting best practices

Before you drive forward and start designing or modifying your IT budget, bear the following best practices in mind:

Shift from annual to continuous budgeting

It’s common to assign an IT budget to your upcoming fiscal year. But a better approach is to use rolling budgets that adjust quarterly based on your business growth and tech needs at any given time.

Scenario-based planning and reviewing IT cost-per-employee trendlines are both a huge part of the process here, giving you room to ramp up your spending as needed.

Categorize your IT spending

As part of your IT investment strategy, place your costs into three main buckets:

• Essentials, such as devices, security, and infrastructure
• Operational, including collaboration tools and software subscriptions
• Strategic, covering innovation projects and any emerging tech adoption

Allocating funds dynamically across each of these categories gives you a strong starting point to scale your business without creating waste.

Provide transparency for your departments

IT budgets can quickly spiral out of control if departments are unaware of their actual technology consumption. Support your teams in taking accountability for their resources using chargeback and showback models.

Chargeback directly bills departments for their IT usage, while showback provides visibility into costs without enforcing direct payments. Both methods enable teams to optimize their IT consumption and justify new technology requests with real data.

Bring the right stakeholders into budget planning

IT budgeting and workforce planning should be collaborative processes involving a wide range of stakeholders. Create a planning committee including the following roles to provide a well-rounded strategy that aligns closely with your business goals:

• CFO and finance teams to align IT spending with revenue growth, cash flow planning, and cost controls
• CTO and IT leaders can check that budgeting supports cybersecurity, innovation, and infrastructure scalability
• HR and people ops provide hiring forecasts, track remote workforce needs, and manage IT-related onboarding and offboarding costs
• Procurement and department heads optimize purchasing, reduce waste, and prevent shadow IT expenses.

Make IT budgets data-driven

Costs and needs change quickly in the working world, meaning that the budget you drew up six months ago may no longer be relevant today. Real-time metrics and predictive analytics are essential for informed decision-making, enabling you to align your IT investments with both the current and future makeup of your org chart.

How Deel IT supports smarter IT budgeting

Effective IT budgeting is more than forecasting costs — it’s about having full visibility and control over IT resources to keep your spending aligned with business needs. Deel IT doesn’t create your IT budget for you, but it *does *offer the infrastructure you need to track, manage, and optimize IT spending in real time, preventing financial waste and operational inefficiencies.

Deel IT enables better IT budgeting and cost control by providing:

• One central platform for IT operations
• Real-time asset tracking to prevent over-purchasing
• Mobile device management to streamline security and reduce admin
• Smarter software license and cloud management
• Security-first IT provisioning, IT asset disposition, and access management
• Full IT lifecycle management to maximize budget efficiency
• Zero-touch deployment to supply devices to remote workers

Ready to track your IT assets with precision and allocate a sensible budget that fits your workforce needs like a glove? Book a free 30-minute product demo of Deel IT today.