IT costs in mechanical engineering: increasing by 5% per year – where is the future?

IT costs in mechanical engineering: increasing by 5% per year – where is the future?

The digital transformation in mechanical engineering is progressing inexorably and is accompanied by a significant increase in IT costs. According to a report from IT Matchmaker, total IT costs have been increasing on average 5 percent per year faster than industry revenue since 2017. This development is related to a comprehensive transformation of work processes and the necessary technological adjustments.

In 2024, the IT cost ratio is estimated at 2.6 percent, which illustrates the challenges faced by companies. A benchmark based on data from 169 mechanical and plant engineering companies shows that 70 percent of IT budgets flow into operations, while only 30 percent are earmarked for innovation projects. In recent years, the average annual salary of internal IT employees has also fallen by 10 percent to 68,640 euros.

Changes in the IT landscape

The growing demands on the remaining IT teams are a direct result of the increasing relocation of operational IT activities to low-wage countries and of outsourcing. These factors contribute to a higher burden on internal employees, who have to support an average of 53 users. In smaller companies this value is as high as 72 users per IT employee.

The company's IT cost structure consists of 58 percent material costs and 42 percent personnel costs. In addition, it is reported that an average of 590 software applications are in use per company, which illustrates the complexity and high administrative effort.

Investments in the future

Investment priorities in the industry have been clearly identified for 2025. The focus here is on modernizing business applications, IT security and digital sales channels. A comprehensive overview of the digital transformations in mechanical engineering also highlights the role of artificial intelligence, which has previously played a subordinate role. Nevertheless, a study shows that the use of generative artificial intelligence can increase the profit margin in mechanical and plant engineering by up to 10.7 percentage points, which corresponds to an additional profit of 28 billion euros.

Regulatory requirements such as NIS2 and the Cyber ​​Resilience Act require additional resources from companies. Currently, two-thirds of companies in the industry have cyber insurance in place, and 90 percent of these companies plan to maintain it. This highlights the growing awareness of the need for security and resilience in the digital world.

The VDMA Wireless Communications for Machines held a general meeting in May 2025 and, among other things, focused on the potential of artificial intelligence and digital transformation. A white paper from the VDMA shows how companies can integrate these technologies into their processes, products and business models.

In summary, mechanical engineering is facing profound changes that bring both challenges and opportunities. Digital transformation and the associated IT costs are not only risks, but also obligations that companies must actively shape.