AP, LTW

Global information technology spending will rise this year, but not as much as previously expected due in part to the strength of the dollar versus the euro as well as governemtn austerity measures, says.

The research firm now expects global IT spending to climb 3.9 percent over 2009, to $3.35 trillion. It had previously forecast 5.3 percent growth.

In a statement, Richard Gordon, a Gartner research vice president, blamed debt issues in Europe for the change. Concerns about surging public debt levels in Europe have weighed on the euro this year.

"Our latest IT spending forecast reflects the fact that the global economic outlook is stable but vulnerable to shocks in key regions and industries, which means that IT spending decisions are still scrutinized for value," he said in a statement.

Budgets are “constrained” and discretionary spending is “still on hold,” Gordon noted.

"CEOs are targeting 2010 as a ‘return to growth’ year, and to enable growth strategies, CFOs expect increased IT spending,” Gordon added.

“However, CIOs are seeing only marginal increases in budgets and are constrained to essential enterprise IT spending with discretionary spending still on hold. In the consumer sector, confidence is improving, although consumers are still wary of the threat of unemployment."

Gordon sees a “ripple effect” hitting IT as governments reduce spending.

"Longer-term, public-sector spending will be curtailed in Europe as governments struggle to bring budget deficits under control during the next five years and to reduce debt during the next 10 years," he explained.

"Private-sector economic activity will also likely be hindered because of the direct impact of austerity measures on key government suppliers and the indirect impact caused by the ‘ripple effect,’” Gordon added.

“An effective policy response will be critical to stimulate investment in general and in IT in particular."

Gartner expects IT services spending will rise 2.9 percent to $786 billion, while telecom spending will rise 3.4 percent to $1.97 trillion. Software spending will rise 3.1 percent to $229 billion.

The research firm expects to see much higher growth in computing hardware, which it believes will climb 9.1 percent to $365 billion due to strong personal computer sales. PC sales have been boosted in part by the adoption of Microsoft Corp.’s latest computer operating system, Windows 7.

However, the revised growth figures still mean IT spending is returning to 2008 levels.

In 2009, computer hardware spending fell 12.4 percent; software declined 2.6 percent; IT services decreased 5.3 percent; and telecom spending dipped 3.5 percent. Overall IT spending decreased 4.9 percent to $3.2 trillion.

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