One in 4 US companies cut IT budgets in 1st quarter

SAN FRANCISCO, April 3 (Reuters) - One in four chief information officers at U.S. companies said their IT budgets were cut in the first quarter, reflecting belt-tightening as the economic downturn shows no signs of abating, according to a Gartner survey released on Thursday.

Globally, nearly 233, or 23 percent of the 1,011 CIOs surveyed, indicated a decline in their planned annual IT budgets. On average, IT budgets were cut 10 percent from the initial amounts.

U.S. IT budget growth rates are "softening," the study said. But overall, U.S. IT budgets for 2008 are expected to grow.

"CIOs responding to the study report that IT budgets are still growing, even in the United States, but growth rates are muted slightly," said Mark McDonald, head of research for Gartner Executive Programs.

But "this is not deja vu," McDonald said in an interview, referring to market conditions after the dot com bubble burst.

"From what we know, the market conditions that exist now aren't the same as 2001 and 2002, when it was a tech-driven bubble," he added.

This time around, there will not be the kind of "bloodletting" that companies undertook, McDonald said.

That is because a majority of CIOs are holding on to IT budgets planned at the beginning of the year, the survey found. Sixty-five percent of 451 U.S. CIOs said their IT budgets remained unchanged in the first quarter and 10 percent reported increases.

Globally, 15 percent said they would increase annual IT spending by as much as 15 percent and 62 percent said there would be no change in their budgets.

One-third of the CIOs surveyed said they had contingency plans for their IT budgets.

"Given economic conditions, CIOs should be prepared and have a contingency plan for both increases and decreases in the next 90 days," McDonald added.