Analyst house Gartner has confirmed the gloomy outlook for the IT industry after finding that nearly half of businesses reduced their IT budgets, in the first quarter of this year.

It surveyed 900 chief information officers, and 42 percent said the cash allocated to the IT department had been reduced from the previous quarter's amount. Spending will be near the levels in 2007, Gartner said.

IT budgets will decline a total of 4.7 percent this year, according to the research.

Chief executives had trouble settling on final budgets, it emerged. Some 46 percent of CIOs said their 2009 IT budget had changed since it was initially signed off.

More than 90 percent of the firms changing their budgets made a reduction, with the average reduction at seven percent. Only four percent of firms said their IT budget had increased, and these were mainly in the healthcare industry.

The largest budgetary decline was in professional services, telecommunications and technology, with a 10 percent drop. Manufacturing IT expenditure is set to fall at eight percent, and utilities and financial services four percent.

Gartner said the percentage of CIOs with a contingency plan, in case of further budget cuts, had doubled to over 60 percent.

But businesses were holding out hope for 2010. Most CIOs expected the economy to begin to recover during the first nine months of next year, and they said they would respond at that point by increasing staff numbers and investment in IT projects.

Mark McDonald, VP at Gartner, said had cut headcount and renegotiated supplier contracts in order to tackle the recession.

"CIOs report shifting more work to in-house resources, and delaying capital expenditures more than reducing IT project investments," he added.