A stronger US dollar and public spending cuts in the indebted euro zone are weighing on global IT budgets, research firm Gartner said on Thursday, trimming its outlook for 2012.

Gartner now expects global IT spending to rise 2.5 per cent to $3.7 trillion, instead of a previously forecast 3.7 per cent gain. Growth will be supported by the popularity of smartphones and an improved global economy, it said.

The change was partly due to a stronger dollar, Gartner said, adding that growth would be a solid 5.2 per cent at constant currencies.

"Despite ongoing concerns about the global economic recovery ... early signs in 2012 suggest that the global economic outlook has brightened a little," said Richard Gordon, research vice president at Gartner.

It also said, however, that government spending in technology, is contracting globally - particularly in Europe where policymakers are grappling with massive public debts.

"While there has been much commentary about the need for government cuts since the sovereign debt crisis emerged in Europe, it is only now that the impact of government budget cutbacks is being felt on IT spending in the region," Gartner said, adding this would hit IT services firms the most.

Europe's top IT services providers include Capgemini , Atos, Logica and Tieto, who often have a stronger position in public sector than their US and Indian rivals. – Reuters