However, the study by Boston-based Celent says the investment pools' outlay on technology will still top $1.35 billion in 2009, Securitiesindustry.com states.
For many funds, spending on new technology and major IT infrastructure will "take a back seat" to achieving maximum efficiencies from existing systems, the paper noted.
Cuts in the US are likely to be smaller than those in Europe and Asia, it added.
Yet despite the tough conditions currently facing the hedge fund industry, Celent said it expects technology spending to recover in 2011 as investors return and business rebounds. By the following year, it predicts IT budgets will have returned to "solid growth".
In the meantime, the industry will prioritize spending on issues such as risk analytics, risk monitoring and control, and legal and
The report's author, Isabel Schauerte, said: "For the time being, cost-minimization and operational efficiency are at the top of the operational agenda."
Celent is a research and consultancy firm that specializes in examining the use of IT in the financial services industry.