The global IT industry went through a year of fear, uncertainty and doubt during the calendar year 2002.

According to the IDC (India) Ltd research released at its one-day seminar on "Directions 2004" in Bangalore on Wednesday, the trepidation was mainly attributed to the dotcom crash, the slide in the US economy, the telecom capacity glut and the events of September 11, 2001.

Worldwide IT spending rate declined to 4.1 per cent in 2002 from a high of 10.8 per cent in 1999. The study shows that the revival would take place in the current year (2003), with worldwide spending rate at 3.7 per cent.

Disclosing the findings, IDC (India) managing director Pradeep Gupta said in line with the global trends, the Indian IT industry also slowed down but was more stable than its counterparts in other countries.

"The total domestic IT spending reached Rs 25,931 crore (Rs 259.31 billion) last year, posting a growth of 6 per cent over the previous year. We expect the domestic sector to show a significant growth performance of 16 per cent in the current year (2003)," Gupta stated.

Domestic IT spending is expected to show a stable growth over the next four years, displaying a compounded annual growth rate  of 21 per cent, with total IT spend reaching Rs 55,925 crore (Rs 559.25 billion) in 2006.

As expected, exports (hardware, IT services and IT-enabled services) will continue to be the main drivers of growth for the Indian IT industry. The share of exports in the total IT market is projected to increase to 71 per cent in 2006 from 65 per cent currently, the study claimed.

Within exports, IT-enabled services has the highest growth rate, followed by IT services and hardware.

Despite depressing conditions worldwide, ITeS grew by 76 per cent to cross Rs 10,000 crore (Rs 100 billion) in 2002. IDC estimates that ITeS will grow at CAGR of 52.4 per cent from 2002-06.

As far as export is concerned, the share of ITeS expected to increase to 42 per cent in 2006 from 23 per cent in 2002.

"The IT services exports, however, continued its growth path though statistics were not as impressive as in the previous year. Its exports recorded marginally lower growth of 22 per cent to reach Rs 34,250 crore (Rs 342.50 billion) in 2002. But the figure is expected to grow at a CAGR of 23 per cent to reach Rs 78,642 crore (Rs 786.42 billion) in 2006," Gupta disclosed.

The total Indian market (domestic and exports) witnessed a growth of 21 per cent to reach Rs 73,219 crore (Rs 732.19 billion) in 2002.

"We see a continued growth performance for the sector over the next four years and expect the IT market to grow by a CAGR of 27.9 per cent to reach Rs 196,105 crore (1961.05 billion) in 2006," IDC country manager Kapil Dev Singh declared.

With a sea change in the IT and telecom industry globally, IT vendors face new challenges in the light of the new macro-economic and geopolitical reality reshaping the computing and communications landscape.

"The new reality is that growth in the ensuing years will be limited to a single digit. Going forward, the industry will have to adjust to the new landscape, where opportunities will be harder to find," Gupta asserted.

The new mandate for the industry is to focus on return on investment, industry specific solutions, integrated applications, wireless, converged devices, security and continuity and outsourcing.

"The way forward will be to align with new realities, adjust to new mandates and take the required actions," the research has pointed out.