Indian IT market to touch $ 10.73 bln by 2011: Gartner

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New Delhi, Jan 22 (UNI) Though IT industry is facing high attrition rates, the sector is pegged to grow to 10.73 billion dollars by 2011 at a five year compounded annual growth rate (CAGR) of 23.2 per cent, according to Gartner, Inc.

''Growth of the IT services market is primarily being driven by economic growth, high growth among the small and midsize businesses (SMBs), government projects and increased customer focus. Many IT service providers, multinational companies (MNCs) and domestic have now recognised this potential and developed strategies exclusively for the domestic market,'' Gartner Senior Research Analyst Arup Roy said.

Many IT organisations are planning to spin off their IT organisation into an independent entity to capture the growing opportunities, Mr Roy added.

The market segments that are expected to witness the strongest growth are consulting, IT management and business process management (BPM) services with five year CAGRs of 28.1, 23.8 and 27.1 per cent, respectively.

Consulting revenue, although coming from a small base, grew 30.1 per cent to 340 million dollars in 2006 as compared to 2005.

As companies become more mature in their overall approach towards IT, they invariably have to rely on external providers to help them with consulting services.

IT management revenue grew 27.3 per cent from 2005 to 549 million dollars in 2006.

Both global and Indian vendors have leveraged the growth areas and the top three vendors, IBM, Tata Consultancy Services (TCS) and Wipro Infotech, together accounted for 26.1 per cent of IT services vendor market share in 2006, he said.

In 2006, IBM surpassed TCS to become the top vendor, taking 11.2 per cent market share. TCS and Wipro occupy the second and third positions with 10.9 and 4.1 percent market shares, respectively.

However, the Indian IT services market is still fragmented, with the majority of the market being serviced by smaller local players that account for close to 40 per cent of the IT services market.

''As the market matures, competition will intensify and then lead to consolidation. Vendors that are unable to find a niche for themselves, or smaller vendors with no real differentiators, will be acquired by larger, more-aggressive competitors,'' Mr Roy said.

Gartner, Inc is the world's leading information technology research and advisory company.

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