Indian IT industry grew by 14 per cent to $15.3 billion in 2002-03 on the back of a domestic market turnaround and buoyancy in IT services sector, according to the Dataquest annual industry review.

Despite the adverse effect of various negative factors -- the war in Iraq, the outbreak of SARS, rising visa and immigration issues, undercutting of rates by IT and BPO vendors, and a sluggish global economy -- the IT sector posted fairly good growth on the back of big strides in the outsourcing space.

But it was the domestic market that really turned around, posting a 9 per cent growth rate for the year under review, against negative growth in fiscal 2001-02.

Software exports contributed 64 per cent of the overall revenue at $9.8 billion with an year-on-year growth of 26 per cent and a 9 per cent growth by the domestic IT industry contributing $5.5 billion, the review said in New Delhi on Monday.

But it wasn't size that was cause for worry -- it was the crashing growth rates, this time well into the sub-20s, said the survey.

"We are entering an era of the teens," the survey quoted Kiran Karnik, president, National Association of Software and Services Companies, as saying.

As many as eight of the top 20 software exporters saw growth rates shrink to below 20 per cent (into the teens). Four of these showed only single-digit growth, and one showed negative growth.

The domestic IT industry contributed the remaining 36 per cent to the overall revenue.

IT training was the was worst hit of all segments registering a negative growth of 23 per cent and a revenue of Rs 1,215 crore (Rs 12.15 billion). The sector had registered a negative growth of 37 per cent last year.

"At the end of yet another year of pressure and tough decisions, the Indian IT industry showed a sluggish growth rate of 14 per cent to $15.3 billion in 2002-03," the review said.

Despite efforts to enter other geographies like EU and Asia Pacific, Indian IT's reliance on US increased to 67 per cent from 64 per cent.

Larger BPO players continued to increase numbers at a steady clip, some even more-than-trebling their headcount, the survey said.

The period under review showed that this was the beginning of a phase of consolidation for the IT sector, as billing rates fell and competition grew fiercer. The survey reveals that smaller companies may soon get bought out or fall by the wayside.

The DQ-IDC India Megaspenders Survey for the fiscal year 2002-03, however, praised the banking, financial services and insurance (BFSI) sector. Public sector banks and insurance companies placed the biggest orders in fiscal 2002-03.

The top corporate IT spender in 2002-03 -- Punjab National Bank, with IT investments of Rs 180 crore (Rs 1.80 billion). The Life Insurance Corporation of India, Canara Bank, Bharti Cellular and Central Bank of India were the other big spenders in the top five club, said the survey.