Contrary to expections and high hopes, the global technology spending, especially in the US is likely to be flat or lower even in 2003, though the worst appears to be over.

But the good news is stiffer IT budgets and freeze on additional investments by global companies will lead to more outsourcing of software services and products from countries like India.

"Tech spending is likely to decline this year too. It may see a negative growth of 2 per cent. Globally technology sector continues to be under pressure. CEOs and CIOs of corporates and IT majors are in a wait and watch mode, thanks to the continued economic downturn, security concerns and uncertainty in the geo-political map," said Wipro vice-chairman Vivek Paul in Bangalore on Friday.

Expressing cautious optimism in the revival of telecom and enterprise sectors, Paul told rediff.com that growth rates hereafter would be more realistic and pragmatic. Gone are the days when double digit growths were the order in the boom times, not long ago.

"What could be pain in the US could be a gain for India, as outsourcing is set to grow consistently to touch 19 per cent in the next three years from the current 7 per cent.

With IT-enabled services such as business process outsourcing, back office operations, research and development activities in design, embedded software, VLSI, SI moving to India in tandem, the prospects of substantial IT business going to India from the US and Europe are upbeat," Paul claimed.

With no let-up in competition from peer players, pricing pressure in IT-enabled services and hard bargain for maintaining billing rates in software services and products continuing, 2003 will be equally a tough year, while it means more challenges and opportunities for the Indian tech industry.

Sharing the same cautious optimism, Silicon Valley-based Brocade Communications' co-founder Kumar Malavalli said the IT spending scenario in the US continued to be 'spotty'.

"If you look sector wise, telecom continues to be in doldrums due to the Internet bust and excess capacities ruling the roost. In storage and networking, a churning is on due to consolidation and substantial upfront investments.

Though everyone expected a revival in tech spending in the later part of 2002, nothing much happened for various reasons, including post-Sept 11, corporate scandals, and accounting frauds. The Wall Street has also been on a roller-coaster. Capital is scarce for new projects or additional investments in old or new economy," Malavalli remarked.

At the same time, one positive outcome of 9/11 has been the growing concern for security of data and storage of information. Storage networks are no more a luxury. They have become inevitable to avoid any disaster hitting one location or a data centre.

"Though we may not see much of spending in the telecom, PCs and Internet solutions, we see funds going into data consolidation and data protection. Data farms are likely to emerge on the lines of server farms as disaster recovery and security concerns will grow due to global terrorism and cyber attacks.

There is a great potential for India as outsourcing of software for data security and communication storage networks will increase in the coming years as in the case of software services, consulting and IT-enabled services," Malavalli affirmed.

There will be more shake-out and consolidation in the wired telecom sector, be it equipment manufacturers or service providers.

But innovations and rapid development in mobile applicaions, consumer electronics, medical imaging, and retail will see investments going into wireless technologies.

"After the Y2K, if the 21st century started with a boom in the global IT industry, only to go bust in the next two years, 2003 will be a year of consolidation and linear growth, leading to a gradient recovery in 2004, when new applications and technologies will be the engines of growth," Malavalli asserted.

For instance, what Napster did for music and songs is being replicated for movies now. The trend is towards downloading them (movies) through wireless applications.

"It is high time we start developing products to own the intellectual property rights and build a paten base for the future. It is possible if Indian entrepreneurs take initiative with the help of its counterparts in the Silicon Valley, the regulatory bodies and Nasscom," Malavalli reiterated.