In its top 10 predictions for the IT industry for 2004, Gartner said the industry had entered a period of vendor consolidation, with as many as 50 percent of technology suppliers being eliminated from the competition in the next couple of years.

"There are currently more than 2,300 publicly traded software companies in the world, that's about 50 to 60 percent too many," said Partha Iyengar, research vice president at Gartner.

Iyengar said the job cuts and consolidation will come despite a recovery in the IT sector due to a combination of key technology advances, architectural changes and market forces.

"The resulting impact will be positive and negative. On the negative side, vendor consolidation will result in continued job loss in high-paying white collar positions, primarily in the developed economies," Iyengar said during a presentation of the latest Gartner report on IT trends in Bombay on Wednesday.

"The days of customer is the king are over as market forces crush weaker vendors leading to domination of the IT sectors by a few large vendors that will not be governed by cut-throat pricing."

Gartner said the information communication technology (ICT) market is making a slow and steady recovery, but spending is still "pragmatic and cautious."

"This time IT spending will be driven by business and not by the hype of technology seen during the dotcom boom days. So far we have seen the tail wagging the dog, now it will be the other way," Iyengar said.

He said the economic recovery in key economies such as the United States, China, India and Japan will trigger spending in the IT sector.

Gartner was also upbeat about India's rising power in technology outsourcing despite a backlash in some states in the United States.

A number of states such as New Jersey, Maryland, Connecticut and Washington have been considering stopping outsourcing their government information technology work to other countries for fear of local job losses.

"We forecast that offshore business process outsourcing work to India will touch 13.8 billion dollars by 2007, which is 49 percent of the total offshore technology outsourcing business," Iyengar said.

"By 2005 most large US and European enterprises will only consider external service providers that provide a global delivery model and India is a clear leader in this.

"One in 10 vendor jobs and one in 20 IT space jobs will move to developing countries from the developed ones," Iyengar said.

"But the situation is not severe and the backlash will cease to be a major issue by early 2005."

Indian government officials and trade bodies have criticised US states for their anti-outsourcing moves saying the United States was practising the opposite of what it preached in multilateral forums where it argues for greater market access and free trade.

India's IT industry has been worried because such a ban would have a direct impact on one of its fastest growing business areas.

The outsourcing sector grew about 60 percent in the year to March 2003 and is projected to surge by 55 percent to 3.6 billion dollars in the current financial year.

Last year the business process outsourcing sector accounted for about a quarter of the total revenue of the information technology sector in India.

Gartner also brushed aside China's rising threat to India as a software source, saying "it (China) was actually an opportunity for India and not a threat.

"At least for the next 18 to 24 months I do not see China as a threat to India," Iyengar added.

In the telecommunications sector, Gartner predicts more than 17 percent of Asia's 3.5 billion people will own a mobile phone connection by end of 2004. They did not give a figure for how many people in Asia currently own mobiles.

"The average enterprise will have 80 percent more mobile applications in the field by end of 2004 with devices becoming less expensive and more integrated," Iyengar said. "And picture messaging will spread rapidly."

SPACE.WIRE