Research firm Gartner expects global IT spending to fall 6 per cent in 2009, sharper than an earlier forecast of 3.8 per cent, due to the economic downturn.

"Visibility for fiscal year 2010, as of now, remains hazy and any global economic improvements are likely to take time to reflect in fundamentals," Harit Shah, a sector analyst with Angel Broking, wrote in a report.

"We expect pricing to witness a downward trend, as has been the case over the past several quarters now."

In June, Tata Consultancy said a slowdown in global demand for outsourcing had halted, but clients were still demanding lower prices and were cautious in their technology spending.

Infosys, which stunned the markets in April when it forecast its first decline in annual revenue, may project a smaller drop in dollar revenues due to favourable exchange rate movements, brokerages said.

Emkay Global said Infosys could forecast a fall of between 1 and 4 per cent in annual dollar revenue in 2009/10, smaller than its April forecast of a drop of 3.1 to 6.7 per cent, after the dollar fell against the euro and the British pound in the June quarter.

But the sector's rupee profits would be hit by the Indian currency's rise of nearly 6 per cent against the dollar in the June quarter, brokerages said.

COMPETITION

Tata Consultancy, Infosys and Wipro are looking to expand in markets such as Europe, Latin America and Asia Pacific to cut their dependence on the United States, which accounts for more than half the sector's revenue. Indian IT services firms, which count Citigroup, General Electric, BT Group Plc, General Motors, and Boeing among their clients, face competition from big players such as IBM and Accenture.

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