India's IT spending will grow at a compound annual growth rate (CAGR) of 14.8 percent to US$110 billion by 2012, according to Gartner. Most of that spending will be on telecommunications services and equipment which is expected to reach $82 billion [b] by 2012.

"We are seeing large investments going into telecommunications," said Naveen Mishra, senior research analyst at Gartner on Friday. Spending on telecommunications services is expected to account for $52 billion, with spending on telecommunications equipment accounting for another $30 billion by 2012, he added.

Financial services and communications organizations will be the biggest spenders on IT, closely followed by services, manufacturing and government, the research firm said on Thursday.

Computing hardware is the second largest IT market in India, and is expected to generate revenue of $12.9 billion by 2012, growing by a CAGR of 15.4 percent from $6.3 billion last year. Gartner predicted that nearly 24 million PCs will be shipped in India by 2012, of which over 50 percent will be mobile PCs.

The market for IT services is expected to grow the highest, with a CAGR of 20.2 percent to revenue of $11.8 billion by 2012. Most of this business is still going to multinational service providers, Mishra said. Indian outsourcers were until recently focused on more lucrative markets abroad, he added.

For this year, the country is on track to reach $64.7 billion in IT spending, up by 17.2 percent from last year, Gartner said.

The IDG News Service is a Network World affiliate.