Washington: The Information Technology (IT) service sector worldwide suffered a major setback in 2002. The year proved to be the "most difficult" period for many high-tech IT firms, according to a report by technology research firm Gartner.

The firm's chief research officer Paul Ritter said enterprises abstained from most essential projects, such as upgrades of existing technology or integration projects designed to get the most out of tech gear bought during the boom.

"Users avoided large or technologically challenging projects," Gartner's principal analyst Kathryn Hale was quoted as saying by 'Newsfactor'.

Gartner also said that IT services actually shrunk compared with 2001, falling 0.6 per cent to $ 536 billion. It marked the first year the IT industry saw revenues decline since the Stamford, Connecticut- based firm began tracking the data.

Moreover, without must-have technological advancements, companies also felt there was no competitive risk associated with staying on the tech-buying sidelines in 2002, he added.

Interestingly, only the Asia-Pacific and Japanese markets saw growth last year, but Hale said even that growth appears to have leveled off by year-end.

All other markets declined, with Latin America hit hardest in the form of a 7.2 per cent revenue plunge. North American services revenue fell 1.1 per cent during the year, Gartner reported.

Nevertheless, the only bright spot was outsourcing, which enterprises increasingly view as the best way to "minimise costs in an economy of prolonged uncertainty in which very tight budgets are the norm," said Hale.

Among the top five firms were IBM (NYSE: IBM) commanding 7.5 per cent of the market, worth $ 40 million. Hewlett-Packard also muscled its way into the top five. Rounding out the top five were EDS with a 3.9 per cent share of the market, Fujitsu with 2.6 per cent and Accenture with 2.1 per cent.

ANI