Indian IT outsourcing firms, including TCS and Infosys, grew faster than their global peer to increase their share from 4.8% of the global outsourcing market in 2009 to 5.5% in 2010.

As a unit, Indian outsourcing firms grew 18.9% in 2010 while globally, IT services industry grew by just 3.1%. Indian firms, however, continued to occupy just a tiny fraction of the overall market and none of them figured in the top five, accounting for just $43.6 billion of the total market.

“Although global sourcing makes the location of a provider’s headquarters increasingly less relevant, we found that India-based vendors continue to grow above the market average and, therefore, continue to gain market share,” said Dean Blackmore, senior research analyst at Gartner, which released the numbers a few minutes ago.

The 18% growth, however, is lower than that of many of India’s high performing companies. Yesterday, India based Cognizant Technologies reported a 43% increase in its quarterly revenues to $1.37 billion.

The size of the overall market was $793 million in 2010, lower than the size of the industry in 2008.

In 2009, global IT services industry (which excludes pure BPO such as sales and marketing) declined by 5.1% due to the recession.

Compared to Indian majors that are growing between 20-40% a year, the World number one in IT services — IBM — grew just 2.6% in 2010. It remained the top dog with a total revenue of $56.4 billion in 2010, compared to $8 billion for India’s biggest IT services company, TCS.

It was followed by HP (which had acquired EDS) with revenues of $35.3 billion, up just 0.3%.

Fujitsu, at 3.5% annual growth in IT services and revenue of $24.1 billion had a solid year in 2010. Accenture returned the strongest numbers in the top 10, growing 6.1% to $22.2 billion.

CSC, the number five, grew just 0.6 percent to $16.1 billion.

“Software support showed the highest growth in 2010 at 6.6 percent. Weaker performances came from process management and hardware support, both of which grew approximately 1 percent less than expected growth. Consulting and development/integration services came in slightly above expectations as organizations that had put investments on hold began investing again in 2010, particularly in the second half of the year,” Gartner said.

From a vertical services perspective, the government vertical showed the lowest growth rate in 2010, tied with the education sector at 1.6 percent, as governments around the world implement budget cuts aimed at reducing deficits.

“There is little doubt that the effects of the global recession of 2008 and 2009 are still very much being felt, but the market for IT services bounced back in 2010 after a 5.1 percent revenue decline in 2009,” said Kathryn Hale, research vice president at Gartner.

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