Indian firms are increasing their IT budgets an average of 13 percent this year, far more than the global average of 3.3 percent, research company Gartner said Wednesday.

The country's domestic IT market is also forecast to grow at a five-year compound annual growth rate (CAGR) of 20.3 percent, reaching $24.3 billion by 2011.

While there are fears of a global recession, India is showing rapid growth, said Peter Sondergaard, global head of research at Gartner, in a conference call.

The increased spending by Indian CIOs is directed primarily towards building new business capabilities, with 30 percent of IT spending allocated to business growth and 19 percent to business transformation, Gartner said.

Indian enterprises will make heavy investments in bringing the base infrastructure up to global standards, said Partha Iyengar, Gartner's head of research in India.

A key problem for Indian CIOs is attracting and retaining quality staff, as they are competing with Indian and multinational IT services companies, Iyengar said.

India's IT services market is forecast to grow to US$10.73 billion by 2011 at a five-year CAGR of 23.2 percent, propelled by Indian companies that are outsourcing some of their work to other Indian and multinational companies due to staff shortages, Gartner said in January.