BOSTON (AP) – Massachusetts’ computer software industry has posted a fourth straight year of declines in jobs and number of businesses as the broader economic recovery fails to spread to a sector that was hot in the 1990s.

Results of an annual survey conducted earlier this year by the Massachusetts Software Council show the state lost 121 software companies and 3,859 software-related jobs over the past year, The Boston Globe reported Saturday.

However, losses in both categories narrowed from the previous year, and industry leaders said recent increased software spending and new software hiring indicate a possible turnaround.

But the software council’s chairman, Paul Egerman, said efficiency gains and the shifting of programming work offshore may be holding back employment growth.

“Outsourcing could be one factor,” said Egerman, chief executive of speech recognition software firm eScription Corp. in Needham. “A lot of small companies feel they are under pressure to do outsourcing. It’s become almost a condition for companies getting venture capital.”

The council’s survey found software companies employed 124,807 workers in Massachusetts this year, a 3 percent decrease from last year’s 128,666 jobs. The figures include jobs at both software-only companies and the software divisions of hardware or electronics firms.

The survey found 2,781 companies in Massachusetts selling software and related high-tech products and services, down 4.2 percent from 2,902 last year.

This year’s list includes 2,381 software firms with headquarters in the state and 400 based outside the state but with Bay State operations. Last year, 2,525 software companies were based in Massachusetts and 377 based elsewhere.

Last year, the number of Massachusetts software companies fell 5.7 percent, and the number of jobs 4.9 percent, from 2002.

While software leaders last year had predicted their business was stabilizing, recent reports from council members indicate that many are only now boosting payrolls.

“I see this as a bottom,” said Joyce L. Plotkin, the software council’s president. “All the indicators are that we’re settling out. The word from large companies and small companies is: We’re hiring.”