The information and communications technology sector forms an essential element of the Republic's economic fabric. Over the past 15 years, the vast majority of the major IT multinational companies have established a base in the State to the extent that around 55,000 people are currently employed by such companies.

However, the sector is not confined to the realm of multinational electronics. If we include companies in the telecoms industry together with a thriving indigenous sector, total employment in the sector rises to 97,000 people.

Through this concentration, the Republic has established itself as the largest exporter of software in the world. In 2000, total exports amounted to £23 billion (€29.2 billion), or 27 per cent of all exports.

The sector also has a strong regional presence, with a large number of companies operating outside Dublin, particularly in Cork, Limerick, Shannon, Galway, Dundalk and Waterford.

Over recent weeks, a number of high-profile announcements regarding job losses have led many commentators to predict a speedy demise of the Republic's information and communications technology sector. While it is undoubtedly the case that these losses have dealt a serious body blow to the success of the sector, the prophets of doom and gloom are misplaced in their overall contention that the sector will continue to decline.

Much attention has been focused on the almost 4,500 job losses that have been announced in this area so far this year; few people have commented on the fact that 2,500 jobs have been created.

As a result of the ongoing slowdown further job losses may occur. However, the overall strength of the sector nationally and internationally, coupled with the inevitable growth in demand for its products and services mean the sector will bounce back. It is not a question of whether it will recover, rather a question of when the rebound will occur.

From an international perspective, the Republic remains an attractive location for multinational companies. We have a highly educated young workforce, we are English speaking, we have access to the rapidly expanding European market, we have business-friendly policies and, most importantly of all, we have a favourable corporate tax regime that must be protected at all costs.

Indigenous companies also continue to prosper. The Republic has emerged over the past 15 years as a major player in the software development industry and the indigenous sector employs in excess of 11,000 people, generating revenues in excess of £1 billion. While start-up and early stage companies will find it difficult in the current environment to secure funding, the future of the sector remains bright.

We must also be realistic and accept that in some areas we have lost competitiveness. As we move away from low value-added, low-wage industries, it is inevitable that the trend of labour-intensive operations transferring to low-cost centres will continue. This phenomenon is not the sole preserve of the high-tech sector.

It is vital that we ride out the current storm and take strategic action to maximise our return when the sector begins to pick up again. What we need to do now is position ourselves to take advantage of this upturn and we should be talking about increasing our potential to attract preferential capital investment and continue the entrepreneurial culture of start-up technology companies.

Five key actions must be taken to enable this dynamic sector to react in an agile manner to the opportunities that will occur.

Enhance the skill levels of employees through retraining and an improved education system. It is recognised that the education system has underpinned the Republic's recent growth by producing a stream of well-educated and highly skilled graduates. We must now critically examine some aspects of the system, such as the apparent gender bias, the low take up of mathematics and science-based subjects, and our poor record in postgraduate studies.

Increase the level of R&D investment by indigenous and multinational companies. This will support a continued move up the value chain. For this to happen, such expenditure should be treated in a tax-friendly manner.

Develop niche markets so that we have centres of excellence that are recognised internationally.

Improve our infrastructure, particularly in telecommunications, to the level of that in competitor countries.

Promote and market information and communications technology as a key part of the Republic's future social and economic prosperity.

The relentless growth in demand for information and communications technology products and services will continue. It permeates all aspects of our life. In the last six months of 2000, more than 19.5 million Europeans gained home access to the internet. We should look at the current situation as a slowdown, not as a meltdown and we should use this breathing space to take the necessary steps to take full advantage when demand again begins to increase.

Brendan Butler is director of ICT Ireland, the IBEC division representing the technology sector. brendan.butler@ictireland.ie