Ireland's fund industry has trebled in the past five years and now stands at $1.2 trillion (€936 billion) in assets under administration, but the sector is beginning to show the strains of this phenomenal rate of growth.

According to a survey recently carried out by Deloitte, most fund administration companies in the State are struggling to expand their operations in line with recent growth, with many citing a shortage of quality recruits as a major stumbling block.

"The huge growth in the industry is clearly putting strains on businesses, particularly in relation to resource and talent management," said Derek Moriarty, financial services partner at Deloitte. "This is currently exacerbated by the high attrition levels we are seeing within the industry."

Mr Moriarty added that the industry was now collaborating with third-level institutions to tailor courses specifically to the funds sector in order to address the shortage of candidates.

Many fund companies have chosen to relocate from the capital to regional areas such as Galway, Cork, Limerick, Kilkenny and Wexford, in order to tap into a wider pool of candidates.

However, Deloitte has observed a continuing trend among global financial institutions to move certain transactional activities offshore to lower cost locations such as the Pacific rim and eastern Europe.

Fund administration companies are also finding themselves under pressure to redesign their business models to reduce costs in an increasingly competitive environment.

More than half of all companies surveyed plan to enhance productivity by changing or upgrading their computer systems within the next 12 to 18 months.

The majority of operators in the funds industry anticipate that hedge funds will be the most significant growth area over the next three to five years.