EMC's decision to make 160 staff redundant in Cork is not surprising given the major slump in demand for the firm's products. But the timing of the announcement will disappoint employees within the domestic technology sector who had hoped for a speedy recovery and greater job security.

Job losses in the hi-tech sector have slowed to a trickle since Christmas and there was growing optimism that firms were beginning to invest in new technologies again.

Locally, this was bolstered by announcements from Oracle and Microsoft that they would increase their Irish workforces. But industry analysts believe the more realistic prospect is for a stuttering recovery with further cost cutting and job cuts.

"The fundamentals are slightly better now but the recovery will be slower than some expect," said Mr Barry Dixon, analyst with Davy Stockbrokers. "In an Irish context we have not seen the last of the job losses."

Cost cutting was the motivation for EMC, the world's largest data storage firm, to reduce job numbers. The firm trimmed costs last year by implementing two weeks unpaid leave for its staff, but with increasing competition from IBM and slower-than-expected growth, it cut jobs yesterday to protect its financial forecasts.

The firm, which posted two consecutive quarterly losses in the second-half of 2001, hopes to return to profitability later this year. Influential Wall Street analyst, Ms Laura Conigliaro of Goldman Sachs, lowered her 2002 earnings outlook for EMC yesterday saying it had got off to a slow start and it may not break even this year.

"We are trimming our forecasts on EMC in the face of weak demand and pricing pressure," Ms Conigliaro wrote in a research note to investors. "As we have been saying for several weeks, EMC appears to have gotten off to a slow start to the quarter, with constrained IT spending, intense competition and pricing weighing."

The market for the company's products which store electronic data has been hit hard by the melt-down in the dotcom sector and a slower-than-expected growth in firms distributing software over the internet, according to Mr Seamus Mulconry, e-commerce strategist with Accenture.

He believes the long-term prospects for the technology sector are better with Accenture beginning to see recovery in the US.

This should reach Ireland within six months if not sooner, he said. But with other major hi-tech employers in the Republic, including Lucent, Compaq and Hewlett Packard, considering cost cutting, further redundancies are likely to be announced here.