The Information and Communications Technology (ICT) sector in the Republic is facing its greatest challenge. Currently it is managing through an adjustment period.

Over the past decade, the sector has experienced unprecedented growth. Today it comprises more than 1,000 companies and represents a variety of segments of the industry: software, hardware, electronics, telecommunications and content providers. This growth has manifested itself within the multinational and indigenous sectors, providing unprecedented levels of high-quality employment within the Irish economy.

The sector employs almost 100,000 people and at €27 billion (£21.2 billion) is responsible for more than 25 per cent of the State's exports.

My vision for the sector is that the Republic should be recognised as a world leader in ICT by 2005.This begs the question: are we not already a world leader?

In many respects we are but, if we fail to respond to the evolving market conditions, our position could be undermined. The rapid evolution of the industry and increasing competition from other countries make it essential that the Republic looks to the future to ensure appropriate policy and structures are put in place to secure the continued success of the sector.

The State's ICT sector is an undoubted international success story, but we must not lose sight of the fact that, across the world, the sector is constantly changing. Excelling means gaining a competitive edge through the latest available infrastructure and technologies, the development of a skilled and flexible workforce, a pro-competitive and world-class regulatory regime, and effective policy-making.

These are critical to create an attractive and supportive business environment. There is no room for complacency in the current environment. Government and industry must work together to provide the necessary components to foster success.

For the State to prosper, we must be in the premier division and benchmark ourselves internationally against other ICT leaders. Our vision must not be just to maintain our global position but to develop and enhance it, to be recognised as a world leader in ICT, and to play a central role in the creation of a sustainable economy for our people.

In ICT, "status quo" is a step backwards. We must respond with speed, decisiveness and innovation to global demands and to emerging opportunities and threats.

Earlier this week, ICT Ireland, the representative body for the sector in the Republic, introduced its strategic vision for the sector. As chairman of ICT Ireland, I am convinced that the future of the sector can be best achieved by the various components that make up the sector working together to identify the key challenges. In its strategy, ICT Ireland has identified six key components to our future success.

Firstly, our ability to move up the technology value chain is critical. As a relatively high-cost location, the Republic is already losing lower-end technologies to low-cost locations and this trend is set to continue.

Secondly, we must achieve centre-of-excellence status in selected technologies and become a leading location for high-end, high-value production activities. This will ensure our status as an ICT centre and create a critical mass of world-class technology skills, with significant spin-off for multinational and indigenous ICT companies.

Thirdly, we must substantially resolve the skills issue and be in a position to call on an expanded, educated and responsive skills base. The need for a flexible workforce with a supportive regulatory regime is vital to achieving the vision. Central to this is the standard of education at all levels, and this standard must be above that of our competitors.

The fourth criteria is to attract significant additional inward investment. This will require modern infrastructure, accessible and affordable telecommunications services and a favourable regulatory framework. It is also critical that such investment will have an appropriate regional balance.

Fifthly, our record of start-up technology companies must be improved and match that of competing economies.

Finally, we must develop market relationships, which are crucial in light of the State's relative isolation. Web-based technologies offer significant challenges and opportunities for the ICT sector and require increased direct customer contact.

ICT Ireland has identified a number of critical factors essential to achieving our vision - including education, R&D, taxation, entrepreneurship and infrastructure.

I am convinced that the long-term future of the ICT sector is extremely bright. Our task is to deliver sustainable economic prosperity based on a vibrant, innovative and forward-looking ICT sector.

Mr Kevin Dillon earlier this week took up the position as ICT Ireland chairman. He is managing director, European operations centre, and vice-president EMEA, Microsoft Corporation.