The indigenous software industry is struggling to create companies with a turnover of more than €2 million annually, according to the Irish Software Association (ISA).
Calling for a more strategic national approach to developing the software sector and helping it to scale, the software association noted that only 24 out of a total of 700 Irish software companies have hit €2 million in revenue.
"This is frightening, in many respects. There is a glass ceiling that they can't get beyond, said Mr John Shiel, head of the ISA's Vision 2008 Competitiveness Strategy Group.
Irish software companies also are concerned that rising costs within the state could drive out multinational companies that generate €8.9 billion in exports to the economy and provide opportunities for Irish software companies to supply services and products to them, he said.
Mr Friel said the state should focus on supporting ad promoting a handful of software sectors in "sustainable niches" where Irish companies either excel already, or where future growth is most promising.
The ISA also called for the government to implement a policy whereby 25 per cent of government contracts would go to small to medium sized companies, and to continue looking at ways of supporting seed funding for small companies.
Meanwhile, the Irish information and communication technology (ICT) sector is expressing growing confidence in an economic turnaround.
Some 80 per cent of 440 respondents to a survey said they were "very confident" or "confident" about their organisation's prospects, up from 74 per cent last year.
