The IT sector is estimated to need more than 2,200 extra employees a year for the foreseeable future and the industry has set its sights on finding them.

In 1998, these companies spent hundreds of thousands of pounds and employee hours searching for appropriate staff. Despite their best efforts, a survey released earlier this month shows the problem is growing. The first report of the Expert Group on Future Skills Needs provides the most comprehensive examination of the high skills shortage to date. It is the result of a collaborative effort between the Government, industry bodies and training establishments.

Dr Chris Horn, chief executive of Iona Technologies and chairman of the Expert Group says: "What we're seeing is it's becoming more competitive to find staff in the sector and there's a push upwards on salary rates." The shortfall of an estimated 2,200 workers a year comprises 800 engineering and computer science professionals and 1,400 engineering and computer science technicians.

"Issues strategically are that if this develops into a more challenging situation it may discourage future inwards investment to the country - for those already here and for multinationals hoping to set up base here," Dr Horn says.

The Government has taken the problem seriously, Dr Horn says. "Within less than six months some recommendations have been acted on, which is encouraging."

In the foreword to the first report of the Expert Group, the Tanaiste, Ms Mary Harney says: "An adequate supply of the skills required by industry will be a key determinant of the future growth potential of the economy. It is a key policy that skills needs, both in terms of numbers and type, are estimated and the correct policies put in place in sufficient time to ensure that the skills demands of the economy are met."

Ms Mary Cryan, chairwoman of the Irish Software Association, hopes the start made by the Government will continue next year. "They helped with the Expert Group, increased IT graduates at university and established the Opportunity Ireland programme in Enterprise Ireland which is attracting ex-pats back," she says.

Some industry professionals believe additional work permits should be issued to non-EU nationals. The Department of Trade, Enterprise and Employment processes approximately 6,000 work permit applications a year. Delays sometimes mean that applicants take up jobs elsewhere.

"Once a company can prove they cannot fill the job with an EU national, applications are put through in order to get people here," Ms Cryan says. "We would like to see these applications speeded up."

In addition to limiting the growth of the economy, the shortage and increasing cost base mean IT businesses may lose their competitive edge in the global market. Once employees are found and trained, keeping them loyal to the company in an extremely competitive environment is a challenge. "Retention these days is also a nightmare as nearly every quarter, salaries are going up 10 per cent," Ms Cryan says.

Although the total expenditure required to deal with the issue is difficult to estimate, Ms Cryan argues that the "cost of not fixing this problem is even bigger". Education is one strand in a multi-part solution. "The major cost that the Government would incur would be providing more university places," Dr Horn says. In 1995, 1,800 places were approved for the university sector in engineering and software. In 1997, an additional 3,200 students were provided for in software professional, electronic technician and tele-services staff courses run by various educational institutions. Mr Colm Donlon of the IDA believes some of the skills shortage is a myth and that companies need to adjust to the realities of the new job market. "Any company worth its salt is constantly trying to promote a positive image of itself as a worthwhile employer. No company can take for granted from now on that just putting an ad in a newspaper will get a response."

One lesson of the new environment is that recruitment must be innovative. Most recruitment companies have created job web sites and in August, a Dublin-based recruitment company sought industry partners to help retrain workers with little or no experience in computer programming.

Dr Horn believes this aspect cannot be over-stressed. "I frankly feel that one of the key things is making the general public aware of the opportunities in the sector. At the end of the day, we need people to take up the places."