The rapid expansion of Ireland's software industry is no longer a Dublin and Cork phenomenon.

The south-east region, until recently dominated by the engineering and food sectors, has experienced a mini-explosion in small, high-tech companies supplying innovative products and services to international markets.

Typical of the trend are two Carlow companies offering highly specialised services from unlikely premises in the town.

Capture Productions' temporary headquarters is a rented terraced house on Burrin Street, with just a poster in the front window to indicate there is any kind of business activity inside. But this small multi-media company is a partner, with the likes of France Telecom and the Spanish Ministry of Education, in an EU-backed project to improve methods of language teaching in schools.

Established by Athy man Mr Kevin McDermott in 1995, the company employs 12 people and specialises in the localisation of children's animated educational games, and is also developing such products of its own.

Its connection with France Telecom and other major institutions in Britain, France, Spain and Portugal came about through its involvement in the MALTED (multi-media authoring for language tutors and educational development) project. Under the scheme teachers are learning how to create computer-based language courses without having to become computer programmers.

Up the road at the innovation centre at Carlow Institute of Technology, a fledgling company is helping to set up major business deals for IT companies throughout the world.

Run by Dubliner Mr Mike Kelly and Mr David English from Boston, Technology Sales Leads (TSL) was set up in January to offer a service which they say no other Irish company is providing. Essentially, TSL - which has a staff of five but has plans for rapid expansion - does the groundwork in setting up sales for clients, allowing those clients to concentrate on finalising the deals.

Detailed reports are issued to clients about what the prospective customer is seeking, the likelihood of concluding a deal, what needs to be done next to help bring a deal about and so on.

"Our clients have senior sales reps who only deal with strategic sales," says Mr Kelly. "These guys are expensive and they need to be getting the returns. What we do is say `here's a report: these companies are the ones you need to be spending your time with and these are the technology issues you have to address in terms of compatibility and so on. These are the people you need to speak to and these are the key issues you need to address with them.' "

"And we'll say `this guy is expecting a call in six weeks or a month or whatever'. So it really means that these very high level strategic sales reps aren't spending their time with tyre-kickers; they're actually in major deals and they're closing these deals. So it really increases their efficiency and the return on its investment the company can get from them."

The two men got the idea while working for a company which provided this service in the United States. Similar examples of innovation are now common throughout the south-east. Mr Gerard Flaherty of Enterprise Ireland's regional office in Waterford says that until two or three years ago the level of activity in the international services/software sector was very low, with just a handful of exporting companies based in the region.

"From a standing start of four companies three years ago we now have well into the mid-20s on our books. The great thing about the sector in the south-east is the sheer diversity of the companies we have here," he says. "Every area of the sector is covered in the region, from applications development [writing software] to multimedia developers to Web content providers to networking specialists."

Mr Flaherty says that lifestyle factors have played a key role in persuading returning and existing entrepreneurs to set up shop in the region. "The beauty of the IT sector in business terms is that it can generally be located anywhere as the customers don't depend on the service provider being next door if they want to buy or something goes wrong. Technology helps you to supply the customer from anywhere you want."

Mr Kelly and Mr English agree that operating from Carlow places them at no disadvantage. "The whole telecommunications set-up is improving all the time," says Mr Kelly.

"Here, for example, we have American software companies using an Irish marketing company to target Malaysia."

They also express appreciation for the support of State agencies like Enterprise Ireland and the Carlow County Enterprise Board.

Capture Productions producer Mr Peter Mee says, however, that suitable office space in the town is difficult to find - hence the need to operate from a residential building - and recruiting staff who are prepared to re-locate can be a problem.