THE IRISH services sector needs to internationalise and diversify from software/ICT and financial services, according to a strategy report aimed at increasing the sector's contribution to the Irish economy, published yesterday.

Over the past two decades, services have become highly important to the Irish economy, currently contributing approximately 63 per cent of value added in the economy, with expectations that this can rise to 80 per cent. "Today, services are the main driver of the economy and the most likely avenue to sustainable growth," Tánaiste Mary Coughlan said at the publication of the report.

However, until now the importance of services had not been fully reflected in enterprise policy, hence the publication of Catching the Wave: A Services Strategy for Ireland, prepared by the Services Strategy Group, which recommends action in three areas to enable firms to capitalise on opportunities and overcome challenges.

"We believe that the services sector has the potential to provide Ireland with its future economic growth. Implementation of our policy proposals will make a real difference to our services companies competing locally and internationally," said Tony Keohane, chair of the Services Strategy Group and CEO of Tesco Ireland.

The report says that services exports, which account for 43 per cent of total exports from Ireland, are overly-reliant on software/ICT and financial services, accounting for 60 per cent of services exports. The report notes "very real opportunities in other areas that are currently underexploited", such as healthcare.

The group would also like more internationalisation of services enterprises. "A limited number of Irish companies have established operations in other countries, in areas as diverse as sandwich bars and software. This is a major opportunity for Irish companies to expand their operations, which to date has only been realised by a relatively small number of firms," Mr Keohane said.

The main recommendation involves recognising the role of Irish service enterprises trading locally and "ensuring that these are efficient and productive".

The Irish Exporters' Association welcomed the report and called on the Department of Enterprise, Trade and Employment to take responsibility for implementing the recommendations.