Across the State, universities, colleges and institutes of technology have been filling their classrooms and labs with information technology students. New classrooms and labs have been built to accommodate the overflow. New lecturers have been recruited to teach them. On the research side, information technology is one of two areas that have been singled out by the Government for special TLC. Science Foundation Ireland recently dispensed the first slice of its £560 million pie to researchers in the IT and biotechnology fields.

While the campuses blossom, bleak winds are blowing across the economic and employment landscape. A series of high-profile closures in the computer and IT sector has taken place in the past three months. The ESRI's Medium Term Review, published a week ago, warns of further widespread job losses, including in the high-tech sector. It seems the only exceptions will be the public sector and food processing. The destruction of the World Trade Centre on September 11th appears to be hastening a global economic turndown.

Could the colleges soon be churning out IT graduates for a jobs market that will have contracted significantly? Should the Government rethink its strategy?

The response by the Government to the shortage and predicted future shortages of skilled IT workers has been unprecedented in the history of higher education in the State. Those who argued that higher education was not about training for jobs, and that the links with industry were too strong, were ignored.

Just four years ago, an Expert Group on Future Skills Needs was convened. The needs of industry were directly and immediately addressed by the universities and institutes of technology. New places for undergraduates, accelerated technician courses, postgraduate conversion courses were all put in place.

And industry lapped up the graduates. It couldn't get enough of them. Many students had two, three or four job offers before they graduated. Starting salaries rose. Certificate and diploma students were being tempted away from continuing their studies. It was an employee's market.

The most recent graduate destinations survey, carried out by the Higher Education Authority, shows 87 per cent of graduates with primary degrees in computer science going directly into employment. This is significantly higher than the overall employment rate of 59 per cent for primary degree holders. These figures provide a snapshot of where the graduates of 1999 were in April 2000.

While statistics are not yet available, there is anecdotal evidence that computer science graduates are not in such demand this year. The annual milk round, where companies attempt to persuade undergraduates of the attractions of a career with them, may not be quite such an intense affair.

In Waterford IT, careers officer Angela Long says the number of companies offering to give presentations to students has declined. "We're only coming back after the summer, but, so far, there are not as many of the big companies getting in touch to arrange roadshows or recruitment fairs. They say they are not cancelling their recruitment process, but are taking things slowly."

In DCU, careers officer Muireann N∅ Dhuigneβin says the college would have got about 20 jobs per week for computer graduates over the summer last year. This summer, offers were thin on the ground. It's no longer an employee's market, according to Gregory O'Hare, acting head of computing at UCD.

So, should the colleges be thinking about reduced intake next year? The response from the higher-education sector is an overwhelming "no". The response from the Expert Group on Skills Needs is also a "no".

O'Hare says: "I don't think we have over-capacity. There is a nervousness in the market. Ireland has seen some high-profile job losses, but many companies are ploughing ahead very successfully. Our graduates do not appear to having any difficulty getting employment. We have graduates from one or two years ago who were made redundant, but they seem to have moved on to other jobs with consummate ease.

"We're not sounding any alarm bells about numbers coming in to study at third level. It would be morally indefensible to train loads of people for a particular global market that didn't exist."

Two-and-a-half years ago, it was an employee's market, he says. Graduates could choose between job offers, and to an extent, salary, location, terms and conditions. That luxury is ebbing, he says. "But I wouldn't say it's an employers' market. It think it's moved to the middle ground."

NUI Galway officially opened its new £9 million IT building last month, to house what has become the college's largest school. Professor Gerry Lyons, an ex-Digital employee, who has worked his way through two downturns in the industry, says: "Every industry is cyclical. The cycles in IT are fairly long, with upturns lasting five or six years and downturns one or two, so I'm very optimistic."

At DCU, N∅ Dhuigneβin says many of this year's graduates were catered for before the downturn, with major companies recruiting earlier in the year - although, for those who didn't secure jobs then, opportunities over the summer were slim.

There is a view that the job losses will affect the less qualified. So, difficulties may emerge first for certificate and diploma graduates. Long agrees this may be true, but she points out that increasing numbers of certificate and diploma holders are now staying in college to obtain a degree. This is a trend that may increase if the jobs market dries up. However, it is only an option for those who do sufficiently well in their exams.

Dr Sean McDonagh, former director of Dundalk IT, spearheaded the introduction of accelerated technician courses, whereby students spend six months in college, six months in placement and six months in industry. Up to 60 per cent of those enrolled on the IT support in manufacturing technology and industrial science certificate course were mature students. More than 2,000 students have done accelerated courses with a retention rate of up to 80 per cent, which compares very favourably with more traditional courses.

Initially, the graduates were offered jobs with the companies which offered them work experience, says McDonagh. Many of these larger companies are no longer taking on people. However, he remains sanguine about the prospects for graduates of the course. They can also progress on to a degree and, this autumn, some of the students who did the first accelerated course are graduating with degrees.

It seems we are returning to the pre-boom days where the better qualified you are, the more likely you are to secure a job. Lyons says: "My view is that Ireland is moving beyond its manufacturing industry base (where the job losses are) to high-cost, value-added industry. Just as we have produced graduates over the past 10 to 15 years, we now need to produce postgraduates."

At the National Micro-electronics Research Centre, which has 58 full-time and part-time postgraduates (the largest body of ICT-technology related postgraduates in the State), and has just attracted funding from SFI for two projects, centre director Professor Gabriel Crean is of the same mind. He says the Government has taken the correct course in its recent focus on IT. The creation of the Irish Council for Science, Technology and Innovation, Science Foundation Ireland, and the Irish Research Council for Science, Engineering and Technology has been positive.

"There is £1.95 billion set aside under the National Development Plan for research, technology and innovation. Ireland can't punch its weight in every area. I think the Government has been very realistic. The only research worth doing is world-class research. For SMEs the only products worth producing are world-class products. Ireland is a small country, it has to export."

The current strategy is building a nucleus of leaders, he says, although the payback time may be five to 15 years. This will ensure a long-term future for the industry. "It's technology that has created the jobs in the last decade. It's research that will create the jobs in the next decade," he says.