The UK is facing a shortage of skilled IT professionals following a sharp decline in the number of students taking the subject at university, a report has warned.
Over the past five years, the number of graduates in IT has halved to 20,000 a year - far short of the 150,000 new entries needed by businesses.
The report, by Lancaster University Management School, the British Computer Society, and Microsoft, warns that without concerted action, the UK risks losing its position as a leading software development centre.
Employers, universities and the government will need to collaborate to improve the image of IT, if employers and their suppliers are to find the staff they need in the UK, the report warns.
About 102,000 IT and software jobs, equivalent to 12% of the total IT workforce, will have been transferred from the UK overseas by 2010. And more companies could be forced to look offshore, if the skills supply is not addressed in the UK.
Bola Rotibi, senior analyst at Ovum, said: "We are in danger if we don't sort this out of slipping ground, and squandering our own heritage for producing good-quality, innovative students. If we don't get the skilled people, companies will move abroad."
Peter Skyte, national officer for the Amicus trade union, said he was concerned that offshoring would mean existing IT staff losing their jobs in the UK.
"Offshoring is not necessarily a zero-sum game and overall the UK may gain through offshoring. But there will be losers. People will lose their jobs," he said.