Many Irish graduates lack interpersonal and communication skills, according to a submission by the IDA to a major international review of third-level education in the Republic.
In its submission to the OECD review, the IDA states that foreign companies based here "frequently find that core personal skills, including communication, interpersonal, presentation and project management skills seem to be lacking in graduates entering the workforce."
It acknowledges that significant progress has been been made by the colleges in addressing this problem, but points out that "much more needs to be done".
The IDA says there is also a view from the business world that many third-level courses lack an essential practical element, which might better prepare students for the work environment.
The IDA also invites the OECD to evaluate how the colleges determine the needs of "their customers, students, business etc" and to consider whether this should be an ongoing process. "Business, for its part, is of the view that it does not get sufficient say in the process," it states.
It is also critical of how the demands by industry for more science graduates have not always produced a response from the colleges, despite the importance of science skills for Ireland's international competitiveness.
The submission says the universities must have a greater commercial mandate, whether they develop as "public organisations or perhaps in some cases evolve to private organisations". This echoes recent proposals from the Higher Education Authority (HEA). In its submission to the OECD, the authority said colleges should be privatised, if they so wished.
The IDA wants to see third-level colleges enjoy better freedom and flexibility, especially in the areas of science, biotechnology, research and adult education.
It says colleges should become more customer-centred and view themselves as service-providers. Direct competition between colleges for funds and customers could have beneficial effects, it states.
The OECD review is the most comprehensive examination of third-level education in a generation. The review team from the Paris-based body travels to Dublin on Monday to begin its work.
Next week it will meet representatives of a range of bodies, including the HEA and the Conference of Heads of Irish Universities.