Businesses and government departments are planning huge cuts to their IT recruitment budgets which could see some companies cutting 100% of their temporary staff cut and 10% of permanent workers made redundant.
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But cutting IT staff when skills are not required could leave organisations short when they are most needed when business picks up.
According to research from management consultancy Deloitte job cuts form part of the cost cutting strategies adopted by organisations during the economic slowdown.
The report said that half of companies are planning to cut their contract IT staff by between 50% and 100%. A total of 66% of organisations are planning to reduce permanent staff by 10%.
But organisations that gain a reputation for recruiting when times are good and firing when business slows will find it difficult to recruit the necessary skills when the upturn comes.
"IT skills are scarce and organisations that have not retained the expertise they need may have a real challenge attracting new staff when markets strengthen, particularly if they have a hire and fire reputation," said Deloitte.
Matthew Smith, director of UK regions at Harvey Nash, said that IT workers looking for permanent jobs will expect a certain level of stability. "If they are approached by a company has a reputation for hiring and firing they may be put off which will have an adverse effect on the company that needs the skills."
In contrast he said that contract staff understand that they will be the first to go when the economy slows. "They know they can charge high rates when times are good."
Smith said in contrast to Deloitte's findings Harvey Nash's contract recruitment business is strong. "During the current economic climate many firms have recruitment freezes so hiring temporary staff is a way to fill skills gaps."