Demand for IT contractors is at its highest since the dotcom boom, with 76% predicting their earnings will rise this year.
A study of 607 IT contractors found that scarcity of selected skills is expected to increase earnings. Last year only 54% of IT contractors believed that their earnings would rise.
Competition between financial services and the public sector for the best IT people will continue to drive wages up, although it is unlikely the public sector will be able to go head-to-head with banks in a protracted staffing war, said Giant Group, which conducted the survey.
Matthew Brown, managing director of Giant Group, said, "Public spending is near its limit at present but the political pressure on the government to free up more cash for IT projects such as the NHS national programme for IT may mean lower-profile e-government projects feel the pinch."
The public sector uses the largest share of contractors, at 23%, compared to financial services, which uses 21%.
However, most contractors felt that the finance sector would drive growth in demand over the next 12 months. Compliance projects were expected to be the main factor source of work.
The telecoms sector is expected to take on more contractors this year. Major projects, such as BT's £1.6bn deal to run Reuters' worldwidedata networks, are increasing demand. However, problems at Marconi and the prospect of a merger between NTL and Telewest could lead to a short term slow-down.
"The UK's appetite for broadband shows no sign of abating and the telecoms sector should receive a much needed boost when 3G finally achieves mass market penetration," said Brown.