This is particularly true for roles such as enterprise architect and IT project managers. "Higher-level skill sets are in short supply so the people in high demand are being pushed very hard," Trezise said. "When it comes to IT salaries there are always peaks and troughs, but there are specific areas where demand outstrips supply." Claims of upwardly spiralling salaries were supported this week by the latest Hudson Report, which found half of all IT employers intend to increase staff over the June 2006 financial quarter.

Salaries for generalist IT managers are expected to stay the same; however, IT managers with a specialist skill set in security, project management, business analysis or SAP integration are commanding higher salary levels, according to the report. The Hudson Report surveyed more than 8000 Australian employers and found only 7.4 percent intend to reduce IT employee numbers.

Martin Retschko, Hudson IT&T director, said good specialist candidates offering a cultural fit with a high degree of motivation are receiving multiple job offers, which leads to increased salaries ."Employers are prepared to negotiate more than they have before and certainly the heat in the market is turning in the favor of appropriate (specialized) IT candidates," Retschko said ."The overall salary data we have been collecting suggests across the board salary increases but it does vary across levels of management. "Retschko said Australian IT companies are either one-third or half way through a positive growth in IT investment, adding that this is expected to last another 12 months. "As IT spending increases, vendors are taking on more work and raising staff levels in anticipation of more demand for products and services from the end user community," Retschko said.

Employers are turning to available pools of talent, like contractors, as the skills shortage continues. "Our message to employers is to invest heavily in retention strategies to keep key talent and remain competitive," he said. Hudson CEO Anne Hatton said employers faced with a critical skills shortage should look to flexible working solutions such as job sharing.

Australian Computer Society chief executive Dennis Furini agreed salaries are moving up . He said there is already evidence of shortages in skills in security, project management, business analysis and enterprise architecture.