"At the moment many companies are looking overseas to source personnel, albeit these people are trying to target specific industry sector experience but the number of compliance programs growing in the financial sector is not making it an easier path to find these people and they are often snapped up at higher rates than government projects can afford.

"Anecdotally I can say application development experts are at the top end of the rate increase at around 15 percent in the past 12 months and given the continued shortage of IT candidates it is a surprise the increase is not greater. I think it comes down to the fact clients are trying to source people in Australia and not push offshore, but it is getting to a pointy end ... Employers are looking for a specific skill set and cannot find it, yet don't appear to be hugely investing in training - it is a full circle problem we have got."

Cross said full-time salaries and contractor rates will continue to increase higher than other industry sectors unless supply and demand of capable staff in Australia is addressed. Cross said this will come to a head in three to five years.

According to the report, Australian businesses are actively trying to source skilled IT labor externally, with the number of 457 Visas (temporary skilled migration) into Australia numbering 58,140 within the first ten months of 2006.

The skills in highest demand were Java, PHP, .Net and development management. In the security space those with a data protection focus (such as antivirus, spyware or security developers) and business continuity, disaster recovery and backup skills attracted an average 12 percent salary or rate increase. Those with an SAP or Oracle background are also in high demand.