Small and medium companies are paying annual salary increases of 1020 per cent to retain their information technology staff, according to a survey by IT recruitment specialists Elan Computing Ireland.

For companies employing fewer than 100 people, 70 per cent stated their annual increase in wages to IT staff was 1020 per cent, while for companies employing 300 to 500 and more, the increases stated were in the 010 per cent bracket.

The survey found that with 99 per cent of respondent companies there had been increases for all IT staff in the previous 12 months, with the largest percentage increases going to the 25 to 30-year-old age group. More than 50 per cent of respondents said the IT skills shortage meant they had had to recruit foreign nationals rather than Irish staff.

The survey was sent to more than 100 companies and had a response rate of 30 per cent.

"Larger companies with greater numbers of staff and healthy student intakes have less exposure when it comes to losing staff," said Mr Tom Clancy, office manager with Elan Computing. "In smaller companies when someone leaves they take a substantial part of the company knowledge base with them."

With conservative estimates of 3,000 to 20,000 new software engineering jobs arising in the short to medium term, the pressure on small businesses and permanent salaries would continue to grow, Mr Clancy said.

Although three-quarters of the companies stated there had been an increase in permanent staff, the IT industry in Ireland remained fluid as 27 per cent of respondents said they had lost 12 or more of their employees in the previous year, he said.

"The nature of the shortage has produced an engineer who needs progress in salary, technology or career in a short time frame. In short, IT people are more demanding."

Mr Clancy said most Irish companies treated their staff excellently but in the present market they might have to adopt more competitive measures to ensure they retained their IT staff.