IT departments are struggling to balance the economic pressure to cut costs and headcount with the need to retain IT skills, and are finding that using contractors to plug gaps is landing them in a catch-22, according to new research from consultancy Morse.

The firm surveyed 200 IT directors and found that nearly three-quarters traditionally used contractors to fill skills gaps in their in-house teams, and the same amount found it difficult to hire people with the right skills and experience.

But excessive use of contractors could be harmful to the long-term health of the IT department and ultimately the business, according to the research. Some 72 per cent of respondents indicated that a skills shortage was preventing the IT department from taking on projects which could financially improve the business.

"IT directors want to use permanent skills where possible, but they can't because of the demands placed on them by the business," explained Morse director Mike Devlin. "People look to contract out niche skills as opposed to bringing them in permanently, and that is the conundrum."

Companies that become financially locked into fixed-term contracts with certain IT contractors risk these skills becoming siloed with them, said the report, forcing the IT director to renew the contracts indefinitely.

Devlin urged firms to look at "flexible resourcing" options which can provide the "best of both worlds", for example skilled IT professionals with no obligatory lock-in to rigid contracts.