The current skill shortage in the IT industry in the UK could mean that many small businesses will have to increase contractor pay rates by up to 15 per cent, a new report suggests.

As there is an increasingly small pool of IT contractors available to carry out the work small and medium-sized enterprises need doing, Parity has predicted that these workers will increase their charges in the near future.

The company suggested that outsourcing IT services could prove to be a cost effective way for these businesses to deal with mounting IT costs.

"High demand means that contractors are once again finding themselves in the fortunate position of being able to pick and choose the projects they work on," explained Simon Wayne, the professional services director at Parity.

"Businesses therefore run the risk of losing out if they do not offer much more attractive day rates, confirm contracts more quickly, and secure longer term agreements."

A recent report said that it was important to try to attract more women into IT if the current skill shortage is to be dealt with.