Business spending cuts due to the credit crunch have resulted in many companies turning to IT contractors instead of hiring their own permanent IT support, it has been stated.

Gerry McLaughlin, speaking on behalf of his organisation ITcontractor.com, said that in all economic downturns, businesses look for a way to cut costs when sales hit a plateau or start to fall.

He also noted that when services to the company were outsourced to an offshore facility, they rarely return, although recently many have returned after not reaping the benefits they believed they would.

Mr McLaughlin added that "cutting IT contractors is the easiest means to do this along with stopping the advertising budget".

He continued: "If the downturn persists they then look to cut their permanent staff."

A recent report by e-skills UK and Experian projected that growth in the IT industry over the next eight years would hit 2.5 per cent per annum, which was noted to be five times faster than employment in the UK on a whole.

More than half of small businesses (53%) believe that the most important benefit of outsourcing is guaranteed response times for IT support, London based Connect conducted the research in 2007.