IT contractors may find themselves with more competition for vacancies in the future, once the impact of the public spending cuts is felt.

Workers in the public sector who find themselves made redundant could see it as an opportunity to set up their own business, according to Peter Reilly, director of HR research and consultancy at the Institute for Employment Studies.

For the thousands of IT workers who could be losing their jobs, this may well mean a move into the contracting sector.

However, Mr Reilly warns that these workers could find it very difficult operating in the self-employed market.

"The difficulty is that in many parts of the public sector they haven't had much preparation - it's not like they've particularly been in commercial organisations," he said.

Recent research from Badenoch & Clark suggests that 56 per cent of public sector workers who are consider moving to the private sector believe they lack the appropriate skills.