Thirty-one percent of the 1,400 CIOs questioned said they thought employee referrals were the most effective way to locate skilled technology talent, while 19 per cent said they preferred working with IT recruitment firms.

Traditional classified print advertisements ranked in third place with 17 per cent and online job boards took fourth place with nine per cent.

Katherine Spencer Lee, Executive Director of RHI, said: "Although it may seem surprising that IT executives are not relying more heavily on technology to recruit candidates, there is no substitute for peer-to-peer networking.

"Referrals offer hiring managers access to qualified professionals they might otherwise not have reached. There is also an implied recommendation from the person providing the referral."

Miss Lee added that staffing firms offer similar advantages because they typically have a strong network of industry contacts in the local business community.

She said: "This enables them to reach the hidden talent pool; individuals who are a match for the position but may not be actively sending out resumes or scanning classified ads."

Tim Barton, Director of the UK-based agency, ARC Recruitment, said: "In the cases I've known companies to hire by word of mouth, it is often because they know the candidate and have a proven ability to take on the task.

"The downside is that the internal person referring them is effectively refereeing their good work. Secondly, it saves on a fee (this however is often a false economy as they don't always get the best man/woman for the job).

"Beyond that most Managers like to mix and match internal/agency sourced and external referrals to select the 'best for the job' so in part this is true, the problem again is that referrals are normally derived by a 'bounty focussed' internal scheme which takes the focus somewhat off whether he/she is a good hire."

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Richard Powell, © Shout99.com 2002