Demand for IT executives plunged 26 per cent in June, according to the EL executive demand index.
The fall was second only to that for marketing executives which recorded the largest slump, down 29 per cent, the index showed.
Australian business was yielding to the global economic gloom, executive search firm EL Consult, publisher of the index, said.
"While I'm confident that the longer-term growth trend remains intact, the global economic situation remains uncertain," EL Consult head, Grant Montgomery, said.
Key factors hitting business confidence were the sharp rise of the Australian dollar - potentially making exports more expensive; terrorism still being a potent threat, and the SARS scare was only just coming to an end, Montgomery said. This environment had dampened business desire to invest in "expensive executive assets".
There may have also been some conventional, end-of-financial-year burnout with companies having spent their hiring budgets, Montgomery said.
Meanwhile, businesses were still retrenching management as this made rapid improvements to the bottom line.
Montgomery said while corporate restructuring may benefit companies and their shareholders in the short term, in the longer term it meant companies were not improving through growing their product range or customer service.
The current business mindset was retarding executive demand and creating economic stagnation, he said.
Demand for finance executives fell 12 per cent in the month, while engineering dropped 6 per cent.
Queensland and Western Australia experienced the largest falls in demand, while Tasmania and Northern Territory produced a positive result.