NEW YORK (CNNMoney.com) - Tech workers are back in hot demand, according to a report released Monday.

Tech-sector job cuts in the first quarter of 2006 were 40 percent lower than the same quarter last year, according to Challenger, Gray & Christmas Inc., an employment consulting firm.

It was the fourth consecutive quarter in which tech cuts were below the year-ago level.

The tech sector, which includes computer, telecommunications, electronics and e-commerce, announced 39,379 job cuts in the first three months of 2006, down from 59,537 in the first quarter of 2005.

But the first-quarter figure was 16 percent higher than the 21-month low of 34,048 tech cuts announced during the final three months of 2005.

Mergers and acquisitions, particularly in the telecom industry, have been a driving factor behind tech sector job cuts for several quarters and the first quarter of 2006 was no exception.

Nearly half, or 43 percent, of the staff reductions this year in all sectors resulted from mergers and 88 percent of these merger cuts occurred in telecommunications.

"Despite the inevitable job-cutting that typically follows mergers, the job market picture for the nation's tech workers is definitely improving. Many job seekers in high-demand fields such as storage systems administration and information security are probably finding themselves in the driver's seat when it comes to negotiating employment terms," John Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement.

"Some businesses may in fact regret some of the job cuts they made in recent years, which, in retrospect, may have been too deep. Recent surveys suggest that employers are having an increasingly difficult time finding information technology (IT) workers."

In a quarterly survey by the tech industry trade publication CIO Magazine, 26.3 percent of chief information officers said IT labor was hard to find and keep. That is double the 13 percent of CIOs who said the same thing a year ago.

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Planned layoffs fell 26 percent in March from February -- the lowest level in 11 months, click here for more.