Unions say more than 1,500 workers face a "very worrying" future as the three Welsh quangos which employ them are abolished.
Rhodri Morgan says 'back office' economies can be achieved
First Minister Rhodri Morgan said some jobs would go after his announcement that the bodies would be taken over by the Welsh Assembly Government.
He said he did not know how many jobs could be lost at the Welsh Development Agency, Wales Tourist Board and Elwa.
But he said he hoped staff would see it as an "exciting opportunity".
Mr Morgan announced to the assembly on Wednesday that the three quangos - or quasi-autonomous non-governmental organisations - would come under the direct control of his government within two years.
It amounts to the start of the "bonfire of the quangos" promised by Welsh Labour almost ten years ago.
But staff at the Welsh Development Agency (WDA) the Wales Tourist Board and Elwa - which looks after post-16 education with the exception of universities - are concerned about the impact on their jobs.
Mr Morgan told BBC Radio Cymru: "I haven't said that there would not be any job losses. That's the consequences of the announcement."
The first minister said there could be economies in "back offices" to put more resources into the "frontline".
The WDA is the biggest employer of the three, with more than 900 staff. Elwa has almost 500 workers, and the tourist board more than 100.
The assembly government will control the three quangos
Jeff Evans, of the Public and Commercial Services union PCS), said: "The key issues for the union now are concerns about future jobs and pay and conditions of service.
"The important thing now is that we engage with the assembly to seek further clarification on the implications for staff," Mr Evans told BBC Radio Wales
"This is bound to be a very worrying and unsettling period for staff.
"Having said that, I think we were reassured generally by what Rhodri Morgan had to say about the staff situation, but obviously we'll be keeping him to his word."
Former WDA chief economist Brian Morgan questioned the assembly government's ability to deal with the bodies.
"The thing about the WTB and the WDA is that they are deliverers... both at home and abroad," said Mr Morgan.
"What's the assembly's track record? At the moment it could well be said that it leaves a lot to be desired so it really is going to need a lot of help and support to get this right."
Tourist board chairman Phillip Evans found out about two hours before the announcement, and said he should have been told earlier.
"We've always prided ourselves on the professional rapport we've had with government, so to say I was surprised is probably a little bit of an understatement," said Mr Evans.
"When you've got an organisation that is now probably the most successful tourist board in Europe and we've probably got the most talented people... I would have thought, yes, we should have been involved in discussions."
But Mr Evans said he took "some comfort" from Mr Morgan's statement that tourist staff would transfer to the new department and that employees were the most important part of delivering public service.
The first minister said staff would be helping to create a department with "real fire power, real career opportunities, real opportunities to specialise".
Mr Morgan said the change to a "messy system" would give clarity of accountability and scrutiny.
He praised the performance of the WDA, and said staff had achieved "minor miracles" to overcome the problem which meant investors had to go to both it and the assembly government for grant help.
But Mr Morgan said the flaw in the system to create a "one-stop shop" still had to be reformed.
"I look at this not as getting rid of three quangos but the opportunities it creates for making us much be more businesslike and much more departmental.
"It'll give us a structure much more like that of the Scottish Executive."
Mr Morgan said details still needed to be worked out. But, asked about the future of Elwa, he did not think there was any question of some of its powers being returned to local councils.