It is common knowledge that the IT outsourcing market is split into so-called tiers, with tier one comprised of the “Big Four” (IBM, HP, Accenture, CSC) and tier two being mainly specialists in certain technologies or regional in scope such as Logica or Unisys, often aspiring to join tier one.

But this unintentional layering of the supplier market inherently creates a challenge. Companies with tens of thousands of employees, outsourcing IT functions through a contract of five years or more and with a value of upwards of £15 million per year, will be perfectly suited to a tier one provider. But the companies of a scale just below this with needs of equal complexity but an ability to sign a contract valued at only £3 - 10 million per year , simply will not be given the same levels of care and service by the tier one providers.

However, a tier two supplier typically lacks the sophistication and scale to accommodate the complex requirements these organisations have as they typically target the smaller end of the market. Therefore, companies of this size – approximately 2,000 employees for example – have shortlists of potential sourcing providers, but no one who can serve them fully, representing a gaping hole in the market – tier one wouldn’t serve them adequately, tier two can’t.

But there is a solution.

The first step is to readdress your expectations and understand you are unfortunately in a market black hole. If your budget is less than what would satisfy a top tier supplier, then the further down the hierarchy of suppliers you are looking, and the more care you must take when selecting the eventual supplier. And as you are unlikely to find a single supplier who can fulfil all your needs to the level you require, be open to a multi-sourcing approach whereby you take advantage of the specialisms of various suppliers. Provided the overall relationship and co-operation is adequately managed from all quarters, multi-sourcing can prove more than beneficial. Indeed multi-sourcing is arguably best suited to organisations of this scale.

Finally, with so many rumours abound within the sourcing industry, and any other industry for that matter, on possible mergers, consolidations, departures from the UK market etc., companies must be certain of whether the supplier is on an upward or downward trajectory. Will you be the most or least important client to the agency in three years’ time?

In short, with top tier suppliers likely to focus on more profitable and larger contracts, and smaller suppliers unlikely to be able to meet your requirements, heightened degrees of diligence and flexibility will be essential – your first choice supplier may not be suitable, but there is no reason why the problem cannot be solved by an alternative strategy.