There are about 442,000 IT consulting firms in the U.S., according to a recent report in IBIS World. A pretty crowded market.
The report doesn’t specify if this includes outsourcers who offer their services in the U.S. market or have U.S. offices. But the IT outsourcing market also seems to be pretty crowded.
So the question is: how can IT service providers get noticed? What can you do to stand out from the crowd and start to carve out a good market for your business?
Are the Riches in the Niches?
For as long as marketing has been around marketing pundits have been telling us we’ve got to carve out a niche for ourselves. Choose an industry or sub-industry and dominate it. Be number one in that niche.
The problem is, with so many competitors going after all the niches, you could end up dominating a niche alright, but a niche that may not be able to sustain your business (and if you think you’re the only one who’s noticed your niche you’re deceiving yourself).
For example, if you provide outsourced software development services, you might want to go after the barbecue restaurant niche. But then the BBQ joint niche starts to get crowded, so you go after the BBQ brisket niche, or even digging deeper still, the niche of BBQ restaurants who only serve you on wax paper and provide wooden benches for you to sit on.
Now those are my favorite BBQ places, but are there enough of these types of joints with money for you to build a profitable business on?
I took a kind or ridiculous example to make a point: there’s a only so granular you can get with a niche before you start seeing diminishing returns.
The New Niche Strategies
But before you get a little disheartened that all the good niches have been taken, let’s take a look at the new niche strategies that have been making an appearance on the marketing scene.
1. The Fractal Strategy
Andrew Davis pioneered the fractal niche idea. Go after a niche, for example small businesses who need accounting software. Then look at different scenarios within that niche. Are there different behaviors within that business segment that could turn into a niche for you?
There are owners who spend most of their time in the office, and then there are owners who spend most of their time on the road. You could target small businesses whose owners travel all the time, because they have different needs than owners who stay in the office all-day long.
This is different than going ridiculously deeper into ever more sub-divided niches like in the brisket example above. Targeting different behaviors, or lifestyles, is an overlooked way of looking at niches. And yes it can provide you with riches.
2. The Personality Strategy
Brian Clark, CEO and Founder of Copyblogger, talked about the personality niche in one of his foundational blog posts, How to Dominate Your Niche.
This is not for everybody, because it requires pretty extreme displays of personality to attract people who can relate to you.
One of the examples Clark cites is Noami Dumford of IttyBiz (who I actually really admire). She’s the potty-mouthed, anti-marketing personality who’s actually a really awesome marketer.
But this type of niche is kind of hard to do, and only a few people can pull it off successfully.
3. The Territory Strategy
The third example, the territory approach, is fairly straightforward. Don’t try to find that totally undiscovered niche only you know about. Instead, go into a crowded niche, and carve out a territory within that niche.
A crowded niche? Isn’t that a little self-defeating you say?
Crowded niches are niches with lots of business – and lots of money. So it makes sense to go where the money is. But once you’re there, figure out where you’d like to carve out a territory you can own.
Let’s take for example two large and successful nearshore outsourcing firms: Softtek from México, and Globant from Argentina. They’re both relatively large technology outsourcing providers from Latin American, selling software development and IT outsourcing services to large U.S.-based companies.
And the niche, the nearshore outsourcing niche within the overall IT consulting niche with 442,000 players in the U.S. market, is a crowded one.
But that’s where the similarities end. They’ve both carved out nice territories for themselves.
Globant, as you can probably tell by their website, has that Silicon Valley-esque feel to it. They appeal to the large, fast-growth firms who are staking their growth on internet technologies. Their skinny-jean wearing Argentina-based developers have that same hipster vibe that endears them to their target U.S. customers. They were even recognized by Fast Company as one of the 10 most innovative companies in South America.
Softtek, on the other hand, communicates stability, safety and security. They’ve established themselves as the nearshore outsourcer for the Fortune set. They’ve even reached that point IBM reached decades ago: nobody ever got fired for hiring Softtek. If you want to make it into the Fortune 500, then Softtek is the outsourcer for you.
Two totally different territories within the nearshore outsourcing niche.
There are actually more niche strategies than the three I mentioned here. There are cause-based strategies, like Tom’s Shoes which donates a pair of shoes to a needy person for every pair you buy from them. And there are collections of niches, where a company will serve dozens of sub-niches.
But we think it’s time you think differently about your niche strategy, and maybe even stop worrying about dominating a niche, while thinking creatively about what territory, personality or fractal strategy you can carve out for yourself.