News & Events
How to Target Highly Profitable IT Staffing Niche Markets
- August 14, 2016
- Posted by: Maurice Fuller
- Category: Staffing
The world of IT staffing continues to undergo rapid change and we’re seeing IT staffing firms that are becoming increasingly specialized, which is why you need to know how to target the highly profitable IT staffing niche markets.
Generalist versus specialist approach
Before the big box staffing firms entered the industry, IT staffing was a specialty. Today, IT and engineering staffing is a $30+ billion segment of the $120B staffing industry with hundreds of sub-specialties. Yet many IT staffing firms continue to operate as generalists. The challenge with the generalist approach is that it has the potential to raise operating expenses and it leaves your firm largely undifferentiated.
“You will find the niche and the niche will find you”
In what area should you specialize? Buried in your stream of open and closed job orders are the seeds of niche specialties that could be developed into highly profitable specialty businesses. You could grow a niche you are currently serving – for example Agile PMs. This would enable you to tell buyers, “We specialize in providing Agile project management consultants.” You can also learn about potential niche opportunities through conversations with clients, candidates and field employees.
Positioning your firm as a leader
Pursuing a specialty enables you to brand your firm as The Leader within a niche. Clients and candidates want to engage with – and be associated with – leaders. Being a leader boosts your credibility and gives you greater pricing power. In many industries, the top two or three suppliers in a market capture the majority of profits. It’s more compelling to be able to tell a prospective client “We are the #1 provider of MIL SPEC XYZ Software QA consulting services for embedded systems” than “We specialize in providing software QA testers.”
Just about any firm can brand itself as a leader by narrowly defining their niche. There are many dimensions across which you can establish your leadership position, including function, industry, level, region, delivery model, vertical, technology, purchasing model, customer size, etc.
Serving niche markets on a national basis
Think about serving your niche on a national basis, and not just regional. Through LinkedIn and other research tools, you can now identify buyers of niche IT services throughout North America. In fact, NewVector offers training in locating niche buyers of staffing services.
Example: ALKU and barriers to entry
Andover-based ALKU is one of the fastest growing IT staffing firms in the U.S. By providing “highly specialized consulting services on a contract basis” – ALKU has experienced tremendous success focusing on high margin niche markets. For example, ALKU Government Solutions provides IT specialists with TOP SECRET clearances. These positions require lengthy background checks including polygraph examinations. This niche has significant barriers to entry due to government approvals and the expertise required to serve this customer base.
Transitioning to your niche
Steve Jobs famously said, “Focus is about saying no.” In the context of niche IT staffing, that means saying no to job orders that are outside of your niche and yes to job orders within your niche. For example, a $7M staffing firm in a large North American city successfully narrowed their sales and recruiting focus to mobile app development in just 45 days. This resulted in a tremendous acceleration of their business.
It can be challenging for IT staffing firms to turn away business they could potentially fill. Specialization means strategically rethinking your mix of clients and candidates to grow higher margin business faster.
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