According to research firm IDC, which has released the results of its 2006 Australian outsourcing end-user survey, a number of large contracts are expected to go with selective sourcing as organizations continue to unbundle mammoth IT contracts and look to best-of-breed providers.

IDC research manager for outsourcing and BPO (Business Process Outsourcing), Aprajita Sharma, said tier one providers such as IBM Corp., CSC Corp., EDS Inc.and Hewlett-Packard Co. will grapple with a dynamic and competitive environment.

"They face tough competition from the tier two providers and Indian offshore outsourcers," she said.

In recent years selective sourcing has been the single, biggest trend shaping the IT services market.

Under this new regime, customers can focus on buying the best, not the biggest.