What is Tier 1, Tier 2 and Tier 3 (2024)

In Ning's layman terms;

Every industry has a ‘classification’ or a ‘rating’ system. Sometimes these labels are official; other times they’re just unofficial ways to describe a company’s size and abilities. For example, small companies often call themselves ‘boutique’, while larger ones make their ‘significant’ size known. While these general labels are helpful, the IT and Telecommunication industry has a very specific rating system. ICT firms are classified as ‘tier 1’, ‘tier 2’, or ‘tier 3’, and since that doesn’t really give much information away, I thought I will explain what those terms mean.

What’s the difference?

The tier system isn’t a difficult one to wrap your head around – it’s actually quite logical. Basically, the telecom companies are rated according to their capacity to take certain projects. The size, resources, experience, and of course, money a company has determined the kind of projects they are able to take on, and therefore what ‘tier’ group they fall in to. In layman’s terms, tier 1 companies are the big guns, and the tier 3 ones are the more modest firms. Over time, companies can move up the tiers if they fit the criteria.

Now, let’s explore the different tiers a little more.

Tier 1

Tier 1 firms are the largest, wealthiest, and most experienced in the industry. This tier is so exclusive, in fact, that there are only a few main telco players! Here’s the breakdown:

These companies take on major commercial projects such as motorways, railways, hospitals, universities, office towers, shopping centers and the like. They have the expertise, resources, and finances to take on such large-scale projects. Tier one contracts are usually in the hundreds of millions and even billions price range.

Tier 2

Mid-tier companies are still key players in the ICT industry. As the name suggests, they are somewhere in between tier 1 and 3. As a general rule, tier 2 companies are more likely to take on commercial (rather than residential) projects. NCS, Citic is a tier 2 company (Singtel is both tier 1 and 2, Ask Ning Why), education, heritage, retail, and industrial projects. Sometimes the lines can be blurred for a company between tier 1 and 2. But they can be tier 1 with tier 2 salary.

Tier 3

Now that you know a little bit about the tier ratings, you can probably guess that tier 3 companies take on the smaller projects. There are a lot more of them around, and they have plenty of work to keep them busy. Tier 3 firms usually take on projects around the million-dollar range to 15,000 USD; sometimes a little more, sometimes a little less. The types of projects they take on are:

• Sizeable residential jobs, including smaller enterprise network installation and stores.
• Small-scale commercial work, such as building or petrol stations, supermarkets, offices, and places like McDonald's.

These companies are essential to the industry, and they build up their portfolio with this type of work. They then have the opportunity to start moving up the tier ladder.