Here's a typical exchange between a prospect and a salesperson when this common sales objection is raised:
Clearly, that's not working.
Whatever you said right before the sales objection elicited the prospect's response. Perhaps you said, "We specialize in offering a full line of whatevers." Or maybe you said, "We're a Minneapolis based consulting firm."
For example, whenever I say, "I'd like to get together with you to find out how your company is handling your sales training needs," the auto response is "We're already working with xyz company."
The key is to avoid getting in that situation in the first place!
It's a different story if I say, "I see that your company's sales have been stagnant the past few months. I have some ideas on how to increase new client acquisition." With that opening line, I will never be told, "We're already working with xyz company."
So don't tell people what your company does. Focus on the business objectives you address. Change what you say and you'll change the responses you get.