To establish a thriving international business, it is essential to carefully select your business model. Build operate transfer (BOT) is one of the most popular models of cooperation in IT outsourcing allowing the business to form strong bonds with virtual teams for a particular project that requires specific talent and skills. Your decision will depend on factors such as talent availability, data security, IP protection, setup time, and flexibility. In today’s article, we are going to take a closer look at the build operate transfer IT outsourcing model, explore the basics, see what benefits it provides to the business, and whether it is the right choice for you.
What is the Build Operate Transfer in a Traditional Sense?
In the realm of IT offshoring, the build-operate-transfer model is frequently employed. Typically, a technology company opts for an offshore partner to establish a software development center in a foreign location. This approach entails the creation, operation, and eventual transfer of the development office along with its team. Although the BOT in the tech industry does not encompass the public sector, its underlying concept remains consistent: reducing risks and minimizing costs.
IT service companies pose potential rivals to product companies, which is why the traditional BOT model raises concerns regarding the security of confidential information and intellectual property.
Typically, in the BOT model, the management of your research and development (R&D) team is handled indirectly through a local service provider, rather than by you directly. Consequently, there is no guarantee that this development team will refrain from utilizing your information when collaborating with your competitors.
How Does Build Operate Transfer Outsourcing Model Work?
First and foremost, we need to discuss the basics of the BOT model. The name says it all, but you need to be aware of the model’s specifics to implement it properly and benefit from it as intended. The Build Operate Transfer model consists of three distinct stages:
Stage 1: Build
During this initial stage, the focus is on establishing the team. However, it encompasses more than just assembling a group of individuals. The objective is to ensure that the team is fully prepared to operate within local regulations and leverage back-office support in areas such as finance and HR. At this stage, both parties collaborate to define the terms and scope of the partnership. A detailed analysis of requirements is conducted to determine the necessary skills and competencies for the new team. This is when your project company initiates the process of acquiring appropriate technologies, team members, office space, and equipment based on the project’s specific needs.
Stage 2: Operate
The second stage involves the day-to-day management of the offshore team by the provider in close cooperation with you. The partner also offers local support and ensures seamless integration of the team, aligning their activities with your business goals. During this stage, the provider devotes significant attention to operations, working closely with the team to ensure effective alignment of key processes. It is also an opportunity to allocate resources for training the team, which may involve workshops and individual meetings with team members.
Stage 3: Transfer
The transfer stage marks the transition of ownership. When you are ready, the provider transfers the team to you, along with the expertise and skills developed throughout the operational phase. All resources are transferred to your organizational structure within the specified timeframe. Ideally, this transfer process follows a predefined procedure outlined in the initial partnership contract.
What are the Benefits of Build Operate Transfer in IT Outsourcing?
Now you might wonder what benefits build operate transfer software development offers to the business. The most important thing here is cost reduction, but there’s much more to it than you might see at first glance. Here are the key benefits of build operate transfer IT outsourcing:
Cost and risk reduction
The most significant advantage of this model is the potential for lower costs and reduced business risk. Establishing your own subsidiary in a foreign country can be time-consuming and expensive, especially for early-stage enterprises. By opting for BOT, you can outsource the process and transfer the fully developed subsidiary once it’s ready. Local technology companies, with their experience and expertise, can complete the setup faster and in a more cost-effective manner, resulting in lower risks and expenses compared to traditional outsourcing.
Alignment with company culture
Maintaining company culture and work practices can be challenging when outsourcing. However, the BOT model offers a solution by requiring you to share your best practices, values, and communication frameworks with the provider from the start. This alignment ensures a smooth transfer stage, eliminating the need for additional time and effort to familiarize the team with your company’s operations. The outsourced team structure will be aligned to integrate into your existing workforce seamlessly.
Full control over processes and operational structure
With BOT, you retain full control over your project management processes and operational structure. By agreeing with your business partner on the desired operational setup, you can ensure that work is carried out in accordance with your established practices. After the transfer phase, you will have a team that is aligned with your business processes, maintaining the desired level of control.
Enhanced agility
In the face of changing market conditions, agility is crucial for business survival, as demonstrated during the Covid-19 pandemic. The BOT model offers flexibility, allowing for faster transfer of teams and resources if required. It also provides the option to extend the process and continue the outsourcing collaboration. This adaptability enables you to respond promptly to evolving circumstances, ensuring your business remains competitive.
Local knowledge and insight
Gaining in-depth knowledge of the local market is vital for successfully expanding into a global company. Working with external teams in an offshore model may present challenges due to differences in professional culture and communication styles. By partnering with a local provider through BOT, you can benefit from their regional expertise and support. They can help you adapt specific aspects of your business operations to the local market, facilitating a smoother entry into international markets.
Final Thoughts: Is Build Operate Transfer the Right Choice for Your Business?
The Build Operate Transfer model offers numerous advantages as an outsourcing approach, but it is crucial to apply it in the appropriate context. This model can significantly reduce costs and risks, ensure alignment with company culture, provide control over processes, enhance agility, and leverage local knowledge and insight. However, it is important to carefully evaluate the specific requirements and goals of your business before implementing the BOT model.
Factors such as the need for long-term collaboration, the importance of maintaining full control over operations, the level of cultural alignment required, and the availability of local expertise should be taken into account. By assessing the unique circumstances and considering the potential benefits and limitations, businesses can effectively leverage the BOT model to establish successful international operations.
