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Admin Mar 21, 2024

The Build-Operate-Transfer Model in IT Outsourcing Explained

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Sometimes in the IT Industry, there is a severe drought of budget-friendly, qualified development resources, and companies of various sizes are on the lookout for offshore IT talent.

The current global IT outsourcing market is worth $375 billion and has been steadily increasing. The number of companies looking to outsource their IT solutions to reduce their overall operational cost has reached over 50% globally.

Although IT outsourcing is no longer a new trend, many companies are still perplexed and do not realize its potential. They still think their IT outsourcing is limited to customer service and staff augmentation models. Although these arrangements have worked well for many companies, some still find it challenging to monitor their outsourced programs due to strict security compliance.

So how do these companies benefit from an IT Outsourcing process while still maintaining control over the operation?

In some cases, when companies are looking at long-term projects while aiming to achieve low-cost operations with good control, the BOT model works best.

The Build-Operate-Transfer (BOT) model allows you to establish an offshore IT process for your organization to support your local IT infrastructure.

This article explains what a BOT outsourcing model is, how it works and what problems it can solve.

What is a Build-Operate-transfer (BOT) Model?

In order to better control operations for long-term projects, the BOT (Build-Operate-Transfer) model as defined by Gartner means “a contractual relationship in which an organization hires a service provider to set up, optimize and run an IT or business process service delivery operation with the contractually stipulated intent of transferring the operation to the organization as a captive center.”

BOT, as a hybrid model, combines elements of the “build” and the “buy” option.

To simplify, the model allows you to set up an outsourced IT infrastructure, make it optimally operational and legally transfer the subsidiary after a set period. The BOT model provides you with the cost-efficiency of an outsourced IT solution and total control over intellectual properties and technology.

The Three Stages of BOT Model Explained

Typically, it takes three to five years for a BOT model to be completely executed and transferred. The model comprises three main phases:

1) Build Phase: In this phase, the BOT service provider starts with a deep analysis of your needs. The IT outsource partner will try to understand as much about your needs, business goals, your culture, and technical requirements. Once they have enough information about your business needs, they create a comprehending plan, secure the talent, equipment, and technology needed to implement your project. Generally, this stage takes 6 to 12 months.   

2) Operate Phase: In this phase, your IT outsourcing provider will manage all daily activities associated with your project. They’ll also keep you updating about the progress and how things are shaping out. This stage usually takes 2-4 years to form a stable, optimized team and processes.

3) Transfer Phase: In this phase, your IT outsource partner is ready with the necessary teams, technologies, and processes. And the entity is ready to be legally transferred as a subsidiary to your organization. Your IT outsource partner must legally transfer the team, the technology, intellectual property, and other assets.      In short, your IT partner must:

  • Prepare and procure necessary equipment
  • Recruit, hire, and train employees
  • Establish communication infrastructure
  • Make sure all the processes comply with regulatory bodies
  • A plan for future expansion
  • Cooperate between the local and outsourced IT infrastructure

How BOT Helps

Because the BOT model is built in a way to be your subsidiary in the future, you have the legal right to use the technology, intellectual property, and all assets including infrastructure. You will inherit a well-coordinated team of professionals who’ve proven their worth over the years. This can save you the hassle of recruiting and training the staff for yourself.

Most organizations are still unaware of the BOT model and hence feel resistant toward the outsourcing scenario.

The BOT model allows you to customize an IT infrastructure that is closely related to your business, which has a positive impact on your business.

  • The possibility to build an outsourced IT infrastructure within a particular timeframe with technologies customized for your business. Other IT outsourcing solutions cannot guarantee this arrangement.
  • If your business needs flexibility, you can easily manage the offshore team to manage the tasks. BOT gives you the flexibility to move teams around depending on the tasks.
  • Relying on local IT partners is always beneficial when working offshore. The culture, language, and regulatory laws vary with each region. Having the local talent to oversee your subsidiary will help you manage everything in a risk-free manner.

Conclusion

In short, the Build-Operate-Transfer outsourcing model should be taken seriously by those looking for long-term IT projects.

BOT model helps organizations with strict compliance laws and the need to have good control over their data. It allows significant control over your assets while helping you to avoid upfront costs of the project. And the legally transferred entity will be customized to suit your business needs.

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