BOT or the new outsourced IT model

BOT (build operate transfer model) of IT Outsourcing allows to establish an overseas IT subsidiary for a business at greatly reduced cost and risk

What is a Build Operate Transfer (BOT) Engagement Model?

Devised to allow greater operational control and further overseas expansion, BOT (Build Operate Transfer Model) has been defined by Gartner as: “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. B-O-T, as a hybrid model, combines elements of the “build” option (that is, “insourcing” or captive center) and the “buy” option (that is, outsourcing; see also “captive centers”).”

In plain language, although it involves an external IT provider, a BOT-based software development arrangement emulates the relationship you would have with an overseas subsidiary of your own. The outsourcing partner sets up your nearshore or offshore team, brings it to a fully operational level, and then legally transfers the subsidiary to your company after a set amount of time. This model gives you the cost and efficiency of traditional IT outsourcing while allowing you to maintain full control of your intellectual property and proprietary technologies.

How Does It Work?

Generally, it takes a BOT service provider around three years to complete the set-up and transfer of your fully operational nearshore or offshore IT subsidiary. The process is comprised of three main phases:

1. Build Phase — This phase kicks off with an in-depth analysis of your specific requirements. The outsourcing partner should try to learn as much as possible about your business goals, project, technical requirements, and company culture. Once your requirements are fully understood, the outsourcing partner will secure the talent, dedicated office space, equipment, and technologies needed to execute your project. On average, this phase can be completed within 2–3 months.
2. Operate Phase — During this phase, your outsourcing partner fully manages all the day-to-day project-related operations. They do so in alignment with your project needs and goals and should continually keep you updated about the progress. This should include regular daily, weekly, monthly, and quarterly communications, as well as the required project-related reporting. Often, they are also positioned to provide HR and professional training support to your team. This phase generally lasts for 1–2 years to achieve a stable and fully operational development team.
3. Transfer Phase — At this point in the engagement, your fully operational development team is ready to be legally transferred, in its entirety, as a foreign subsidiary of your organization. The outsourcing partner will transfer 100% of the operation, including your intellectual property, employees, knowledge base, and assets.

In summary, your BOT (Build Operate Transfer) outsourcing partner’s support will include the following activities:

• Procurement of office space and the required facilities
• Legal registration of the business in the foreign country
• Recruitment, hiring, and training of employees
• Set up of the communications and technology infrastructure
• Ensuring adherence to the selected project methodologies
• Knowledge capture planning for the future transfer
• Coordination between the different offices/geographies

What Are the Advantages of the BOT (Build Operate Transfer) Outsourcing Model?

The build operate transfer engagement model offers a host of clear-cut advantages that can provide tremendous value to your business.

• The ability to acquire the entire offshore or nearshore development operations within the agreed-upon timeframe
  With BOT, it’s contractually guaranteed that your external outsourcing arrangement will become part of your business within the stipulated timeframe. This arrangement cannot be ensured using any other IT outsourcing engagement model.
• The availability of local knowledge
  Local knowledge is paramount in all matters that take your business overseas. And venturing into an uncharted territory unprepared is a major business hazard. The culture, laws, language, and ways in which government institutions and businesses operate vary greatly from country to country, especially in less costly developing nations. In this sense, relying on an experienced local IT partner is one of the best ways to establish your presence in a new country. You’ll have a chance to gradually acquire all the information needed in a controlled and nearly risk-free manner before you take on the responsibility of your overseas IT operations on your own.
• Flexibility to leverage your offshore team if the business needs change
  BOT is significantly more suitable for insourcing purposes and gives you much more flexibility in leveraging your resources should a considerable change in your business occur. Put simply, BOT gives you the flexibility to switch your nearshore or offshore team to different projects or tasks when required. It may also be easier for a BOT-based team to work together with your in-house resources, enhancing the speed of delivery and quality.
• Greater control over your overseas operations
  BOT ensures that you have the maximum control possible over your offshore or nearshore team.
• Greater alignment with your corporate culture
  Although, when done right, the dedicated team model allows for a high level of alignment between your outsourced team and your corporate culture, the BOT model allows you to take this alignment to an entirely new level.

Bottom Line

In conclusion, BOT is an IT outsourcing engagement model that should be seriously considered by any company looking to establish a long-term IT and software development team in nearshore or offshore location. This model is also particularly suited to companies with strict data, intellectual property, and other regulatory and compliance requirements that are best protected in-house. BOT enables enhanced control over your remote resources and assets while allowing you to avoid significant upfront costs associated with establishing nearshore or offshore IT and software development facility on your own.