Technologies are evolving at a breathtaking pace and the number of businesses that want to adopt those technologies, get digitized, and thrive through modern progress is rising.
The same evolution goes for service delivery as well. Multinational organizations, enterprises, and medium to small companies all want to gain a competitive advantage in the market and turn to software development outsourcing to adopt innovative software and improve efficiency as well as boost revenue.
With the growing demand for services, more diverse and innovative service delivery models appear as well to leverage external expertise effectively. And one of those innovative models with its growing popularity is called build-operate-transfer model in IT.
Check out this extensive engagement models ebook that will help you understand the basics of collaborating with an outsourcing vendor.
In this article, you are going to find out the essentials of BOT in IT outsourcing industry. First of all, we will give the definition of this approach, describe how it works, what are the benefits of BOT, as well as possible challenges you might encounter. Let’s get started so you know more about the build-operate-transfer in IToutsourcing and can make better and well-informed business decisions!
What is a Build-Operate-Transfer (BOT) Model?
Before we dig into all the details, let’s get started with the basic definition so you know clearly what is BOT.
Build-operate-transfer model is one of the business engagement models that imply building R&D centers in an overseas location. Usually, a trusted IT outsourcing provider takes over this process and will create a center that will function in their location.
To be more specific, an IT outsourcing provider who offers a BOT model will be fully responsible for developer recruitment, legal aspects, payroll and accounting, and other operational procedures. It’s also worth noting that the R&D office might eventually transition into the client's premises.
Outsourcing is one of the best and most well-recognized solutions that can help businesses reduce costs and improve their efficiency. Vendors offer quality services through the BOT as well as other engagement models to achieve all this.
In addition, by leveraging the build operate and transfer model in IT, companies can gain a competitive advantage as they can benefit from the market-leading expertise while delivering complex software solutions as well as acquiring exceptional service delivery capabilities.
How Does Build-Operate-Transfer Model in IT Outsourcing Work
Build-operate-transfer in IT industry is a very straightforward model. It consists of three main stages.
1. Build stage
The first phase involves a deep analysis of the client’s tech requirements and business needs. It’s crucial to understand their main vision, the end goal, as well as their company culture. Based on that, the service provider will take care of choosing the location, employing competent specialists, and providing the team with all the necessary hardware and software.
2. Operate stage
This phase is aimed at attaining safe and consistent operations while standardizing all the internal procedures and improving the processes to meet the objectives. The professionalism of a vendor will enable the client company to become more flexible, scalable, and easily adaptable to market changes.
3. Transfer stage
The last phase of engagement implies that the mature and stable operational center will be legally transferred to the client. It can be fully or partially transferred to a client including all the IP, knowledge base, team members, and assets. One of two options will be discussed and agreed upon beforehand. The success of the BOT depends on the success of the overall transition which depends on the proven track record of the service provider.
Key Benefits of Build-Operate-Transfer Model in IT Industry
Let’s take a closer look at the real advantages that BOT in IT industry can bring to businesses all over the world.
1. Reduced costs
First and most significant benefit of the BOT model is its reasonable pricing. The option of creating an R&D office with this model will be suitable for small companies that only want to grow as well as for big enterprises that want to cut down their expenses without losing the service quality. It can help you save up to 60% of expenses as salaries in overseas locations are significantly lower than in the North American market. We recommend you take a look at Eastern European service providers.
2. Minimized risks
Along with significantly reduced costs, the BOT can also minimize the potential project risks related to the services offered. The outsourcing company will take care of all the details as they are aware of the industry and they know all the local conditions of collaboration including the legal side of the process. The vendor will be already prepared to face all the challenges and overcome them without your involvement.
3. Flexibility
The build-operate-transfer model is considered a very flexible one. If a company needs that, the BOT will satisfy this need. Employees hired within the BOT model will be able to work on different tasks and switch between projects. Moreover, the collaboration between your in-house team and BOT team will be more productive and effective as outsourcing professionals are fully integrated into the project and will share the overall company culture.
4. Access to a wide talent pool
Due to a talent shortage of qualified professionals, businesses located in North America or Western Europe have faced a problem of having difficulties hiring in-house employees. The high demand for talent creates a lot of competition between employers of different sizes.
The BOT model will give you unique access to a wide talent pool so you can hire specialists with the required expertise without geographical limits. No matter what you choose — a nearshore or offshore outsourcing partner, you will have higher chances of successful recruitment of experts.
5. Facilitated scaling
The build-operate-transfer model gives an opportunity for a client to start a productive collaboration with team members right away. As the company infrastructure is completed and all team members are put to effective work, the client can focus more on scaling up their businesses while the outsourcing partner will take care of and eliminate all the possible bottlenecks. It gives more freedom to a company for business growth and development as well as plenty of room for rapid operational expansion.
6. Fast product release
Team members hired within a BOT model work on a project continuously. They are fully dedicated to the process meaning you can achieve the desired results and release your product on the market faster and more easily. Both parties are interested in a successful collaboration that’s why both of them are putting maximum effort into the quick and quality end result.
Challenges & Solutions When Using Build-Operate-Transfer Model in IT Market
As you can see, the BOT model in IT industry has plenty of advantages. However, there are some potential risks that you might face as well. Let’s take a look and the possible drawbacks:
- Offers might be rejected by candidates. If you haven’t played the offshore outsourcing game before, you have to be ready that candidates might potentially reject your job offer. Not all outsourcing providers will promote your company to be more appealing to candidates. In order to avoid that, you have to take care of employer branding as part of your collaboration strategy with offshore specialists.
- Challenges with dedication. The BOT team will belong to the offshore outsourcing provider. Therefore, chances are you will face potential challenges with employee dedication. Developers who will work for you can be confused and not fully understand who manages them and to whom to report all their progress. To make everything easy and smooth for you, make sure you take over the management process and your vendor that assists you in setting up the R&D team won’t have access to the development itself.
- Lack of operational management expertise. Choose an experienced provider who is knowledgeable in setting up an R&D office. Many IT service providers don’t know all the administrative operations details it implies. Choose a vendor with practical skills that will help you effectively.
Summing Up BOT Model for IT Outsourcing
To sum up everything that we said above, the BOT model IT outsourcing is the outstanding solution for companies who look for affordable ways to expand their teams, improve operational efficiency, and take their businesses to a whole new level.
More and more companies of different sizes opt for this specific model over other engagement models due to the big number of benefits the BOT offers. Despite some minor challenges it’s possible to face during the collaboration, this model is definitely worth considering for your upcoming projects.
Consider Intellectsoft Your Trusted Software Development Partner
If you are looking for a reliable software development partner that can help you in your digitalization journey, consider collaboration with Intellectsoft. It is a trusted offshore IT outsourcing strategies company with more than 14 years of professional experience on the market.
Our team offers a wide range of expert services, starting from software development consulting, to building a custom end product while using the latest technological knowledge and advancements.
Take a closer look at our top client cases to see how effectively we cope with business challenges and what scalable and innovative solutions we offer.
We have extensive expertise to outsource software development services across various industries including construction, healthcare, fintech, hospitality, logistics, and more. Intellectsoft has gathered the most qualified software engineers and other IT professionals to deliver top-notch results and meet all your business needs and requirements.
Feel free to contact our representatives today to get all the information regarding the terms of collaboration, to describe your project, and see the NDA agreement as well as contract samples. We are ready to skyrocket your business and implement our best knowledge and practices to build software that will transform your company.
FAQ
How does the BOT model benefit IT Outsourcing?
In outsourcing, the build-operate-transfer model has a very special place. This particular model has many advantages and that’s why it’s chosen by various companies across industries. The main benefit of this specific model is cost reduction. You will be able to expand your team and receive quality services while paying less. Another pretty important advantage is that this model minimizes all the risks related to the process of building an R&D office so you will always stay on the safe side. In addition, this approach is very flexible and scalable, and you will get access to a wide talent pool to choose from.
Is the Build Operate Transfer model in IT popular?
Yes, BOT is getting more and more popular every day due to the wide range of benefits it might offer to businesses. If you want to know more about this model in Intellectsoft then feel free to get in touch with our team and we will be happy to tell you more about the build-operate-transfer model as well as about other engagement models we use while collaborating with our international clients.
How to know if a BOT is suitable for me?
First of all, in order to evaluate this specific model and understand if it’s suitable for you, you have to clearly define your business needs and goals. It will help you see what purpose you have in the future and after that, you can think of ways that will help you achieve your plan. BOT is not the only existing model so if you are hesitating, contact us and we will give you some basic consulting to enable you to make a well-informed decision that will match your ultimate business development goals.
