The build-operate-transfer model in outsourcing

The term build-operate-transfer or BOT is usually associated with project financing, public-private partnerships and infrastructure. However, build-operate-transfer also refers to an outsourcing model. The more common outsourcing models, such as comprehensive outsourcing, co-sourcing or staff leasing, and facilities outsourcing can serve as starting points for building and operating companies’ offshore operations. When the company is ready to own, fully operate and take over the entity that was erstwhile being managed and controlled by the outsourcing partner, it can do so once it is prepared and makes that decision. The entire operation will then be transferred from the outsourcing partner to the owner company.

Companies that opt for the build-operate-transfer model have a vision to own and operate its own organization, usually in a foreign country, but would like to strengthen its capabilities first and mitigate a newbie’s risks during the start-up stage. Hence, the company undertakes a contract with an outsourcing company to build an offshore delivery or shared services organization and operates it for a set period.

During the build stage, the outsourcing company handles all administrative and legal matters, sets up the infrastructure and office spaces, and provides the personnel and other resources.

During the operate stage, the outsourcing company provides and manages services including the range of human resources services (recruitment, training, etc.), finance and accounting (payroll, expenses, etc.), facilities and IT management, quality assurance, and many more.

During the transfer stage, which may come even earlier or later than the contractual period, when the company decides that it can take on, and thus, buy the entire operation, the outsourcing company will support the transition until it is eventually out of the picture.

Some companies prefer the build-operate-transfer outsourcing model because it reaps the many benefits from having an experienced outsourcing partner to set up and manages operations for them, and minimizes the risks of venturing into a new country and market. For some, it is a clear win-win arrangement.