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Build-Operate-Transfer (BOT) Model: Key Components, Stages, and Challenges

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Build Operate Transfer

The Build Operate Transfer (BOT) model is an approach where a client hires an external partner, called the BOT partner, to build, operate, and transfer a product. The Technology Service Center (TSC) follows the BOT model, which is a sequential method designed to build large-scale infrastructure and technological projects.

The BOT outsourcing model is a low-risk IT outsourcing approach. It allows companies to launch and scale technical operations outside the country. An outsourced vendor builds and manages an offshore development team with BOT under their legal and operational control. The vendor sets up and runs the business process; when the process stabilizes, full ownership is transferred to the client. BOT combines outsourcing flexibility with in-house team control.

The BOT model consists of three phases: build, operate and transfer phase. In the Build phase, the vendor builds the infrastructure and implements the processes involved. In the operating phase, the vendor operates on a day-to-day basis. In the Transfer phase, the fully operating facility is transferred to the client with all the documents, training, and expertise needed to operate it independently.

What Are the Key Components of the BOT Model?

The five key components of the BOT model are given below.

  1. Build Phase Setup: The vendor establishes a functional team. It takes responsibility for the design, construction, and development of the project. Effective communication between the client and vendor is important during the build phase. 
  2. Operate Phase Management: The vendor manages the daily activities and maintenance of the process. The vendor hires and trains staff, allocates technology resources, and develops operating procedures. Regular reports are also provided to the client’s company, highlighting improvements and suggesting optimization strategies.
  3. Transfer Phase Execution: Vendor transfers all the operational responsibilities to the client. It includes the team, knowledge base, intellectual property, and tools. The transfer is made once agreed milestones are reached.
  4. Governance & Performance Framework: BOT model sets clear KPIs, reporting systems, and communication pathways to bring accountability and transparency. It assists the vendor and client to be on track with the goals, monitor progress, and maintain steady performance during the project.
  5. Legal & IP Protection Structure: This structure comprises contracts, NDAs, and intellectual property (IP) agreements to protect the ownership rights of the client. Make sure that all the assets, information, and innovations are protected throughout the partnership and even after the transfer of operations.

When Should Companies Choose the BOT Model?

The BOT model works for companies launching their operations in a new market or a foreign market, as it reduces risk and upfront cost. This model allows businesses to set up local operations through an experienced partner that handles the setup, staffing, and compliance. It is best for companies looking for global talent or long-term in-house capabilities. During the operation phase, the vendor trains the client’s future team for processes such as software development. Companies choose the BOT model to test dedicated offshore models. The company first tests the performance and then takes full ownership. It minimizes risk and reduces efforts and costs.

What Are the Challenges of the BOT Model?

Here are the 3 challenges of the BOT Model:

  1. Knowledge Transfer Complexity: Smooth Transfer of knowledge without disrupting ongoing operations is difficult. Detailed documentation, training, and coordination are required between the vendor and the client for the smooth transfer. 
  2. Cultural & Process Alignment: The differences in work culture and operational practices affect the team’s performance. Clear communication and mutual understanding are required to address these differences. It is essential for smooth integration and uniform results.
  3. Long-Term Commitment: Maintaining a multi-year business relationship is challenging. This involves financial commitment and flexibility to changing business demands. Companies failed to achieve the final result without a long-term vision.

How Do You Measure Success in a BOT Engagement?

Here are the 4 metrics to measure the success of BOT model:

  1. Time-to-Productivity: Check the speed at which a new team starts working at full potential and gives results. It shows the efficiency of the onboarding process, training, and setup.  It reflects the time taken by the team to reach expected performance levels.
  2. Cost Savings vs In-House Setup: Cost savings measure the financial advantages gained through the BOT model instead of building an in-house team. It shows the cost-effectiveness of the outsourcing model. Higher savings mean the BOT model is working well.
  3. Operational Performance Metrics: Measures key aspects such as project quality,  speed, and accuracy. These metrics show the good performance of the team. Strong operational performance shows that the BOT model is running smoothly.
  4. Smoothness of Transfer Phase: This evaluates the easy transfer of control and knowledge to the client.  A smooth transfer means that the client can run operations without any issues.