Build Operate Transfer - What Type of Outsourcing is Right for You?

A changing global marketplace has caused US companies to look at offshore outsourcing as a viable business solution to corporate needs. Benefits such as cost-savings, riskavoidance, and resource flexibility and expertise make outsourcing an attractive option that many companies are already leveraging in their business today..

TEAM International produced a white paper examining four key relationships that companies can establish with offshore vendors. These are:
· Tactical Outsourcing – Project based
· Offshore Development Centers (ODC) – Dedicated team of resources
· Build-Operate-Transfer (B-O-T) – Eventual ODC ownership
· Do-It-Yourself ODC – Establish company owned development center

While each of these relationships carries inherent advantages and limitations, companies who are planning within a three to five year window, could strongly benefit from an ODC or B-O-T relationship.

Based on the needs of your business, and time horizon on which planning takes place, each of the four relationships can apply. For companies looking to establish longer-term solutions or flexible pools of resources, and ODC set-up can provide a cost-effective and predictable solution.

The key difference between an ODC and a B-O-T relationship is the future transfer of ownership of the ODC operation. With B-O-T, the offshore vendor will establish the team, infrastructure, and operations, and then transfer the entire set-up back to the client company who will own, operate and integrate the ODC into their corporate culture.

B-O-T means offshore vendors will provide all of the logistical planning needed to establish a global presence; including:
· Office Space / Facilities
· Corporate registration / Legal Creation

Offshore vendors can provide the local and cultural knowledge needed to establish a global subsidiary on behalf of client companies. A B-O-T relationship allows the client company to focus on their core competencies, while the offshore vendor provides all of the logistical planning needed to establish the offshore ODC. At the end of a period time, or as defined metrics are achieved, ownership and operation of the ODC is then transferred to the company. Once this transfer takes place, the company is able to streamline the operation into its own processes, and enjoy the benefits of a trained, experienced team, ready to engage.

Companies who decide to adopt the B-O-T approach should expect to benefit in the following ways:
· Short-term cost efficiencies – as the vendor bares the start-up costs
· Short-term risk avoidance – as the vendor bares initial risk
· The highest controls on quality deliverables – the client defines metrics for success
· Effective ability for knowledge transfer and capturing IP for future use

For many new companies considering offshore outsourcing of business processes, a key concern is the lack of control over intellectual property. As the marketplace continues to become more competitive, maintaining IP and protecting proprietary assets will continue to rise in importance. For these companies, selecting a B-O-T relationship over an ODC scenario will ensure IP is captured and maintained, as the “transfer” of the operation guarantees IP capture and ownership.

Full white-paper is available in PDF.