Implementing an IT outsourcing strategy has been one of the most popular approaches for businesses to streamline their daily operations and drive innovations. Among many diverse outsourcing models available, the build-operate-transfer model has emerged as an innovative solution for companies looking to establish and manage development projects by collaborating with an external party while retaining control over the process and outcomes. Learn more about the build-operate-transfer model in IT outsourcing and its benefits for your business.

What is Build-Operate-Transfer in IT Outsourcing?

Build-operate-transfer (BOT) is a strategic project model in IT outsourcing. In this model, a company hires an outsourcing provider to establish and operate its IT business operations. At the end of the project, the operations are transferred back to the company with full ownership. The build-operate-transfer model is suitable for new companies that need to establish a robust IT infrastructure and teams quickly to support their growth or for businesses that want to expand to new regions and require local IT experts.

For example, a company uses the build-operate-transfer model in IT outsourcing to establish a software development center. In this case, they hire an outsourcing partner to recruit the developers, set up the infrastructure, and manage the center for a certain period. Eventually, the company will assume ownership and management of the center.

How Does Build-Operate-Transfer Work in IT Outsourcing?

Implementing the build-operate-transfer model in IT outsourcing system consists of three phases: build, operate, and transfer. Each phase is crucial to meeting all technical and operational requirements. 

Build Phase

The build phase is the initial stage of the project, during which the outsourcing provider conducts market research and discusses aspects such as goals, technical requirements, project scope, timeline, budget, and any other considerations. In the build phase, the outsourcing provider will set the foundation for the build-operate transfer of IT outsourcing. It involves forming a team, renting an office space, and setting up the infrastructure tailored to the client’s project requirements. 

Operate Phase

During the operating phase, the outsourcing provider will start executing their responsibility for day-to-day operations as per the agreement. The IT outsourcing provider will ensure the project results and operations meet the client’s requirements. This includes managing project development, operations reviews, and assessments to enhance team performance and project results.  

Transfer Phase

The transfer phase is the final phase, during which the project is over and will be handed over to the client with full ownership. The outsourcing provider will transfer all assets, including intellectual property, business technology, operational knowledge, and team members. The transferred assets will be integrated into the existing structure in the client’s company, ensuring continuity and alignment with the corporate business goals. 

Build-Operate-Transfer Model vs Traditional IT Outsourcing: What Are The Differences?

The build-operate-transfer model is an alternative to traditional IT outsourcing. While both are essential for optimizing operations, they also have their characteristics for managing IT processes.

Build Operate Transfer Model

In the build-operate-transfer model, a company contracts an outsourcing service provider to develop and manage projects for a predetermined period. Eventually, the project and its components are transferred to the company. The project is handled with a clear timeline encompassing three phases: build, operate, and transfer. 

When the transfer phase is completed, the company will take over the operations independently. The build-operate-transfer model suits companies seeking to optimize their operations with IT outsourcing while retaining control of their projects and assets.

Traditional IT Outsourcing

Traditional IT outsourcing involves hiring an outsourcing service provider to fill a role outside a company’s core activities, such as managing IT infrastructure or providing customer support. Compared to the build-operate-transfer model, the outsourcing provider ultimately controls the quality of the service and how the work is handled. A service-level agreement is created to define how the two parties work together. This arrangement can be long-term without any intention to return the control to the client.

What Are The Advantages of Build-Operate-Transfer in IT Outsourcing?

As companies seek better alternatives to optimize their operations, the build-operate-transfer approach might be one of the appealing choices for businesses. There are several advantages of implementing the build-operate-transfer in IT outsourcing:

Cost Savings

Managing operational costs effectively is essential to supporting business continuity in daily operations. Although the initial setup cost for the build-operate-transfer is relatively high, the long-term operational costs will be lower and more beneficial for the long-run business. The outsourcing provider also offers efficient processes and expertise, leading to more efficient and cost-effective execution.

Risk Reduction

Another advantage of the build-operate-transfer model is that it reduces uncertain risks, as the outsourcing service provider will take on the initial risk during the build phase. This includes financial risks and market uncertainties. The IT outsourcing provider’s talents are also experts with proficient knowledge and experience in their field, which will eventually decrease the potential risk during operations.

Access To Wider Talent Pool

Some companies face challenges in getting talent with specific expertise, especially if they plan to expand their business to a new country. This means they must have expertise and deep knowledge of local market trends. However, they can tackle this by collaborating with local IT outsourcing providers to quickly access a wider talent pool and accommodate businesses’ needs to build their presence in a foreign country.

Control Over The Processes

Despite hiring third parties to build and manage the project, the company can still retain control over project management and operational processes throughout the partnership. This is often unachievable in traditional outsourcing approaches. After the project is concluded, the company will receive a team with a complete understanding of the project and perfectly aligned with the business processes. 

Tap into Indonesia’s IT Talent Pool with PhinCon’s Strategic IT Outsourcing

Some companies might struggle to find the right local IT talent to support their expansion into a foreign country. In this case, access to skilled IT talent becomes a critical factor. PhinCon is a strategic IT outsourcing partner in Indonesia that connects companies with Indonesia’s vast IT talent pool. Now, PhinCon extends its support as PhinCon Pte Ltd for Singaporean companies that need Indonesia’s IT experts to facilitate business expansion in Indonesia. 

PhinCon Pte Ltd provides comprehensive IT outsourcing solutions tailored to your specific needs. Some of our services include complete BPO solutions such as contact center and other customer support functions. We also provide access to a vast pool of highly skilled IT professionals in Indonesia. We ensure that we help you scale your operations efficiently while we take care of recruitment, payroll, benefits, and tax compliance according to Indonesia’s regulations. For more information about IT outsourcing services by PhinCon Pte Ltd, contact us through email sales.sg@phincon.com.  

Editor: Cardila Ladini