Outsourcing options Build-Operate-Transfer

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Outsourcing options Build-Operate-Transfer

Introduction
Companies in developed economies are increasingly looking at offshore suppliers for a variety of IT tasks. This is driven by the availability of highly talented and experienced developers in countries such as India, who are available at significantly lower costs as compared to local IT resources. As more and more enterprises turn to offshore service providers for in-house IT needs, competitive pressures are forcing others to seriously look at the offshore alternative. This is how Gartner describes the offshore outsourcing of IT services: It's big, and there's no turning back. Everybody is either doing it, planning to do it, or should be doing it. Traditionally, there have been two options for U.S. based companies trying to adopt offshore services: engage a vendor who offers offshore services, or set up their own facility. While most companies tend to test the offshore waters with a small project or two, some take the direct route by setting up their own dedicated development centers in their country of choice.

Challenges of setting up an ODC

There are many challenges for organizations trying to set up their Offshore Delivery Center (ODC) by themselves. Here are some of the salient critical success factors for building a successful ODC: Structuring the administrative and infrastructure foundation Finding the ideal location and setting up the operational infrastructure requires a local, qualified, trusted, and experienced team who has developed relationships with reputed local vendors. A tested and proven infrastructure that can scale and support the current and future objectives of the ODC is mandatory. Understanding the human resource maze With the IT boom in India (and other hot spots for offshore talent), recruiting and retaining staff is a major challenge. Foreign workforce culture, compensation packages, and employee career paths differ from that of the US. High turnover is detrimental to the seamless delivery capabilities of the ODC. Strong HR team and processes are critical to successful ODC operations.

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Outsourcing options Build-Operate-Transfer

Understanding of local laws and government bureaucracy Setting up an offshore subsidiary requires an experienced and trusted local network to navigate the bureaucracy and manage legal intricacies. Defining and implementing the delivery methodology Due to the need for remote management and the time difference, additional emphasis is required for planning, coordination, and communication. Tested and proven productivity oriented processes are required for a successful ODC.

What is BOT?
The BOT (Build, Operate and Transfer) solution offers an engagement model that allows clients with interest in potentially owning and operating their own ODC to undertake the process in phases. This phased approach allows an organization to evaluate the effectiveness and benefits of owning an ODC before undertaking the risks and costs associated with starting and running their own ODC. The three key phases of the BOT model are: 1. Build In this phase the offshore team is set up 2. Operate In this phase the BOT partner operates your offshore team to execute live projects. 3. Transfer In this phase, the BOT partner, sets up the foreign subsidiary and transfers all resources to the client company.

BOT Advantages
This model yields consistent, high quality, and cost effective results as it offers the option of quickly starting-up an offshore subsidiary with expert operational managers in an established and proven infrastructure. Key benefits include: Minimized upfront investment During Build and Operate, there is minimal investment as operationally these phases are identical to conducting offshore project execution on a T&M basis. Companies can

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Outsourcing options Build-Operate-Transfer

test the offshore waters prior to committing to a Transfer that requires long term, resources and financial commitments. Minimized management involvement In BOT, the offshore partner is responsible for all management and operational issues. Additionally, the offshore partner is responsible for ensuring timely and quality delivery of products. Transferred team is an operational team The offshore partner builds and operates the team so clients need not address organizational training requirements and transfer issues. A fully integrated and functional turn key team is available when specified by the client. Exit Strategy Compared to setting up your own ODC, the BOT model allows a low to no investment exit option.

What should you look for in a BOT partner?

BOT is a minimum of an 18 to 24 month relationship, and choosing the right vendor is critical in meeting your technology, business, and financial objectives. The BOT partner is your feet on the ground in a foreign country and their credibility and maturity is crucial to the success for this initiative. According to a leading outsourcing research institute, the top five criteria for choosing a vendor are: References/Reputation Once you get into a BOT engagement, the partner company will drive your offshore delivery center towards success. Hence, their credibility and reputation are very important. Commitment to quality The partner needs to understand your quality needs and implement robust processes that meet your quality standards. To enable this, your partner must have mature processes themselves and must have executed similar software development projects.

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Outsourcing options Build-Operate-Transfer

Access to qualified resources IT is a resource intensive industry. Access to resources that fit your needs and culture promotes excellence while maintaining cost, time, and quality benchmarks. Flexible contract terms A BOT engagement is a relatively long engagement. Your BOT partner must be flexible to let you change your strategies to re-align with your changing business focus. Competitive cost structure Cost is one of the critical factors that made you think about offshore! Your BOT partner needs to be able to provide competitive, flexible cost structure that enable quick ramp-ups and provide incentives during the initial build phase.

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Outsourcing options Build-Operate-Transfer

About AgreeYa Solutions

Founded in 1999, AgreeYa Solutions is a fast-growing business and IT consulting firm, headquartered in Folsom, California. AgreeYa was recently named the 5th fastest growing company in the Sacramento metropolitan area by the Sacramento Business Journal. AgreeYa specializes in managing the full life cycle deployment of IT solutions, creating next-generation IT competitive advantages, and leading transformational business initiatives. Our unique approach, emphasizing IT AgilitySM, enables our clients to better respond to rapidly changing business needs and meet managements demands for return on IT spending, while maintaining focus on their core business.
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