Build-Operate-Transfer: How an Alternative to the Traditional Sourcing Model Lowers the Risk of Transformation Projects

Although the sourcing industry is primarily known for recommending outsourcing as a solution, there are instances in today’s evolving business world in which outsourcing may not be the best answer. Whether restricted by a Board of Directors or by political boundaries that prevent the moving of jobs offshore, companies may need an alternative to outsourcing. This ISG white paper outlines the recommended phases, implementation and pricing of the build, operate and transfer (BOT) model, in which an organization uses a service provider to design and implement a service delivery model that is later brought in house.

The BOT model gained popularity in the early-to-mid 2000s as many organizations entered the world of offshore development. The model was particularly popular with software firms and banks. In fact, many of today’s largest captives owe their beginnings to a BOT. The traditional BOT model became less attractive as the sourcing model matured, service provider capabilities evolved and organizations began using multiple delivery models to achieve their sourcing goals.

Government entities, however, continue to face challenges that make the BOT an attractive alternative. Historically, such entities have turned to the BOT arrangement to minimize investment and mitigate the risk of taking on large transformation projects on their own. In today’s business world, it is a solution occasionally used among public companies that are regulated by the government, such as public utility providers. For those enterprises that choose to retain responsibility for specific operations or that need to solve what appear to be overwhelming transformational issues and have no idea where to start, this alternative model, which enlists expert service delivery help for a limited time, may be a worthwhile approach.