Smart companies looking to expand into foreign markets are now considering the Build-Operate-Transfer (BOT) model. Companies often recognize the cost-savings opportunities and/or strategic advantages of establishing an off-shore presence. However, the task of establishing that off-shore presence may seem daunting due to the numerous risks, as well as the time and effort involved.The BOT model reduces those risks and resource drains by effectively outsourcing the start-up and initial implementation process.
Here’s how it works:
The company wishing to establish an off-shore presence (the Client) selects a BOT provider (the Provider) with expertise in the industry as well intimate local knowledge of the proposed off-shore country. The Client and Provider enter into an agreement outlining their respective responsibilities during each of the three BOT phases.
BUILD: The Provider navigates the local laws and customs and establishes a new company in the foreign country. The Client and Provider then work together to select, design and/or build out a facility there.
OPERATE: The Client outsources work to the Provider for a specified period of time. During this phase, the Provider staffs and manages the new facility and is responsible for performing the work to Client’s specifications. The Client pays the Provider for services rendered.
TRANSFER: At the end of the Operate phase, the Client has the option, but typically not the obligation, to purchase the company outright. If the Client exercises its option to do so, it then owns its captive off-shore presence.
Big Advantages to the BOT Model:
- Increased speed to market off-shore for Client
- Reduced risks of mistakes—particularly geo-political issues involved with start-up and operations
- Reduced financial risk—The BOT financial commitment is only through the operate phase, while building one’s own center from scratch would typically be a longer term financial commitment by Client
What should I look for in a BOT Provider?
- Local knowledge—Political red-tape can slow progress and cause unanticipated expense. Does Provider have the contacts and local knowledge to help you establish your presence without hassle and unnecessary expense?
- Facility selection and start-up expertise—Location selection will be the most important decision because it is very, very difficult to reverse if you get it wrong. Has the Provider selected sites, built facilities and successfully staffed them?
- Operational expertise—The Provider is going to be conducting work for the Client for a specified period of time. Do they have the expertise to execute to the Client’s satisfaction during the Operate phase?