Today’s global economy is bridging the international gap and making many organizations who harness this change, very profitable. These organisations align themselves with the right providers at a macroeconomic level.
When companies grow, they look for ways to expand their existing operations to allow for increased throughput. The result is a careful balancing act between risk and reward.
There are numerous risks associated with expansion. An example of which, to expand through the conventional model, organizations must dedicate a portion (if not 100%) of existing skilled employee(s) to hiring and training all new recruits. This is a massive undertaking and does not factor in the likelihood of reduced output while this activity is in motion.
To reduce cost and risk, organizations turn to an offshore model where there is an abundance of human capital at reduced operational expenditures (OpEx). This is not straight forward as companies will then have to go through the lengthy, error-prone, and costly process of understanding how to find the right people, establish legal entities, and then operate under a different set of laws and customs.
The solution to this problem is a Build – Operate – Transfer model, or “BOT” for short.
Organizations leverage the BOT provider’s wealth of local knowledge to:
- Understand local laws, business environment and labor market;
- Attract, recruit, induct new skilled staff;
- Establish infrastructure; and
- Increase success percentage by utilizing the provider’s proven offshore methodology and practices.
Commercially, it makes sense by:
- Eliminating up-front Capital Expenditures (CapEx) involved with setting up a new office;
- Reducing time taken to become productive; and
- Reducing risk by providing an exit strategy to cancel the entire operation at short notice, reduce liquidating costs.
Now organizations have to find the right provider. It is absolutely critical to find the right provider that has the right expertise in delivering on BOT initiatives. I have personally witnessed many BOTs (some good, some bad) for almost a full decade now. Since 2005, I’ve been involved with internal BOT projects for a sizable company of 12,000 employees and $8.5B in annual revenues. Instead of a BOT with an offshore entity, we were building additional departments onshore which were later transitioned back into the business. In 2008, I lead the organization’s Transformation team which dedicated itself to building, operating and transferring functions back into the business. The year 2011 was a milestone year in terms of BOT velocity – we built a complete team of 55 employees in less than 6 months for an operator 13 time zones away!
All BOTs have their own unique traits but there are some commonalities. In an agreed time period, we BUILD up the platforms and solutions, OPERATE these for an agreed length of time – usually one or two years – to make sure all works seamlessly. Once the ters completes, all people, tools and processes are TRANSFERRED to the operator. This “expertise in a box” ensures operators can build up future-proof operations quickly and benefit from a pool of qualified resources who are trained and compliant in their existing mode of operation.
The fast pace environment of a BOT is very exciting and requires enormous dedication from the provider. The provider also has to be located in the correct geographic region to support the build. It is for these reasons that I truly believe Vinasource are uniquely positioned to be leaders in the BOT space.
Contact me today if you have any questions on BOTs and how they can help your organization.
Please check out my blog page at www.TimNguyen.ca to find out more information about myself.
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