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Home > Business > Business Headline > Report

Want a BPO? Just BOT it

Parvathy Ullatil in Mumbai | April 22, 2004 07:52 IST

If you don't want to build up or buy out, just BOT it. Multinational companies that want to enter the Indian business process outsourcing space now have a new option -- Indian companies that build, operate and transfer (BOT) a BPO.

BOT, a business model widely practised in the core sector, for toll bridges and roads, has evolved over the past one year in the BPO industry.

Under a BOT arrangement, multinationals that are seeking a BPO centre in India tie up with an Indian service provider, which sets up the facility, trains the people and runs the operation for 3-5 years after which the entire set-up is transferred to the multinational.

Among other things, the actual physical assets, technology and human resources are transferred. The transfer price and the resources that will be transferred are decided at the contract-signing stage.

"There are a number of advantages in adopting the BOT strategy to enter a certain market or region. The multinational company gets a headstart using the domain expertise of the alliance partner and can retain full control of the Indian centre without setting up a captive unit," said Sarvesh Goorha, CEO, Six Sigma Practices.

The Ernst and Young Offshore Outsourcing Survey on Indian third-party vendors says that nearly 13 per cent of Indian BPO companies have actually entered into BOT contracts.

For example, ebookers, Europe's largest online travel agency adopted the BOT route through a tie-up with a Gurgaon-based BPO company to set up shop in India. Six Sigma has carried out one of the biggest BOT contracts in India involving a large US-based insurance company and an Indian third party vendor.

Executed over the last 15 months, the project involved moving two thirds of the insurance company's customer services to various global centers. Going through the BOT route helped the company set up its operations in 3-4 months.

The main advantage of the BOT model is that the MNC client is spared the pain going through a learning curve in India. Also, all the legalities and technicalities involved in setting up and running an Indian delivery centre is taken care of by an Indian company which is familiar with the local environment.

According to industry observers, there are numerous inherent advantages of adopting a BOT strategy over setting up a captive unit or opting for a third party service provider.

These include more or less complete control of the Indian operation, no more single 'point of failure', a reduction in the high costs of IT and telecom, better security and more focus and financial muscle to engineer faster growth.

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