Sean Egan is often quoted in Indian business media these days. It would be mighty unfashionable to ask Sean who? In Egan, CEO of Aviva Offshore Services, the India BPO, Inc., has found one of the best proponents of their cause as he regales about the competencies available in the country, in all forums.

Well, that’s not the only reason why Egan is in news these days. He is also spearheading one of the most talked about experiments in the BPO world today-the BOT model. BOT (Build-Operate-Transfer) has triggered a lot of interest and raised many questions of late. Answers, admittedly, are available to only a few of those questions.

For one, the moment one raises the topic, the first question that many ask is what do you understand by BOT? Fact is that there are many variants of the model. While conceptually it means that you leverage on the relationship of a partner which could have any name-BOT, Assisted BOT, BOOT, BOLT, BTO, JV-the difference lies in the nitty-gritty of the arrangement and the exact equation between partners.

Second, despite generating so much of interest, there are hardly any BOT deals that come to mind. Besides, Aviva’s well known experiment with its three vendors, Lloyds TSB is the only other BOT deal known in the industry.

Defining BOT
Typically, BOT means that the client owns the facility, while the third-party vendor builds the facility, hires the employees, gets the operation running for a certain period of time (usually a period of 3-5 years) and hand over the operations to the client after the said period. During the contract period, the vendor and the client work closely with a senior client representative monitoring the operations. At the time of the transition, the vendor is suitably compensated.

In the BPO industry, the model assumes significance. India has established itself as an offshoring destination. Everyone wants an India presence fast. This holds true for many companies who have considered outsourcing for the first time let alone considered offshoring. Therefore, it is not easy to step into an unknown land on one’s own without the aid of a partner. Admittedly, partners could be from consultants to third party service providers. But what about those companies who still want to own their operations at the end of the day. For companies such as these, finding a partner who would hand-hold the company in the early days, BOT is the ideal model.

Going by this definition, Aviva’s experiment with the three vendors EXL, 24x7, and WNS qualifies unequivocally as a pure BOT model. All the three vendors have set up Special Purpose Vehicles for Aviva to effect a smooth transition. (EXL’s Pune center is dedicated to Aviva, WNS has centers at Sri Lanka and Pune and 24x7 has a dedicated center for Aviva at Bangalore)

Aviva owns the facilities while the three vendors have set up operations and have taken the onus of hiring and training. Of course, Egan and his team of 20 people closely monitor the work from their base in Pune. After the specified time-frame of 3-5 years, when the transition is effected the operations will be handed over to Aviva along with senior executives who have been identified in the contracts, although Egan hedges the issue of senior manpower.

The other popular model in India is the Assisted BOT in which the Indian vendor sources the infrastructure and does some preliminary hiring. For instance, Hexaware set up the infrastructure for Exult when it came to India and ICICI OneSource hired about 100 employees for Prudential and allowed them to use their facilities for a while before Prudential got its business running on the ground.

Although these instances exists, it is not as easy as it sounds. There are many concerns on both sides of the table. Which is why we do not see so many deals in the BOT space today.

Why BOT?
There are many who actively propound the model both on the third party as well as the client side. On the client side, the obvious gain lies in that it significantly reduces the learning curve in a foreign land. It helps the company to have its operations quickly without grappling with the laws of the land, and wasting valuable time in deciding strategic issues like selecting location, hiring, and training employees. For companies in a hurry, to offshore and achieve significant scale without bearing the risks BOT is a godsend.

BOT SERIOUSLY!
P.V KANAN CEO 24/7 Customers	VIKRAM TALWAR CEO EXLServices	NEERAJ BHARGAVA CEO WNS
Even as the model is being debated by many, a few pioneers have taken the plunge

Perhaps Egan puts it more eloquently, “The idea was to get experts on the grounds and allow them to address issues in which we have less exposure like the regulatory regime, finding the right infrastructure, hiring talent, and training them. We closely monitor the work of our suppliers and learn from their experience in addressing issues like wage inflation and attrition which I think they are doing very well.”

For the third party providers, there are many gains. For one, there is a guaranteed revenue stream for a fixed period of time. Vendors love predictability and in a highly competitive market, if that can be achieved for a fixed period, it gives enough breathing space to develop other businesses. Says Sanjiv Kapur, GM and Head of BPO operations at Patni, who has done one BOT deal with a leading UK-based BPO player “BOT is a good option for a vendor because it makes your business that much more predictable with a guaranteed revenue stream for a specific period of time.”

At the same time, Kapur reiterates that the fixed period has to be at least three to five years, otherwise, it does not make the deal viable. Industry estimates also put the minimum period to be at least 24 months for any deal to be mutually beneficial.