Sailing with BOT

Datar is talking about Hexaware, which had entered into a BOT agreement with Oracle under which it set up the Bangalore-based 8216;India Service Center8217; in 2003.

As per the agreement, Hexaware established the centre for PeopleSoft, a subsidiary of Oracle, to focus on support and development of new releases, new development, and end client implementation services of its enterprise solutions.

Recently, Oracle decided to exercise the option to acquire the centre. This would mean that infrastructure and employees of the Hexaware-PeopleSoft would become a part of Oracle by late October.

8216;8216;If the ultimate goal is to own the centre, BOT makes sense because it takes away the setting up problems and over a period of 3-5 years, the company gets acquainted with the local conditions, allows size to grow, processes get well established and then take it over,8217;8217; feels Atul Nishar, Chairman, Hexaware Technologies.

More such deals are in the offing. One of the reasons for this sudden spurt of activity in the BOT model is the need for technology-driven infrastructure across all segments.

The service gives companies total control over their expenses and management time involvement through a single window interface vis-a-vis the BOT service provider. The minimal risk, cost and time involved in gaining stability makes it an increasingly popular proposition.

Tata Consultancy Services has just procured a BOT assignment from the Ministry of Company Affairs valued at Rs 341 crore. However, this deal is to be implemented within a BOOT Build Own Operate Transfer framework.

8216;8216;The BOOT format differs in that TCS will be designing and implementing the project until roll out at all sites including certification; owning, operating and maintaining the system for a period of six years after the roll out at all sites,8217;8217; says Tanmoy Chakraborty, global head, e-governance, TCS.

However, Nishar has a word of caution, saying that 8216;8216;a BOT arrangement will only make sense if it involves at least 500 people. Otherwise it is not viable.8217;8217;

The BOT model could also prove to be a useful arrangement in the fast evolving healthcare industry.

With the looming patent expirations and rising R038;D costs, India8217;s vast pool of highly educated professionals and a significant cost advantage compared to the US, there is definitely a window of opportunity in sight, especially for the SMEs in the sector.

Hari Rao, President, the BOT group, which has clinched a BOT agreement with a US-based healthcare BPO Physician Support Systems, opines 8216;8216;Indian companies have been looking at new ways of reaching US clients and vice-versa without incurring the risky expenses involved in the initial stages.

Until now they were dependent on legal and accounting firms who have limited understanding of local clients.8217;8217;

In short, BOT is a de-risking mechanism. One that is quickly catching the fancy of middle India inc.

Recent BOT deals

8226; J D Edwards for Convansys Corp US

8226; Cognizant US for iNautix

8226; Hexaware for PeopleSoft Oracle

8226; TCS for Ministry of Comp Affairs

8226; BOT Group for Physician Support Systems US