According to a new McKinsey Global Survey of executives, their companies have accelerated the digitization of their customer and supply-chain interactions and their internal operations by three to four years since the pandemic. Moreover, the share of digital or digitally enabled products in their portfolios has accelerated by a shocking seven years, which put even more organizations on the path of digital transformation.

However, there is a great conflict between the expected advancement and digitalization of companies and the available, talented IT experts. According to ManpowerGroup, 3 out of 4 organizations reported talent shortages and difficulty hiring, and there will be a global shortage of over 545K software developers by 2026.

It is no surprise, that organizations building software, let it be for internal use or sale purposes, turn to other alternatives, like outsourcing complete projects or working with a dedicated IT team to fill out the gaps within their team.

Fortunately, there is a new outsourcing model on the rise, which has a lot more advantages than the “traditional” dedicated team model; the Build-Operate-Transfer (BOT) approach.

In this article we will elaborate on all aspects of this fairly new option, so you will get a thorough understanding of how it works and why it is beneficial for those, who are looking to expand their IT capabilities and capacities.

What is Build-Operate-Transfer (BOT)?

The Build-Operate-Transfer approach is an ideal solution for organizations who want to expand by building their subsidiary in a foreign country, thus nearshoring or offshoring its IT operation, or for those, who indent to hire a dedicated team for more projects, but don’t want to lose the extra capacity when it has been completed.

The BOT model has 3 phases, as its name tells, which usually last for 12-18 months, depending on the requirements of the client. The essence of this methodology is that the organization contracts with a local partner, who has demonstrated knowledge, experience, and resources to quickly and efficiently build and onboard dedicated IT teams.

The local partner is responsible for mapping the technical requirements and company culture of the client and creating a local subsidiary from scratch to cover the client’s long-term needs. They find office space, hire IT team members, equip the office with hardware and build the complete software environment.

When the client is ready to take over the subsidiary and feels like the team is 100% aligned with its goals, the transfer of ownership over the foreign office together with the hired experts takes place.

The three stages of BOT

1. Build

This phase usually lasts for 3-4 months. This is when the local contracted partner rents the office and hires local IT talent to cover the client's necessities. It equips the office with all the necessary devices and creates the IT environment with adequate software solutions so that the IT team can smoothly operate on a day-to-day basis.

We also need to highlight, that the local partner builds the team in such a way that it abides by all relevant local regulations while creating other departments, like finance and HR as the foundations of the new, would-be subsidiary.

2. Operate

The operate phase usually lasts from 4-11 months, depending on how much onboarding and training the new IT team needs. This is the stage, when active team building and enhancement takes place so that the new group of experts will be able to fully cater to the needs of the client, adapting its best practices, workflows, company culture, and project management processes.

3. Transfer

This takes place around the 12th or 18th month of the cooperation. Most of the time, the date of the team’s transfer is determined in the contract, however, it can be brought forward or postponed based on the requirements and level of preparedness of the client.

The goal of the transfer phase is to smoothly shift the ownership of the subsidiary from the local contracted partner to the client, without disturbing the daily workflows of the hired experts. At the end of this stage, the client will be endowed with a completely integrated and equipped IT team, tuned to its processes and requirements.

The benefits of the Build-Operate-Transfer model

By reading about the BOT model for the first time, one might not feel a noteworthy difference between this practice and dedicated IT teams. However, there is a huge contrast if we examine it in more detail.

1. If you hire a dedicated team, you will lose the acquired know-how and experience when the project is completed, while in the case of the BOT model, you experience exactly the opposite. Your organization will be enriched by a group of experts ready to take action, wired to your expectations, and endowed with all know-how fulfilling your needs.
2. The BOT model is an ideal choice for those entry-level enterprises, that excruciatingly need a huge IT team, but cannot fully finance it then. All in all, the BOT model is not cheaper than hiring dedicated IT teams, but the most significant amount is due in the transfer phase, so the client usually has more than a year to prepare financially.
3. Building a subsidiary from scratch is a lot of effort and resources while it needs expansive field knowledge and the acknowledgment of local regulations. Partnering with a specialized local organization depressurizes the client as the contracted partner assumes the responsibility of covering all needs of the enterprise. This is why the BOT approach comes with a lower business risk than the typical outsourcing model.
4. One of the greatest advantages of the Build-Operate-Transfer approach lies in the Operate phase. Throughout these months, the local partner ensures that the hired developers and professionals are adequately trained to cover all client needs, know their business practices and goals, and are integrated into their culture. As a result, when the shift of ownership takes place, the enterprise purchases an IT extension finetuned to its needs, which feels like they have always been part of its corporate structure.
5. The pandemic has shown us that the business environment and customer behavior can change unexpectedly. This is why organizations may need to scale up or descale their IT teams in an agile way to match the needs of the market. The BOT approach is ideal for this purpose, as it is a flexible and quick way to expand the IT capacities of the company. The handover of the subsidiary can occur earlier than the deadline fixed in the contract if the client requires it.

Conclusion

With the growing scarcity of competent developers, enterprises find it more and more difficult to hire the most suitable talent for their needs, this is why they turn to other alternatives, like the fairly new Build-Operate-Transfer model. Most businesses now understand that outsourcing IT development can be a great option to expand their development capabilities or to fill out knowledge gaps within their team.

The BOT approach has many advantages over the typical dedicated team model, as the client will be enriched by a competent team, tuned to its requirements and business practices at the end of the Transfer phase. Even though it is not cheaper than the traditional outsourcing model, the Build-Operate-Transfer methodology takes off the burden of building a subsidiary from scratch off the shoulders of the client, while abiding by applying local regulations.

If you have any questions about the BOT model, or you want to enrich your organization with an extended, professional IT team based in Hungary or Central Europe, get in touch with us!