BOT model and its popularity
Introducing the BOT model
The Build-Operate-Transfer (BOT) model is a way to build international teams through a local partner, especially in the IT field. The team is transferred from a supplier to the parent company when both parties are ready. Build-Operate-Transfer is used as an alternative to expanding existing internal software teams or outsourcing development partners.
The characteristics of BOT that make it so attractive are the following:
- Opportunity to rely on a local partner with proven experience
- Reduced risks for the parent company
- A team of developers with a greater depth of understanding of the business and its culture (against an outside team)
BOT - the main options
There are basically two ways to approach the transition to the Build-Operate-Transfer model.
The first option is for the local partner to set up a subsidiary and, after some time, sell it to the parent company, transferring ownership when the parent company is ready to take over. The benefits of this option are the following:
- Ownership of the entire subsidiary is quickly transferred in one step when the parent company wishes.
- Provides a seamless transition for teams, suppliers and customers.
The second option involves setting up the subsidiary at a later stage. It is created when the parent company wishes to make the transfer. The advantages of this option are:
- The initial risks are reduced for the parent company, which allows them to test the offshoring model.
- Less organizational work in the beginning (more at the time of transfer to the parent site).
The three stages of the BOT model
The Build-Operate-Transfer model can be divided into three stages, each of which leads to an approach to the goal of creating a team abroad.
- Build - building the team, ensuring that it is ready to work successfully and has its own back-office support / human resources, finance department, etc./
- Operate - management of the subsidiary in cooperation with the parent company. Ensure that the team is well integrated and tailored to the needs of the parent company.
- Transfer - Transfer control and ownership of the team to the client when ready.
If the Build-Operate-Transfer model sounds like the right solution for you, you're likely to ask yourself, "Where do I start?" To help you, we will list 8 main topics to discuss with your chosen local BOT service provider.
1. Coordinating the objectives and scope of work - define the framework of the project as an idea of the objectives and scope. In this way, long-term goals can be identified, along with the necessary roles and opportunities. These are the foundations for the overall course of the project.
2. Defining processes, organizational structure and management - this step establishes the future structure of the project and makes it accessible. These include:
- The role of the team abroad;
- The size of the team in relation to the overall project;
- Terms and stages;
- Details of the services or products you develop;
- Investment and budget specifics
3. Creating a local subsidiary - here you have the flexibility, as this can happen at different stages of the process.
4. Setting up an office and back-office - Having a physical presence abroad requires compliance with local laws, so it is prudent to choose a reputable local partner to set up your office and manage back-office operations (ie management, administration and office space).
5. Selection and team building - Finding the right employees is the basis of the project. Usually, the client has the last word in choosing the accounts, as he can have and as he can keep control over the salary levels.
6. Collaborative team operations - In the course of the work it should be monitored whether the processes and the structure need adjustments. Effective communication in your organization is essential, as is a cooperation between the parent, the BOT provider and third parties (ie accountant, office landlord, salespeople).
7. Regular reporting, including audits - Operations are already underway and the intermediate results of the new team are beginning to be seen. At this point, regular feedback, timely and accurate reports and audits are important as a way to meet company requirements so that all participants have an idea of the progress made.
8. Transfer planning and execution - Includes proper inspection, preparation of documents and familiarization with all operations performed by the provider. Make sure everything is clear to the team that will take over the operations.
The time frame of the BOT model
The transfer of ownership of the enterprise usually occurs after 12-18 months, but you must be careful about the emergence of critical stages. During the first 3 months, you usually start by recruiting staff and opening an office with employees. Within the operational stage (4-11 months) the number of employees increases, in accordance with the specifics of the plan. Months 12-18 are mainly focused on the model transfer phase, where the local site and teams prepare to be handed over to the main plant.
The benefits of using the BOT model
The BOT model can allow you to adjust your local operations earlier (2-3 months compared to 6+ months for organizations that continue on their own), reduce risks and build a solid foundation for further growth of your offshore team. Some of the main benefits are:
- access to a network of trusted local partners
- improves the time-value ratio
- reduced risk of establishing and operating a company abroad
- minimizes pre-transfer effort
- access to additional services
If you are interested in implementing the BOT model or are looking for alternatives to outsourcing, contact us to learn more.