Build – Operate – Transfer (BOT) Model in the IT Industry Explained (Why companies like Financial Times are using the BOT model for opening new offices)

BOT is for all those companies that want to optimize cost but don’t want to impede growth. Moreover, it is for the companies that cannot find enough talent locally and this affects their business targets. To explain it better, we will talk about how it can be used for software engineering purposes but the BOT […]

by Stoyan Mitov

August 6, 2019

4 min read

adult african agenda 1089556 scaled 1 - Build - Operate - Transfer (BOT) Model in the IT Industry Explained (Why companies like Financial Times are using the BOT model for opening new offices)

BOT is for all those companies that want to optimize cost but don’t want to impede growth. Moreover, it is for the companies that cannot find enough talent locally and this affects their business targets. To explain it better, we will talk about how it can be used for software engineering purposes but the BOT can be used for almost any domain. Nowadays, we are experiencing shortages almost anywhere when it comes to IT talent but these shortages are felt mostly in the big tech hubs like London, Dublin, Berlin, Zurich, Amsterdam, New York & Silicon Valley. What these shortages lead to is an exceptionally high costs to hire a development team and even inability to do so if you have the money but aren’t a well known brand name.

In this case, the BOT model would be perfectly suitable because you hire a team with a local partner who has a great know-how about the market, can find the employees you are looking for, set up the needed processes and culture, and after you have done the investment, your company will be able to buy a team that has worked alongside you and has the know-how about your product or service. Thus you’ll retain the core knowledge about your business within your inner circle and not lose it in the classic situation where the development team is not owned by you and some of the team members are moved out of the project due to a more profitable opportunities.

What is the BOT model?

The BOT model among tech companies in the US & Western Europe becomes more and more popular. It is used for a long time by our governments. Here is a well written description by Investopedia:

“The BOT scheme refers to the initial concession by a public entity such as a local government to a private firm to both build and operate the project in question. After a set time frame, typically two or three decades, control over the project is returned to the public entity”

In the IT world BOT means that a certain company A is building a devеlopment team for another company B and after a certain period of time, company B can buy the team and own it. In the normal outsourcing/nearshoring/offshoring business, company A dedicates a team of developers who are its employees and they work for company B. They don’t become B’s employees. However, in the BOT model the employees of A become employees of B after some period of time. During the first part of the process, when company A still owns the team, company B pays company A as a regular nearshore service provider.

Benefits of using the BOT model

  1. You have an experienced partner in the face of company A who knows the local market.
  2. It addresses the fears of investing in a team that will never become employed by you.
  3. You can share sensitive information with the team, knowing that you have the option to buy it
  4. You will not have to do any recruitment or invest in building processes or team culture.
  5. Company A is motivated to build a great team, set up the right processes and team culture so that you would want to buy the team.
  6. You would be buying a proven team. One with whom you have worked and one who is productive from day one after the trade.
  7. You can plan its future cost because the price of the team is normally per developer.
  8. You always have the option not to buy the team but to continue to pay as normal outsourcing services. However, if this happens normally the prices go up because Company A has given discounted prices due tо the potential income from the sale of the team.

Drawbacks

  1. You pay as much as normal for outsourcing/nearshore/offshore services while the team is working for you but is employed by A.

Success Cases

Some recent success cases for BOT are the teams of Ocado, FT and News UK in Bulgaria. The Financial Times’s new team built in Sofia, recently reached 75 staff and is growing.Below is how they describe the build-operate-transfer model:

“In IT offshoring, Build Operate Transfer (or BOT) describes a relationship in which an organisation hires another organisation as a service provider to set up and run an offshore operation, with the intent of transferring the operation to the organisation as its own offshore facility in the near future”

A German media corporation is another huge company for whom Dreamix, an angular development company & BICA Services are now building a team of 20-60 people under the BOT model.

 

Blogger at JAXenter, business development director at Dreamix, co-founder at Grajdanite.bg and active sportsperson by passion.