If you’re looking for a way to access the best talent in Latin America for your software development projects, you might be tempted to outsource them to a third-party vendor. However, outsourcing comes with its challenges, such as a lack of control over the process. That’s why more and more companies are opting for a different approach: building their nearshore development centers with the help of a regional partner. This is known as the Build Operate Transfer Model or BOT for short. In this article, we’ll explain what BOT is, how it works, and why it’s the best way to create cross-functional teams that align with your vision, values, and goals. We’ll also show you how DevEngine can help you set up your BOT center in Latin America in no time, with minimal risk and maximum benefits.
Build-operate transfer agreements arose as project delivery models in which private organizations received contracts from the government to design, build, operate, and finance capital-intensive projects. Private contractors were responsible for the entire project lifecycle, from inception to completion, and operated the project for a specified period or until they recovered their investment.
The model became popular worldwide as it allowed the public sector to offset the risks and complexities of developing critical infrastructure projects, while private parties benefited by deriving revenue from the project before the contract ended.
In IT, the BOT model is instrumental in developing fully-fledged products or assembling parallel teams. The vendor who may be a nearshore recruitment agency will create a dedicated team on your behalf. They will manage the team’s recruitment, training, and supervision. They will also take care of the legal and administrative aspects, such as finding a suitable office space and handling payroll and taxes.
The team will work on your project tasks, following your specifications and guidelines with continuous support from the vendor until you’re ready to take full control and ownership.
The BOT model offers more control compared to outsourcing development tasks to a third-party vendor as you can directly influence the hiring, budgeting, and contract duration.
The first phase of the BOT model in software development outsourcing is the build phase. In this phase, the BOT service provider works with you to design and implement a project plan that meets your needs and expectations.
Market research and the technical assessment of your objectives and challenges can be instrumental in defining the project’s scope, budget, and timelines.
The BOT service provider then recruits and hires a cross-functional team of experts that matches the project’s requirements. You can have as much or as little involvement in the hiring process as you want. Similarly, the BOT development center can be set up internally by the vendor or as a separate legal entity that handles all the contracts, assets, and leases related to the project. However, the BOT provider will still take full responsibility for managing and running the team during the build phase until the later stages when the team matures.
The goal of this stage is to end up with a fully functional permanent team that meets and adheres to your objectives. Some teams will have no issue getting off the ground and quickly filling in your development gaps. However, there are always many things to fine-tune before the team is fully ready and capable of meeting your desired objectives. It’s worth noting that the team will have its own set of challenges, but they will progressively get better as they successfully work on new deliverables and after weathering major challenges. The team should be gradually assimilated into your organization as it adopts its values and processes.
At an agreed date, the vendor may transfer the project’s ownership and management as a separate legal entity. Usually, the shift is gradual, extending for several months. As the contracting organization, you can still ask the contractor to offer technical support post-completion as the in-house team works towards full autonomy. The transfer may be optional if you still want to delegate the management of the team.
There are many scenarios where applying the Build Operate Transfer model can offer a competitive advantage:
One strong case is when you’re undertaking multiple development projects at once. Building a highly functional and autonomous sub-branch of your development team will allow you to retain the same control and unfaltering dedication to each project’s success.
The independent team will be more immune to obstacles that can derail the progress of your other teams. They can similarly work on issues and tasks that the core team has had difficulty resolving.
You can tailor the parallel team’s specialties to augment your underperforming areas, for instance, providing dedicated support to agency clients or building plugins to extend the function of your main application.
Parallel teams may come in handy when working on accelerating time-to-market. One team can handle the development in key competency areas while a secondary team can be assembled based on their expertise in other programming languages or platforms.
A BOT team may also give you the leeway and capacity you need to tap into new markets. They have the advantage of being based in a physical office location where they can hold meetings with clients. The development center can also serve as an exploratory ground that may allow you to tap into new technologies, trends, and profitable markets that would otherwise be unreachable. You can even test the market demand and profitability before committing to a full-scale operation.
Where security and secret-keeping are highly critical for project success, the BOT model may offer more confidentiality compared to outsourcing to relatively unknown and less established development agencies. You can choose to train the managers of the BOT center and ensure that they follow the company’s standards and policies.
A reliable and experienced BOT provider in LATAM can help you build your offshore team at a competitive price as if you were present in the country. The vendor has direct knowledge of the local hiring costs, average salaries, office space costs, and other expenses involved in building a high-quality team. You can provide them with your budget and goals, and they can meet your exact requirements.
The risks are significantly lower as the operator handles all the complexities of finding the right people, setting up a suitable location, and complying with local regulations. During the “Operate” phase, which is like a proving phase, the operator bears most of the risks, such as ensuring that they have assembled the right team.
The odds of project success are much higher as the outsourcing vendor is more motivated to deliver a working team. They will resolve any issues during the Operate stage, and you can create a condition of only taking ownership of a working team that delivers results.
You may reach a crossroads where you may need to choose whether to outsource your development tasks to other software companies or invest in a separate development center where you retain full control. The choice depends on your long-term investment goals. For instance, if you have a long-term need for ongoing development services at affordable rates, it’s more feasible to establish a parallel team in a nearshore location.
The team will share the same vision and commitment to the end project. You will dictate each aspect of the team’s involvement from what they work on to the tools available to them.
Working with a BOT vendor will offset the risk of building an ineffective team that doesn’t match your requirements as the team will prove its capabilities and talents during the Operate stage where the vendor can quickly react and onboard talent as needed.
BOT partnerships in IT outsourcing are prevalent in major outsourcing centers like Vietnam and Ukraine. These regions offer specialised talent at affordable rates but suffer from a few inconveniences like time differences, language barriers, and cultural incongruence.
As Latin American countries catch up in terms of offering capable developers and a friendly business climate, there is a strong case that more BOT partnerships will become a reality in the region.
There are a few reasons why you should consider LATAM countries as your preferred destination for BOT partnerships and building dedicated teams:
Build, Operate, Transfer” is one of the core services offered by DevEngine to North American companies looking for an experienced partner in the region to set up remote offices and teams to work on mission-critical projects. It’s the ideal service for organizations looking for ultimate control over their team composition, work culture, development technologies, and key competencies.
You’ll receive help assembling cross-functional teams with engineers of varying seniority levels. We can also augment the capabilities of dedicated teams by hiring other specialists, including business analysts, project managers, UI/UX designers, and QA specialists. After going through the three phases of the BOT model, DevEngine will transfer ownership of the mature team to your company.
One of our recent projects involved setting up a cross-functional remote team in South America for a client who wanted to leverage Microsoft technologies. The client faced challenges in hiring IT experts locally and procuring the services of outsourcing agents. Their objective was to have a long-term team that could work to meet their technological goals. We followed the Build Operate Transfer (BOT) model to help them achieve this.
*November Update: We are currently at the “operate” stage, with a team of 12 Microsoft consultants who are working on various aspects of the project. The “transfer” stage is still many months away, but we are confident that we will be able to hand over a fully functional and integrated team to the client.
We aim to build a highly collaborative hybrid team, using the best tools and practices, creating familiarity and rapport with the core team, and delivering high-quality results. Whether you want to build a remote IT team, augment your staff, or hire permanent employees, DevEngine has you covered. Let us handle your hiring process as you focus on more essential tasks!