8 Reasons to Choose BOT Model for an Offshore Development Center

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Moving some of the business operations overseas is smart, considering that an average salary for a software developer in the US is $106.5k a year while in France, for example, it is only $40.5k. No wonder that such tech giants as Cisco or IBM have also transferred some of their services from California and New York in the USA to the more affordable countries like Ukraine or India. The possibilities of acquiring talents offshore are tremendous: from the good-old outsourcing to the full acquisition of an overseas company or establishment of an offshore IT services center under the same corporate roof. The latter becomes more and more popular in 2020 due to the multiple benefits this model of expansion has to offer. Read on what an offshore development center is, and why the BOT model became the top solution for both enterprise and small business enlargement plans.

What is Offshore Development Center?

An Offshore Development Centre (ODC) is a subsidiary of a company that is located offshore, i.e. in another country. Most often, an ODC is set up when the offshore country has greater talent, lower operational and living costs, and can provide the same level of service to the mother company.

Is ODC the same as outsourcing?
Do not mix up outsourcing and an offshore development center. When it comes to offshore IT outsourcing services, this means that the services are obtained from a third party, and the type of cooperation here is B2B. In this case, specific contracts need to be set up in order to have ownership rights for the software developed by such a team. The offshore IT solutions indicate that the team operates in a different country, yet it is a part of the initial business and abides by the same contracts and agreements of the mother-company. A classy example of an offshore service is when a US-based manufacturer opens a factory in China to cut the costs.

What is BOT?

There are several types of offshore development centers a business can opt for. The top three are:

A field project: business representatives travel to an offshore country and set up an offshore development company from scratch.

Acquisition: business purchases an existing company in a different country, making it a part of the current processes.

BOT: business hires a middleman offshore who sets up the offshore development team, then runs it, and in the end hands over to make it a part of the initial company.

While each option has its ups and downs, it is the build-operate-transfer (BOT) model that bears the lowest investment and operational risks. It requires the minimum involvement from the core company, and can happen in the tightest timeframe.

What Are the Stages of the Build-Operate-Transfer Model?

Before we get to the reasons why the build-operate-transfer model is among the top offshore IT solutions existing today, it is worth defining its operational processes:

Build: A local company at the offshore location is hired to analyze the original business structure and needs, then to set up all the infrastructure and the target location, recruit the employees, organize all the cooperation processes, plan the knowledge transfer, etc. This middleman team sets the ground for the upcoming offshore software development the original company is looking for.

Operate: The local company manages all the offshore IT services and processes, arranges the workspace, deals with the local regulations, plans company events, organizes development training, tracks all the processes in the offshore team. At this stage, this company is also working towards optimizing and unifying offshore operations to the mother-company rules, regulations, and systems. At the end of the ‘operate’ stage, a completely functional and independent team is set up with all the legal and daily routines.

Transfer: Once the team matures enough to join the original ecosystem, the middleman plans for the transition of this team from its control to the full supervision of the mother-company, its managers, and additional regulations. After all the preparations, the vendor transfers all the paperwork to the original company and withdraws from the process completely.

The important note here is that BOT may go without the ‘transfer’ part. Many companies remain satisfied with the operational and procedural services offered by their vendors, so they leave the supervision and control of such an offshore development company in the vendor’s hands.

Benefits of a BOT Offshore Development Team

Easiness of setting-up, managing, and acquiring the offshore IT services within the BOT is an obvious top benefit this model can bring. That is also the top reason why businesses in all industries all over the world look for offshore development company services to help with the transition. Yet, there is much more than the free hands to the BOT!

Fast ROI: Depending on the contract, a company can make its offshore team be monitored 24/7. The investments of only about 25%-30% of the in-house budget can guarantee the same profit hence making the ROI grow about 50% faster.
Risk mitigation: When a business hires a local vendor at an offshore location, they get local support and knowledge of the market. It allows mitigating risks related to such an expansion by means of the two heads, not one.
Procedural relief: The company that sets up an offshore development team does not need to worry about recruiting, real estate research, the legal side of business expansion, communication with the governmental bodies, etc. All this is handled by a local vendor.
Fixed timeframe: Once a contract with the vendor is signed, there is a fixed timeframe on when the new offshore IT services get assembled and start working + there is also a deadline for the complete transfer of the new development center to the mother-company. Such assurance allows a company to plan its upcoming steps and easily execute them without major risks.
Local knowledge: Overseas business set up requires a lot of cultural, legal, market, talent, language, and overall research to make the expansion successful. For example, in the United Arab Emirates the weekend is on Friday while Saturday and Sunday are standard working days. An offshore development company can easily provide such country-specific knowledge from the start. Such gradual adoption of the enchanted information provides a controlled process of taking over the operations in the new country.
High speed and fast results: Since all procedural problems are handled by a vendor under the BOT, a company gets a significant boost in the timeline for opening an office and getting people to work on projects. Cooperation with an expert in the local market helps to achieve much faster development of the new center and hence starting to get actual results in a more prominent manner.
Data ownership: Contrary to outsourcing, a BOT model guarantees that the original company has all the legal rights to all the offshore IT solutions (both products and services). This means that you do not have to plan complex hand-overs of the processes, set up rules for the intellectual property, protect internal data from a third-party company, etc. Moreover, the risk of white-labeling also disappears from your charts when everything is hard-protected with your own documents. Any legal disputes do not exist with BOT since the overseas team is a part of your own company.
Office termination: It is always hard to close an office in a different city, and especially if the city is overseas. With outsourcing services, there must be complex procedures in place in order to take back accesses and all sensitive data from a third-party company to ensure that all your groundwork stays with you. The BOT model guarantees you own all the data, so you do not need to pay any closing fees or carefully plan everything. It is the mother company’s decision at all times, and it requires no additional paperwork whatsoever.

Conclusion

An offshore development center is a perfect way to find new talents, expand your business, and boost your productivity. Among all models existing today, the build-operate-transfer is one of the most beneficial possibilities to set up an offshore development team and begin boosting your ROI in the shortest timeframe possible. This strategy helps with collecting the best local minds with the least managerial and cost effort involved. The help of an offshore vendor also allows for easy risk management and provides a high level of data and processes security if compared to the outsourcing model.