Development team

Dedicated team and BOT team in software development outsourcing

By Ha Bui   |   July 15, 2019

As communication barriers come down and global competition grows, businesses must use their resources more efficiently than ever before. Access to a global market has driven a rise in software development outsourcing, with many clients opting for either a dedicated team or a Build-Operate-Transfer (BOT) team.

Fram^ is a leading Scandinavian-Vietnamese software development company that offers both models. While the two systems share many common traits, there are also differences between them. We will get to that, but first, let’s review defining what they are. 

What are Dedicated team and BOT team? 

  • A dedicated team

A dedicated team model is built based upon a long-term agreement between a Client and an outsourcing tech partner. The Partner headhunts specialist developers according to the Client’s needs, this team is dedicated to the Client’s project, with the Partner responsibility for the day-to-day management of the team.

  • A BOT team

The BOT model sees the outsourcing Partner also assemble a team, which then builds and operates the software within the local market. They establish the business as a legal entity, before eventually transferring the whole operation back into the hands of the Client.

Similarities between a Dedicated team and BOT team

The two models are very similar in nature, both offering some of many benefits of software development outsourcing. 

  • Enhanced development capabilities

Both kinds of teams are incubated by a software development outsourcing company and can eventually become part of the Client’s staff. Either model can cut overall project costs, meaning capital is saved for thorough testing and the procurement of high quality resources. This low-cost aspect allows companies to execute IT strategies that would be too costly otherwise.

  • Full customization and easy scalability

A custom-built team means both the software and the personnel should be fit-for-purpose for the project. A dedicated team or BOT team can be scaled up or down according to the project’s needs and crucially they should be talented and experienced enough to deliver scalable software.

  • Short-term cost and risk avoidance

By outsourcing recruitment, team management and legalities to the vendor, the Client insulates themselves against the inherent risk of these processes. They avoid the brunt of start-up costs and the high cost of building an in-house team of full-time developers.

  • Knowledge retention

If the outsourcing provider is reputable and experienced, they should be experts at recruiting, on-boarding and project management. With the knowledge that they have gained about the Client’s business and company ethos, they are able to ensure continuity for the team in terms of their shared knowledge, be it a dedicated team or BOT.

Differences between Dedicated team and BOT team

  • Long-term risk and cost avoidance

The final stage of the BOT model is the transfer of the team into the hands of the Client’s company. They will assume a greater deal of risk at this point, as they are now solely responsible for every aspect of the business’ operations. They can no longer merely abort the agreement and they must pay for the infrastructure of the company from utilities to recruitment to benefits packages.

A dedicated team allows the client to mitigate the risk of unexpected costs, enabling them to divert from or allocate resources to the project on their own terms.

  • IP capture

There can be concerns over the security of intellectual property when outsourcing to a distant land. A build-operate-transfer agreement means that the outsourcing provider can secure the IP rights while establishing the legal entity for the company. The ‘transfer’ aspect is usually based on certain metrics being hit and the business will have to be fully functional, operationally and legally, before the transfer takes place.

Dedicated team or BOT team – Which to choose? 

If a business is planning to enter a local market with their finished product, BOT model is the route to go. On the other hand, if they have changeable long-term needs, a dedicated team may be the better option, giving them their own, dedicated, virtual, extended workforce. The two models are not mutually exclusive and can be converted into one another if needs do change over time.

Geographic and strategic considerations come into play regarding the local infrastructure. Is it an area with loose IP laws or a bureaucratic web of legalities? What are the nuances of the local labor market? A partnership with a reliable software outsourcing company, who are experts in the local market can reap huge rewards for business. 

If you are ready to set up a team in Vietnam and see what benefits it could bring to your business, contact us today!

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