In Build-Operate-Transfer (BOT) for a software team, a vendor recruits and runs a team in India under its own entity, then hands the team and the entity's work to you on terms set at signing. The first contract has to settle three things: when the transfer happens, what it costs and how it is carried out. Leave one open and you have an outsourcing arrangement with an option attached, to be priced just when your bargaining position is weakest.
What to fix at signature
| Term | Fix it as | If it stays open |
|---|---|---|
| When | A calendar date, or a trigger such as a passed readiness review | The vendor gains by delaying |
| Price | A formula or a fixed fee | The team knows your systems, so the price climbs as your need grows |
| Method | Share sale, assignment of assets and contracts, or a new entity, with each step named | The final quarter goes on arguing about structure |
Ask to read this clause before any other part of the contract, and have your lawyer and your finance lead review it together. A supplier who is happy to fix it has shown you how the relationship will run.
Stage 1: Build
The vendor recruits people, brings them on board and stands the unit up inside its own company, with its own licences and premises. What you buy is speed, because hiring in a market where you have no legal presence is the slowest part of starting alone.
Insist on two things:
- You interview and sign off every offer. Without that, the people who later join your company are simply whoever was free.
- The set-up anticipates the transfer. Organise systems, accounts, documents and access from the start so that handover is a change of owner, not a reconstruction. Doing this late costs programmes many weeks.
Work is done in your repositories and under your accounts from the first day. See what to know about offshore engineering, security and IP.
Stage 2: Operate
The team works through your roadmap while the vendor handles payroll, compliance, premises and staff turnover. The benefit is earned in this stage, and the transfer is either made possible here or quietly made impossible.
The difference is whether anyone measures readiness. Scheduled reviews against criteria agreed at signature make the handover a state you can track, not a judgement call in the last quarter.
Four criteria are worth agreeing:
| Criterion | Evidence |
|---|---|
| Someone outside the team can run the systems | A runbook that a newcomer has followed once, unaided |
| No one person holds a critical area alone | Every critical area has a second person who can cover it |
| Leadership exists on site | A named lead who already does the job before transfer |
| Statutory and payroll tasks are repeatable | Written procedures and a calendar of filings |
Report against them quarterly. A criterion that stays red for two reviews triggers a conversation, not a surprise.
Stage 3: Transfer
Transfer day splits into five separate streams. Plan each one.
- The entity. You incorporate your own Indian company. The MCA's integrated SPICe+ form, launched in February 2020, bundles incorporation, a director number, PAN, TAN and registration with the provident fund and state insurance bodies, according to the PIB announcement. Check the current form on the MCA portal.
- Contracts and assets. Client agreements, licences, equipment and leases move by assignment. Make a list during the operate stage and update it every quarter.
- People. Each person receives an offer from the new employer and accepts or declines. Moving the company does not move people on its own, so take advice from an employment lawyer on the route.
- Data and access. Cloud accounts, repositories, domains and credentials sit under your organisation by the end of stage 1, and the transfer only confirms it.
- Registrations and filings. Payroll, provident fund, tax and the labour registrations for the new entity need to be live before the first salary run.
Retention through transfer is a design problem. Decide when to tell people, what the new entity offers and whether the role reads as a step up. A transfer that completes legally and loses the team has delivered the paperwork and none of the knowledge.
After the transfer, or instead of it
Keep the transfer an option. The roadmap that justified the team can be cancelled, the parent can be acquired, strategy can change.
A sound agreement lets you prolong the operate stage, or move to a regular engagement, at a price set beforehand. Optionality that can be exercised in only one direction is not optionality.
When another model fits better
Apply three tests to your own case:
- The capability may be temporary. An entity takes effort to set up and to close. Begin with an offshore delivery centre and add a transfer option later.
- The team is small. An entity's fixed costs weigh heavily on a few people. A dedicated pod or a delivery centre gives the same delivery with less overhead. ODC, staff augmentation, BOT and GCC compared shows where each fits.
- You would rather not run a company in India. BOT leaves you owning one, with payroll, filings, premises and employment law to manage. If you would rather not, a long-running delivery centre is a sound end state.
The question to ask first
The deciding question is whether this team should still be yours in five years. If so, BOT offers a destination that other models lack, and the guide to opening a captive centre in India covers the direct route. If you are unsure, start with a delivery centre and decide later. Moving up in commitment is simple. Moving back down is not.
Public-sector use
Public bodies often want a capability in-house but lack the staff to begin. BOT answers the question an evaluation committee will ask about who runs the system after the contract. See software procurement under GeM and GFR for the tender rules.
Before you sign
- Transfer date or trigger written in.
- Transfer price or formula written in.
- Mechanism and its steps named.
- Readiness criteria and review schedule attached.
- You approve every hire and every offer.
- Source, documents and accounts in your name from the first day.
- A retention plan for the transfer, with a date to tell the team.
- A clause to extend the operate stage or stay on a standard engagement.
- A statement of who bears statutory liabilities until transfer, and the notice and exit terms for both sides.
Questions teams ask
Who employs the team during operate?
The vendor, under its own entity. You direct the work and approve the hires.
What does the transfer cost?
Whatever the contract says. Insist on a formula or fixed fee at signature, since a price set later is set by whichever side has the stronger position.
Can we stop before transfer?
Yes, if the agreement says how. Ask for the exit terms in the first draft.
Where Brihat fits
Brihat Infotech's Build-Operate-Transfer service puts the terms of transfer into the first contract. You approve each offer, and you can carry on as a standard engagement without penalty if you choose not to transfer. Start a conversation.