Build Operate Transfer

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Updated October 8, 2026

• EU and UK transfer rules stop at their borders The Acquired Rights Directive and both TUPE limbs turn on where the business or grouping being moved is situated, so neither reaches a Kyiv team that is itself that business.
• In Ukraine, consent, a share deal or Article 36-1 decides who employs each engineer Moving an employee to the client's company needs consent unless the hand-over qualifies as a business transfer under Article 36-1, which continues employment with the acquirer by law, while buying the employing company leaves every contract running.
• Document the IP chain at every link Rights in code written by employees vest in the employer by law, but every Ukrainian IP default yields to the contract and rights that do not yet exist cannot be transferred, so contractor and vendor-to-client assignments follow the code as it is written.
• Treat the transfer as a bundle of separate transfers People, IP, infrastructure, supplier contracts and knowledge each move by their own mechanism with their own signatories.
• Put client ownership of accounts in place during Build Repositories, cloud accounts and domains owned by the client from day one turn the handover into an access change plus secrets rotation.

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In short: build operate transfer (BOT) is a delivery model in which a vendor builds an engineering team, runs it on the client's product for an agreed period and then hands the team, its code and its infrastructure over to the client. For a team that is itself situated in Kyiv, the EU and UK rules that move staff automatically do not apply. Under Ukrainian law, moving an employee to the client's company needs that person's consent, unless the client buys the employing company, which leaves every contract in force, or the hand-over counts as a transfer of a business entity under Article 36-1 of the Labor Code, which continues employment with the acquirer by law. Rights in code that employees write under their employment contracts vest in the employer by law, so on a share purchase the IP stays in the company the client buys. Written assignments matter for FOP and gig contractors and for the link from vendor to client, while for employees they are good practice.

What Is Build Operate Transfer?

During Build, the vendor recruits the team with the client and sets up the delivery process and tooling. Through Operate, the vendor employs and manages the team and answers for delivery. At Transfer, the client exercises an option to take over the team with its code, infrastructure and supplier contracts.

An offshore development center is a dedicated team working as an extension of the client's own, which the vendor keeps employing. Staff augmentation places individual engineers into a team the client already has. BOT starts like an offshore development center and ends with the client owning the team, so its contract must answer who employs each engineer after the transfer, who owns the code written before it and whose name is on the cloud bill. Choosing among the models is covered in our staff augmentation vs outsourcing comparison.

The direct alternative is a client-owned Ukrainian company that hires the team from day one: nothing moves at the end, but the client carries recruiting and management in a market it may not know yet. BOT is the wrong model for a short product horizon, a team that will stay at a few engineers or a client that never intends to own the team.

Do EU and UK Transfer Rules Cover a Team in Kyiv?

Council Directive 2001/23/EC covers the transfer of a business or part of one to another employer, and Article 1(2) sets its limit: "This Directive shall apply where and in so far as the undertaking, business or part of the undertaking or business to be transferred is situated within the territorial scope of the Treaty." Ukraine is not an EU member state, so a team situated in Kyiv sits outside that scope. Under Article 2(1)(d) only a person protected as an employee under national employment law counts, so a contractor falls outside as well.

Where the Directive does apply, Article 3(1) is direct: "The transferor's rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee." Article 7(1) adds a duty to inform employee representatives in good time before the transfer. These duties matter for a BOT center inside the EU, or for any part of the business that is itself situated in the EU.

Does TUPE Reach a Team in Kyiv?

The UK's Transfer of Undertakings (Protection of Employment) Regulations 2006 have two limbs, each with a location condition. The business transfer limb, regulation 3(1)(a), covers "a transfer of an undertaking, business or part of an undertaking or business situated immediately before the transfer in the United Kingdom to another person". The insourcing limb, regulation 3(1)(b)(iii), is closer to the BOT event, but applies only where, under regulation 3(3)(a)(i), "there is an organised grouping of employees situated in Great Britain which has as its principal purpose the carrying out of the activities concerned on behalf of the client". Where the Kyiv team is itself the business or grouping being moved, neither limb catches its transfer. The test is where the business sits, not where each person works: regulation 3(4)(c) extends TUPE to a UK-situated undertaking whose staff ordinarily work outside the United Kingdom.

Where TUPE applies, regulation 4(1) provides, except where the employee objects under regulation 4(7), that "any such contract shall have effect after the transfer as if originally made between the person so employed and the transferee." For a Kyiv team the comparable rules are Ukrainian.

How Do Engineers in Ukraine Move to the Client?

Article 32 of the Labor Code of Ukraine states that a transfer to another enterprise or locality, even together with the enterprise, needs the employee's consent, except in the cases of Article 33 and other cases provided by law. Under Article 36(1)(5) the old contract then ends and a new one starts with the new employer.

A change of owner works differently. If the client buys the company that employs the engineers, that company remains their employer and the contracts run on unchanged. Article 36 of the Labor Code states the same continuity: on a change of employer or a reorganization (merger, accession, division, separation or transformation), the employment contract continues. The provision keeps contracts running when the enterprise changes hands or form; it does not turn an engineer's move to a different company into an automatic transfer, which still needs consent under Article 32 unless the hand-over meets the Article 36-1 conditions.

Article 36-1, added to the Labor Code by Law No. 3677-IX of 25 April 2024, is the legislated exception to the consent rule. It defines a transfer of a business entity as a change of owner of the enterprise, its reorganization or spin-off and a change of owner or user of property behind which stands an organized group of resources used by the employer, provided the type of economic activity is preserved. On such a transfer, employment continues with the acquirer by law. Seller and buyer must inform employee representatives, or the employees where there are none, in writing or electronically at least 10 working days ahead about the date, reasons, consequences and planned measures. Representatives may then ask for consultations within five working days. A change of essential terms caused by the transfer needs two months' notice, and if employment ends because terms changed to the employee's detriment, the employer is treated as responsible. There is no right to object of the kind TUPE regulation 4(7) gives: an engineer who does not want to work for the acquirer can still resign.

Whether a hand-over in which people move without the property they work with meets this definition is not settled. Consent and new contracts are the more conservative path, but if the definition is met the notice and the two-month rule still apply, so a cautious plan sends the notice anyway and keeps terms at least equal. Relying on Article 36-1 to move people without consent needs legal advice on the specific structure.

Martial law adds one more reason to hesitate. Under Cabinet of Ministers Resolution No. 76 of 27 January 2023, a deferment from mobilization granted to an employee of a critically important enterprise is annulled when that person is dismissed from it, except on reassignment within the same enterprise (item 31(5) of the procedure). An engineer who moves by dismissal loses it unless the new employer is eligible and reserves the engineer again, which the plan should settle before consent is requested.

Engineers Working as Individual Entrepreneurs

Some Ukrainian engineers are not employees at all. Under the Civil Code of Ukraine, an engineer registered as an individual entrepreneur, known locally as a FOP (Article 50), usually works under a civil-law contract such as a services contract (Article 901), so there is no employment to transfer: the vendor contract ends on its notice terms and a new one is signed with the client's company.

Entity Routes Compared

Route	Employment contracts	Typical failure mode
The client's own Ukrainian company hires the team	Each employee consents, the vendor contract ends under Article 36(1)(5) and a new one starts	Key engineers decline, or offers are not ready on the transfer date
The client buys the vendor's Ukrainian subsidiary or a company set up for the team	Contracts continue with the same legal entity, and IP and supplier contracts stay with it. Confirm that every contractor's IP was assigned to it in writing	Unchecked liabilities unrelated to the team, or the Article 36-1 information notice is skipped
A business with the resources behind it passes to the client's company under Article 36-1	Employment continues with the acquirer by law, after the 10-working-day notice from both sides	The plan relies on the article although the hand-over does not meet its definition

The share purchase is the one route that changes no employer at all: no engineer signs anything, and unlike Article 36-1 it does not depend on whether the hand-over meets a statutory definition. Because Article 36-1 lists a change of owner of the enterprise first among its transfers, seller and buyer should still send the 10-working-day information notice. The purchase also brings everything else the company owns or owes, so our technical due diligence guide applies before signing.

How Does Intellectual Property Follow the Team?

Code reaches the client through at least two links, engineer to vendor and vendor to client. Under the Civil Code, economic rights in an object created under an employment contract belong jointly to employee and employer (Article 429(2)), and in one created to order jointly to creator and commissioning party (Article 430(2)). Article 429(2) yields to other rules of the Code, however. For copyright works, which include computer programs, Article 440 gives the economic rights to the employer or the commissioning party in full from creation. The Law of Ukraine on Copyright and Related Rights (No. 2811-IX) agrees in Article 15(2): rights in a commissioned work pass to the commissioning party in full from creation unless the contract provides otherwise. Article 14(2) does the same for employers.

For employees the default settles the question: rights in code written under an employment contract belong to the employer from creation, so on a share purchase the IP stays in the company the client buys. Every one of these defaults yields to the contract, however. Written assignments therefore matter for FOP and gig contractors and for the link from vendor to client, and for employees they remain good practice. Diia City gig contracts carry one more default to confirm rather than assume: under Article 24(2) of Law No. 1667-IX, the rights go to the commissioning Diia City resident unless the gig contract says otherwise.

Rights That Do Not Exist Yet

Timing is the second trap. Article 1113(1) of the Civil Code provides that a transfer contract cannot cover objects or rights that did not exist when it was signed, so a clause assigning all future IP is a weak foundation. The usual remedies are to make the engineer-level contract an employment contract or a contract for creation to order (Article 1112), so rights in future work arise for the employer or commissioning party from creation, and to transfer what already exists with periodic acceptance acts during Operate and a final transfer act at the transfer date.

Authorship stays with the engineer; only economic rights move. Where they pass, the author is entitled to remuneration (Articles 14(2) and 15(3) of the copyright law), which can be included in an employee's salary by agreement if the job duties expressly provide for creating such works. Terms that bar the creator from creating other works are void (Civil Code Articles 1112(4) and 1113(2)), so an IP agreement cannot double as a bar on future work, and registering these contracts is optional (Article 1114(1)).

What Transfers on the Transfer Date?

A BOT transfer is a bundle of separate transfers, each with its own mechanism and its own signatures.

Transfer asset	Mechanism	Who signs	Typical failure mode
Employees in Ukraine	Consent and a new contract with the client's company, continuation with the acquirer under Article 36-1 or unchanged contracts after a share purchase	Each employee and the client's company on the consent route; otherwise vendor and client, who also send the Article 36-1 notice	Key engineers decline, offer letters are late or the information notice is skipped
FOP engineers	Vendor contract ends, a new one starts with the client's company	Each engineer and the client's company	Notice periods out of step, or no IP clause in the new contract
Gig specialists under Diia City gig contracts	The vendor gig contract ends; the new contract is a gig contract only if the client's company is itself a Diia City resident, otherwise an employment or services contract	Each specialist and the client's company	The new contract leans on a statutory IP default instead of an explicit IP clause
Staff in the EU or the UK	Automatic transfer where TUPE or the national law implementing the Directive applies: a business that keeps its identity or, under TUPE, an organized grouping on a service provision change	Contracts pass by law, with information duties on both employers	Handled as a voluntary hire, so the information duties are missed
Intellectual property	Employer ownership by law for employees' code, written assignment from contractors and from vendor to client, with acts for existing code	Engineer and vendor, then vendor and client	A gap at a contractor link, a blanket future-IP clause or authorship treated as assigned
Code and infrastructure	Account ownership moves to the client and secrets are rotated	Account owners on both sides, under a runbook rather than a statute	Cloud accounts in the vendor's name, shared credentials never rotated
Third-party contracts and licenses	Novation or re-contracting of SaaS subscriptions, tooling and subcontractors	The client's company and each supplier	Licenses issued to the vendor that the supplier will not move
Knowledge	Runbooks, architecture decision records, on-call handover and an overlap period	Engineering leads on both sides, as an operational sign-off	Undocumented knowledge leaves with a lead who does not move

Knowledge needs its own row because copyright does not carry it: under Article 20 of the copyright law, computer programs are protected in source or object code, but ideas and algorithms are not.

Engineering Handover: Repositories, Cloud Accounts, Secrets and On-Call

When repositories, the cloud organization, the domain registrar account and the identity provider belong to the client from the first day, the transfer changes who the members are rather than who owns the assets. Accounts the vendor opened become a migration project early in Operate, not in the final week.

• Repositories and package registries sit in the client's organization. At transfer, vendor administrators are removed and required reviewers point to client-side owners.
• CI/CD runs on runners the client controls, and pipeline secrets, signing keys and deploy credentials are rotated after the transfer, because people who leave still know the old values.
• The client is payer of record on every cloud account, and domains, DNS zones, TLS certificates and app store accounts are registered in its name.
• Every production service has a runbook that someone other than its author has followed at least once.
• The on-call rota, escalation paths and alerting move to the client's people.
• Access is revoked system by system for every vendor person who does not move, while build logs, release history and incident records are preserved for the client.

What Should Each Phase Prove Before the Next Starts?

Phase boundaries defined by evidence rather than dates let the client exercise the option against a checked state.

Phase	Exit criteria	Evidence
Build	The team is at the agreed size, the client has approved each hire, the delivery process runs and every repository and cloud account is owned by the client	A roster with each engineer's contract type (employment, FOP civil-law contract or Diia City gig contract), an account ownership list, the first releases
Operate	Delivery is stable, IP acceptance acts are current, every production service has a runbook, client engineers shadow on-call, supplier transferability is checked and the entity route is chosen	Signed acceptance acts, the supplier list, a written entity route decision
Transfer	Every moving engineer has a signed contract with the new employer or continues under the purchased company or with the acquirer under Article 36-1, the final IP act is signed, secrets are rotated, vendor access is revoked and the client team has run on-call alone for an agreed period	Signed contracts, the Article 36-1 information notice where sent, the transfer act, an access audit, the solo on-call incident log

The roster decides which route applies to which person, so it should exist from the first month.

How Long Does Each BOT Phase Usually Take?

No analyst or industry body publishes average BOT terms for software teams. The figures below are what providers and advisers state on their own pages: we reviewed about 30 that publish figures in October 2026, more than a third of them describing global capability centers in India and none specific to Ukraine. They are reference points for negotiating a contract, not Pharos Production's terms. Across the 20 pages that state the time from signature to transfer, it runs from 12 to 60 months with a median of about 30, and the most common phrasing is 18 to 36 months.

Phase	Typical range quoted by providers	Median across published sources	Note
Build	1 to 6 months	About 3.5 months	Providers in India that incorporate a new entity and open an office quote 6 to 12 months
Operate	12 to 36 months	About 18 months	The widest spread: enterprise centers in India run longer than software teams in Central and Eastern Europe or Latin America
Transfer (handover)	3 to 6 months	Range only, no median computed	Contracts, IP acts, account moves and on-call handover
Signature to transfer	18 to 36 months, within 12 to 60	About 30 months	A few providers quote paths as short as 12 months, including software-team vendors in Latin America and Portugal
Support after transfer	1 to 6 months	Range only, no median computed	Only a few providers state a figure

Where providers name a team size below which BOT does not pay off, the numbers split by segment: vendors of software teams put it at about 8 to 15 engineers, while enterprise capability-center providers talk of 40 to 100 seats. The Operate figure matters most when setting the minimum Operate period and the earliest exercise date in the option clause.

How Should the Transfer Option Be Written Into the Contract?

Deloitte suggests BOT "could be thought of as a services contract with a call option to take over the entire operation". Because the transfer is an option, the contract has to say when it can be exercised, how much notice it takes and what it covers. Scope is best written as a roster of roles plus a rule for people who decline a consent-based move: whether the vendor redeploys them, whether a replacement is recruited before the transfer date and whether the buy-out price changes.

Published buy-out terms follow four structures: the net asset or book value of what is transferred, a multiple of monthly billing, a flat fee that some providers band by team size or no fee at all. The amounts providers publish disagree by more than tenfold, so this guide quotes none. A flat fee gives a known number, while a billing multiple tracks a growing team but leaves the price open until exercise, and a book-value price is only as reliable as the vendor's records. Morgan Lewis notes that the transfer stage depends on what the parties agreed, "including the transfer trigger events and any payments required in respect of the transfer", so the formula belongs in the contract at signature.

The option clause should fix the earliest exercise date, the notice period and what the vendor must have ready when notice arrives, since offer letters, IP acts, the Article 36-1 notice and account moves all need lead time. A minimum Operate period lets the vendor recover its setup work and gives the client delivery history to judge. The contract should also say whether non-solicitation is waived for engineers who move and whether the vendor supports the team afterward. Our fixed price vs time and materials guide covers the commercial model during Operate, and our custom software TCO analysis helps compare the option price with running the team in-house.

How Pharos Production Helps

Pharos Production runs offshore development centers and offers build-operate-transfer engagements for clients who want to own their engineering team in the end.

Sources: Council Directive 2001/23/EC of 12 March 2001, EUR-Lex; The Transfer of Undertakings (Protection of Employment) Regulations 2006, regulation 3 and regulation 4; Labor Code of Ukraine, No. 322-VIII; Civil Code of Ukraine, No. 435-IV; Law of Ukraine on Copyright and Related Rights, No. 2811-IX; Law of Ukraine on Stimulating the Development of the Digital Economy in Ukraine, No. 1667-IX; Cabinet of Ministers of Ukraine Resolution No. 76 of 27 January 2023. Engineering and contracting guidance, not legal advice.

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Last updated: October 8, 2026

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• Does TUPE or the Acquired Rights Directive protect a team in Kyiv during a BOT transfer?

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  Not as written. The Directive applies where the business being transferred is situated within the territorial scope of the EU Treaty, and TUPE needs an undertaking situated in the United Kingdom or, for insourcing, a grouping of employees situated in Great Britain.

  The test is where the business or grouping sits, not where each employee lives: TUPE regulation 3(4)(c) covers a UK-situated undertaking whose staff ordinarily work abroad. A Kyiv team that is itself the business being moved meets none of these conditions, so Ukrainian law, including Article 36-1 of the Labor Code, governs its transfer.

• Do engineers have to agree to move, and what happens to those who decline?

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  Usually yes: under Article 32 of the Labor Code of Ukraine a move to a different employer needs the employee's consent, and under Article 36(1)(5) the move ends the old contract. An engineer who declines a consent-based move stays with the vendor, so the BOT contract should say how that role is replaced and priced.

  Two routes need no consent. If the hand-over qualifies as a transfer of a business entity under Article 36-1, employment continues with the acquirer by law and both companies must inform representatives or employees at least 10 working days ahead. There is no right to object of the kind TUPE gives: an engineer who does not want to work for the acquirer can still resign, and if employment ends because terms were changed to the engineer's detriment, the employer is treated as responsible. If the client buys the employing company, the employer itself does not change and the contracts continue unchanged. Since Article 36-1 lists a change of owner among its transfers, the same notice is the cautious step there too.

• When should intellectual property be assigned in a BOT engagement?

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  Code that employees write under their employment contracts belongs to the employer by law, and on a share purchase it stays in the company the client buys. Assignments from FOP and gig contractors and from the vendor to the client belong on a schedule written into the contract, not once at the end: an acceptance act for each Operate period and a final act at the transfer date, with a separate document at each link of the chain.

  The engineer keeps authorship, and the engineer-level contract should settle the remuneration owed where economic rights pass.

• How long does a build-operate-transfer engagement usually take?

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  The 20 provider and adviser pages we reviewed in October 2026 that state it put the time from signature to transfer at 12 to 60 months, most often 18 to 36, with a median of about 30. Build is usually quoted at one to six months, Operate at 12 to 36 and the handover itself at three to six.

  More than a third of the pages we reviewed describe capability centers in India and none is specific to Ukraine. The figures are reference points for negotiation rather than Pharos Production's terms. The handover is shortest when repositories and cloud accounts belonged to the client from the start of Build, because the transfer then only changes who has access. If the vendor opened them, ownership and billing move to the client well before the transfer date. Either way, secrets and deploy credentials are rotated after the transfer, vendor access is revoked system by system and the contract fixes the overlap period and what ends it.

• How is the buy-out price for a BOT team calculated?

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  There is no statutory or standard method. Published terms follow four structures: the net asset or book value of what is transferred, a multiple of monthly billing, a flat fee or no fee at all.

  The amounts providers publish disagree by more than tenfold, so which structure fits is a negotiation about risk and timing rather than a market rate.

• Is build operate transfer the same as an offshore development center?

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  No. An offshore development center is a dedicated team that the vendor keeps employing for as long as the engagement runs. Build operate transfer adds an option for the client to take that team over, with its code and infrastructure, at an agreed point. Pharos Production runs offshore development centers and offers build-operate-transfer engagements.

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