The Build-Operate-Transfer (BOT) model has become a popular approach in the ever-changing landscape of business strategies. This strategic framework offers businesses a unique opportunity to benefit from external expertise, manage risks, and achieve operational excellence. In this guide, we will provide a comprehensive overview of the key components, benefits, best practices, and more associated with BOT, along with real-world case studies and future trends.

BOT – What is it?

Build-operate-transfer (BOT) is a contractual agreement that offers a strategic solution for organizations seeking to optimize their software development or business process service delivery operations. With BOT, organizations can engage a service provider to set up, optimize, and run these operations with the intent of transferring them to the organization as a captive center. This hybrid approach is known to be effective, cost-efficient, and widely adopted by organizations across various industries.

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Key components of BOT?

Build phase

This is the stage where the project or service is developed; it involves planning, designing, developing, and testing.

  • Planning is the first step, which involves defining project goals, scope, timeline, budget, and resource allocation. It includes conducting feasibility studies, market analysis, and risk assessments.
  • The next step, Designing, is where detailed design and architecture are created based on the requirements gathered during the planning phase. This includes technical specifications, system architecture, user interface design, and integration plans.
  • The Development phase is where the actual development work takes place according to the design specifications. This may involve software development, infrastructure setup, customization, and testing environments.
  • Comprehensive testing is conducted during the Testing phase to ensure the project meets quality standards. This includes unit testing, integration testing, performance testing, security testing, and user acceptance testing.

Operate phase

In this phase, the entity responsible for building the project or service takes on the role of running and managing it, including day-to-day operations, maintenance, and support.

  • Once a project moves on to the Operate phase, the entity responsible for operating the project takes over. This includes managing infrastructure, applications, data, security, and user support.
  • Regular maintenance and updates are performed in the Maintenance phase to ensure the project remains functional, secure, and up-to-date with technology advancements.
  • Providing technical support to users, addressing issues, troubleshooting problems, and implementing enhancements or fixes as needed are covered under the Support phase.

Transfer phase

This stage involves transferring the project or service to the client or designated entity, including knowledge transfer, documentation handover, and transitioning responsibilities.

  • During the Transfer phase, knowledge transfer, documentation, procedures, and best practices are transferred to the client or designated entity. This ensures they can effectively take over operations.
  • Handing over all project documentation, including technical specifications, user manuals, system documentation, and operational procedures, is covered under the Handover phase.
  • Formalizing the transfer of responsibilities, contracts, agreements, and any ongoing support or assistance during the transition period falls under the Transition Responsibilities phase.

Benefits and challenges of BOT


  • Cost-effective - Many companies and startups utilize the build-operate-transfer concept to hire a more cost-effective workforce. This approach is especially useful for those who are expanding overseas and do not have the time or resources to build an office and hire staff. As a result, this technique can help fill the skills gap in various sectors without the added cost and effort of traditional hiring methods.
  • Access to a global talent pool - Build-operate-transfer offers the advantage of access to a vast talent pool and can extend an organization's reach beyond its current audience. Additionally, partnering with a well-established consulting company can ensure that the organization has the necessary expertise to navigate the local immigration laws, making it easier to relocate essential workers. This is a unique opportunity to expand business and achieve greater success.
  • Risk mitigation - Sharing responsibilities with a reliable partner can prove to be a prudent strategy to mitigate the risks that are typically associated with market uncertainties, regulatory compliance, and technology investments.
  • Savings and ownership - When considering outsourcing, one of the primary rationales is cost savings. BOT is considered to be an effective form of outsourcing that offers a unique advantage. The team is established specifically for organizations from the outset and works in accordance with its processes. Additionally, the results of their work are fully owned by the organization.
  • Scalability and flexibility - A build-operate-transfer model provides a structured framework for partnerships between vendors and client companies. While adhering to the standard structure, vendors often offer customized BOT models that can better align with the needs of the client. The BOT model also allows for a straightforward process of scaling the local team up or down and adjusting the length of the Operate phase. This flexibility can be beneficial in meeting the changing demands of the business.

Steps involved in implementing a BOT agreement

The implementation of a build-operate-transfer model requires several crucial steps to guarantee a seamless transition from project initiation to full operation and subsequent transfer. These steps play a significant role in ensuring a successful outcome.

Feasibility study and planning

  • The preliminary phase of any project necessitates a comprehensive feasibility study to evaluate its viability.
  • During this critical stage, it is of utmost importance to define the project's objectives, scope, timelines, budget, and resource requirements clearly and concisely.
  • Moreover, potential risks and challenges must be identified, and appropriate mitigation strategies should be put in place to minimize their impact.
  • By undertaking a thorough feasibility study and planning phase, organizations can ensure project success and avoid costly mistakes.

Set clear objectives

  • It is crucial to set clear goals and expectations from the outset.
  • These objectives may vary, ranging from cost efficiency to gaining access to a highly skilled workforce or expanding the organization's global reach. Clearly defining such targets lays the foundation for a successful endeavor.
  • To develop an effective strategy, it is imperative to evaluate and consider key criteria like technical skills required for the project, timeline and associated costs, onboarding and training processes, the budget required for office space and requisite equipment, the legal structure of the new entity, and the internal resource requirements necessary to support the new teams.

Select a location

  • When evaluating potential locations, it is important to carefully consider various factors in order to choose a destination that aligns with organizational objectives.
  • A thorough research of the availability of skilled talent, language proficiency, time zone differences, cultural differences, labor costs, infrastructure, and legal and regulatory requirements is crucial in this regard.
  • By doing so, we can ensure that the chosen destination is suitable for our business needs and can help us achieve our goals effectively and efficiently.

Choose the right partner

  • The process of selecting partners for the build-operate-transfer model involves identifying and evaluating suitable developers, operators, and potential transferees.
  • This requires a thorough assessment of their legal, financial, operational, and technical capabilities.
  • Once the identification process is completed, negotiations must be initiated to finalize contracts, agreements, and terms with the selected partners.
  • The negotiations should be conducted with utmost care and attention to detail, ensuring that all parties involved are satisfied with the outcome.

Build phase

  • During the build phase of the project, it is imperative to initiate a series of critical activities, which include planning, designing, development, and testing.
  • Ensuring adherence to project milestones, quality standards, and budgetary constraints is of the utmost importance.
  • Additionally, conducting regular progress reviews and updates with relevant stakeholders is necessary to ensure that the project is on track and that everyone is informed of any changes or updates.

Operate phase

  • Upon the successful completion of the build phase, the project is to be transitioned to the operational phase, wherein the operator will take over the day-to-day operations, maintenance, support, and management of the project.
  • During the operate phase, it is essential to implement performance monitoring, reporting mechanisms, and KPI tracking to ensure optimal project performance.

Knowledge transfer and documentation

  • To ensure an efficient and effective transition when transferring a project to a new team, organizations should follow specific steps.
  • These steps include preparing comprehensive documentation, facilitating knowledge transfer sessions, and providing training for the transferee or client team.
  • Ensuring a smooth handover process also involves coordinating the formal transition and handover process from the operator to the transferee and transferring all relevant documentation, knowledge, assets, and responsibilities as per the agreed-upon terms.

By following these steps, organizations can effectively implement a build-operate-transfer model, manage the transition process, and achieve long-term success with their projects.

BOT vs. traditional outsourcing

Aspect BOT Traditional outsourcing
Time duration Relevant exclusively to projects that are deemed as long-term and entail specific requirements. Opted by organizations for small and long-term projects.
Ownership The outsourcing company retains complete ownership of the project or product until the point where it becomes necessary to transfer ownership to the vendor. The outsourcing company maintains ownership of assets and services.
Knowledge transfer Complete knowledge transfer. Restricted knowledge transfer.
Contract It is necessary to sign a formal contract. This is a requirement that is put in place to ensure clarity and transparency between the parties involved. Contracts are not mandatory.
Flexibility Flexibility that allows seamless integration of the project's objectives with available resources, resulting in a streamlined and efficient implementation process. After signing the contract, there is a limitation in terms of customizing the project.

Real-world examples of successful BOT projects

  • The Bangkok Mass Transit System, popularly known as BTS, serves as an exemplary instance of a Build-Operate-Transfer (BOT) project. This elevated train system situated in the heart of Bangkok provides a dependable and efficient transportation solution to commuters. The execution of the project was carried out through a BOT concession agreement, spanning over 30 years, between the BTS concessionaire and the Bangkok Metropolitan Administration, the governing body of the city. The successful implementation and remarkable outcomes of the BTS project serve as a testimony to the effectiveness of BOT projects in revolutionizing urban transportation.
  • The Indian Railway system has implemented the build-operate-transfer model to upgrade several major city railway stations, which is a commendable approach. This model involves awarding concessions to private companies or consortia to develop and operate specific railway stations for a defined period. During this concession period, the private entities are accountable for designing, constructing, and maintaining the station infrastructure, as well as providing various passenger amenities and commercial services. This approach not only enhances the quality of services for passengers but also provides opportunities for private companies to invest in the growth of the railway system. The Indian Railway system's implementation of the BOT model sets an example of modernization and efficiency, which is highly appreciated.

The evolution of the BOT model

1990s - During the latter part of the 1990s, numerous US-based companies commenced the establishment of offshore captive centers, otherwise referred to as offshore delivery centers. Among these, India emerged as the most favored destination, while other locations, such as the Philippines and elsewhere, were also considered, each based on their respective strengths.

Early 2000s – With the advent of the year 2000, many companies established multi-location models to take advantage of the benefits of captive centers, including cost reduction via labor arbitrage and work delivered across multiple time zones without paying service provider margins. Despite the benefits, setting up a captive operation in a new geography was challenging due to legal, financial, and regulatory issues. To overcome these challenges, the Build-Operate-Transfer (BOT) model emerged as a compelling business case to establish a captive center while mitigating the challenges inherent in its establishment.

Mid-2000 to early 2010 - The BOT model has been a popular approach for companies seeking to expand their operations into new markets and locations, with the primary objective of reducing labor costs. The model gained traction in the mid-to-late 2000s and early 2010s, particularly when businesses were looking to establish their presence in India. However, as many organizations have successfully established their own delivery centers across the globe, either through Global In-house Centers (GICs) or by partnering with service providers, the BOT model has become less popular in recent years.

Early to mid-2010s - Interest in BOT model deals was high, but execution was complicated. Clients often choose to keep the existing service relationship instead of going through a challenging transfer. Additionally, many organizations began establishing operations in typical BOT-destination countries. As a result, interest in BOT model deals declined by the early to mid-2010s.

In recent years, the BOT model has undergone significant evolution and adaptation to keep up with the changing business landscapes and technological advancements. Here are some noteworthy trends and developments that triggered the revisitation of the BOT model:

  • The global pandemic has highlighted the significance of resilience and continuity planning for businesses. As a result, organizations have revisited their operational strategies and developed a renewed interest in BOT models. These models offer long-term sustainability through flexibility and risk-sharing, which can prove to be beneficial for organizations in the long run.
  • The COVID-19 pandemic brought about significant changes in the way organizations operate, particularly in the adoption of remote work. The virtual work environment has since demonstrated its viability, leading to the emergence of technology that supports remote work. This trend has transformed the way work is done, and organizations have adapted and embraced it to remain competitive and meet the needs of a modern workforce.
  • The pandemic has had a significant impact on global economies, leading businesses to prioritize cost optimization and efficient resource utilization. To meet these challenges, the BOT model has emerged as a highly effective option for organizations looking to manage expenses more effectively. Its potential for cost-effective project delivery and operational efficiencies has made it a preferred choice for businesses seeking to optimize their costs.
  • Many lower-cost locations, including India, Mexico, LATAM, and Eastern Europe, have scaled up their tech talent supply.
  • There is a demand for skills in areas such as data, cyber, AI/ML, and software platforms that outpaces supply.


Build-operate-transfer is the perfect solution for those seeking a comprehensive outsourcing model that offers both flexibility and the seamless transfer of intellectual property and expertise. It allows an organization to maintain scalability while ensuring that it receives the best possible value.

When selecting a technology partner in the local market, it's crucial to consider their reliability, security, and business values. In addition, it's best to collaborate with companies that share an organization's methodologies and approaches to facilitate a smooth transition. By choosing BOT, organizations can be confident that they are partnering with a reliable and trustworthy technology partner that will help them achieve their business goals.

Need an expert guidance on establishing a Build-Operate-Transfer (BOT)?

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About the author

Shyamala Rajan

Manager – Content Strategy,

Torry Harris Integration Solutions