For tech consulting firms, service providers, and agencies, outsourcing IT software development is often seen as a cost-saving strategy that still delivers high-quality results. However, a major challenge remains: finding an outsourcing partner who is reliable, adaptable, and aligns seamlessly with your existing processes without creating conflicts.
To address this, many companies are turning to the Build Operate Transfer (BOT) model. This approach simplifies the outsourcing process by allowing the partner to establish and manage an external unit before transferring full ownership to the client.
What is the Build Operate Transfer Model?
The BOT model in software outsourcing, as defined by Gartner, is “a contractual relationship where a service provider sets up, optimizes, and runs an IT or business process service delivery operation, with the agreed intention of transferring it to the client as a captive center.”
Essentially, BOT is a hybrid approach that combines the benefits of building (setting up an in-house team) and buying (outsourcing operations).
While BOT is widely associated with infrastructure projects or public-private partnerships, in software outsourcing, it serves as a practical model to establish offshore operations. Companies often start with other outsourcing methods—such as co-sourcing, staff leasing, or facilities outsourcing—before transitioning to BOT when they’re ready to fully take over the operation.
Once the client company feels prepared to independently manage the outsourced team or entity, the service provider transfers all operations, infrastructure, and knowledge to the client.
Why Choose the BOT Model?
Companies opting for the BOT model in software outsourcing typically have a long-term goal of establishing their own operation, often in a foreign country. However, the initial phase of setting up operations can be risky and resource-intensive. The BOT model allows companies to:
- Mitigate common startup risks by leveraging the expertise of an outsourcing partner.
- Gradually build the team’s capabilities while aligning processes and tools.
- Gain full ownership and operational control once the team is fully integrated into their methodologies.
The BOT model provides a structured way to scale globally while minimizing risks during the critical early stages. It allows companies to focus on core business objectives while the service provider manages the complexities of setting up offshore operations.
Phases of the BOT Model
The Build Operate Transfer (BOT) model in software outsourcing follows three distinct phases: Build, Operate, and Transfer. Each phase represents a step in establishing and developing an offshore operation before handing it over to the client.
1. Build
The Build phase focuses on setting up the operational foundation. This includes:
- Choosing the location and securing office space.
- Setting up infrastructure like IT systems, internet connections, and hardware.
- Hiring and onboarding staff.
- Establishing legal and administrative frameworks.
By this stage, the company should already have identified the target offshore country and finalized key setup requirements.
2. Operate
In the Operate phase, the service provider manages the day-to-day operations. This involves:
- Overseeing project or product development.
- Handling project management, maintenance, and product support.
- Providing training and coaching to the team.
- Ensuring the team reaches the required level of technical expertise and business maturity.
This phase is often outlined for a specific period, during which the team becomes fully aligned with the client’s processes and standards.
3. Transfer
The Transfer phase is where ownership of the operation shifts from the partner to the client. This happens when:
- The client declares they are ready to take full control.
- The contractual period expires.
At this point, the client gains complete ownership of the offshore subsidiary, along with all assets and operations.
In some cases, the transfer may happen earlier than planned if the client feels prepared to manage the operation. Conversely, it may be delayed if additional time is needed to meet business goals or address unforeseen challenges.
Build-Operate-Transfer Software Outsourcing: Reasons to Consider
When it comes to outsourcing, businesses have plenty of options to choose from. Here’s why the Build-Operate-Transfer (BOT) model stands out as an ideal choice:
1. Saves time and money
Time is one of the most valuable resources for entrepreneurs. Think of it this way: while it might take you 8 hours to figure something out, an expert can get the job done in just 1 hour. By outsourcing to a BOT partner, you save not only time but also money, as you can focus your energy on growing your business instead of trying to manage tasks outside your expertise.
The BOT model is designed to provide both short-term and long-term cost savings. By streamlining operations and reducing inefficiencies, businesses can minimize costs over time and achieve better ROI.
2. No one can do it all
The idea of a “super CEO” who handles everything sounds great in theory, but in reality, it’s impossible. Even the most capable leaders can’t be everywhere, doing everything, all the time.
Outsourcing through the BOT model allows you to delegate tasks that you either don’t have time for or don’t enjoy doing. By offloading these responsibilities, you free up time to focus on more critical, income-generating activities for your business.
3. Reduces stress
Running a business often comes with a high level of stress, especially when you’re juggling multiple responsibilities. The BOT model can help lighten the load by providing expert support to manage operations effectively.
By outsourcing, you gain a reliable partner who helps ensure business goals are met on time and within budget. While there might be some initial challenges as you adapt to outsourcing, once the workflow is established, stress levels tend to decrease significantly.
4. Access to experienced partners
One of the key advantages of the BOT model is the opportunity to work with experienced partners. These professionals handle setting up, managing, and optimizing your operations while minimizing risks—especially when entering new markets or unfamiliar territories.
With a skilled partner managing the process, you can focus on scaling your business while reducing uncertainties. It’s a win-win situation for businesses looking to expand strategically.
BOT Model Benefits
The Build-Operate-Transfer (BOT) model in software outsourcing is gaining popularity due to its numerous advantages. While it comes with considerations, the benefits often outweigh the challenges for many businesses. Here’s why:
1. Speeds up time to market
One standout benefit of the BOT model is its ability to accelerate product launches. With teams operating in different time zones, work can often continue around the clock, resulting in a near 24/7 development cycle. This ensures continuous progress, minimizing downtime, and helping businesses bring their products to market faster.
2. Significant cost savings
Cutting costs is a priority for most businesses, and the BOT model delivers on this front. Companies can save up to 60% of typical project expenses by outsourcing to offshore teams who handle the project setup, management, and operation.
The money saved can be reinvested into the business—whether that’s upgrading internal processes, hiring top talent, or exploring new growth opportunities.
3. Reduced risks
The BOT model is an effective way to minimize risks when expanding operations offshore. Local partners often have deep knowledge of the country’s conditions and are prepared to handle potential challenges. This helps businesses avoid common pitfalls and ensures smoother operations.
Additionally, by diversifying their operations geographically, companies can spread risks across different regions, creating a more resilient business model.
4. Hassle-free logistics
One of the major pain points in setting up an offshore office is dealing with logistics—but the BOT model takes care of this. From finding office space to hiring the right talent, the local partner manages everything.
These partners often have established networks, local expertise, and resources, allowing companies to skip the steep learning curve. This makes the entire process of setting up a subsidiary faster, easier, and less stressful.
5. Ready-to-go teams
When it’s time to transfer ownership, the BOT model ensures that the team is already well-trained and operational. Businesses can seamlessly take over a team that is familiar with processes, tools, and objectives. This eliminates the need for extensive onboarding or training, saving both time and effort.
6. Rapid scaling
The BOT model enables businesses to scale operations quickly. By delegating operational tasks to the partner, companies can free up time to focus on innovation and strategy.
This additional bandwidth allows them to explore new service offerings or plug existing gaps in their business model, enabling faster growth.
7. Access to cutting-edge technology
With a BOT partner, businesses can adopt new technologies more easily. Experienced teams bring fresh ideas and technical expertise to the table, ensuring that projects stay innovative and competitive.
This access to advanced tools and knowledge not only improves efficiency but also keeps employees engaged and motivated.
Through the BOT model, companies can set up offshore subsidiaries that feel like an extension of their own organization. Over time, they assume full ownership of the team and operations, maintaining complete control and retaining valuable knowledge in-house.
By outsourcing setup and initial management to a trusted partner, businesses can focus on their core strengths while still achieving their goals efficiently and cost-effectively.
