Build-Operate-Transfer: a strategic business model for software development

11 June, 2025

Build-Operate-Transfer: a strategic business model for software development

The Build-Operate-Transfer (BOT) model has emerged as a widely adopted strategy for companies aiming to grow their software development capabilities while maintaining strategic oversight. As organisations grapple with mounting challenges in sourcing tech talent and managing expenses, BOT delivers a well-balanced approach—merging the advantages of outsourcing with the stability of in-house control. ManpowerGroup’s 2024 Global Talent Shortage report reveals that 75% of employers are struggling to fill technology positions, with IT and data skills topping the list of the most in-demand and hardest to source globally. This article examines the BOT framework, outlines its key implementation stages, profiles the businesses best suited to this model, and highlights the numerous benefits it offers in today’s complex software development landscape.

_What is the Build-Operate-Transfer model

The Build-Operate-Transfer (BOT) model refers to a contractual arrangement in which an organisation engages a service provider to establish, manage, and optimise an IT or business process operation, with the predetermined goal of eventually transferring full ownership to the client as an internal (captive) unit. In the context of software development, BOT represents a collaboration between two business entities—where the service provider is responsible for assembling, launching, and overseeing a development team that will later become an integral part of the client’s organisation. In this model, the external team is instrumental in maintaining project standards, hitting delivery targets, and contributing their domain expertise to ensure overall success.

Key characteristics of the BOT model include:

Strategic ownership goal: In contrast to conventional outsourcing, BOT is designed from the outset with the intention of eventually handing over the operation to the client.
Blended model: BOT merges the strengths of both outsourcing and internal team-building, aiming to leverage the benefits of each while reducing their respective downsides.
Step-by-step implementation: It is based on a clearly defined three-stage process, with set milestones and handover checkpoints.
Cooperative dynamic: Effective execution relies on strong alignment between both parties, mutual objectives, and transparent collaboration.
Intentional knowledge transfer: A core focus of the BOT model is the systematic transfer of skills, procedures, and organisational culture from the vendor to the client team.

_The BOT model’s implementation phases

Build phase

The Build phase lays the groundwork for the BOT model and typically spans between one and three months, depending on the intended team size. Smaller teams of fewer than five members can often be established within a month, while larger groups of 50 or more may require two to three months for full setup.

Core activities during the Build phase include:

Aligning on project goals, timelines, team size, and required skill sets.
Choosing the team’s location and resolving logistical and security considerations.
Defining roles, performance metrics, reporting structures, and identifying key decision-makers.
Agreeing on financial terms, such as rate cards and payment models.
Completing the master service agreement and initial scope of work documentation.
Developing a hiring strategy, onboarding process, and communication plan.
Setting up the necessary infrastructure, including access to systems, hardware, and tools.
Managing recruitment and hiring based on agreed needs.
Focusing on detailed planning to ensure optimal productivity, high quality, and cost efficiency throughout this stage.

During this phase, the service provider handles the majority of operational setup—including securing workspace, implementing legal agreements, and deploying IT systems—allowing the client to remain focused on their core operations while the offshore team is being built.

Operate phase

The Operate phase is the longest and most intensive stage of the BOT model, typically lasting over two years. During this period, the service provider takes full responsibility for daily operations while systematically preparing for the eventual handover. A dedicated project manager plays a vital role in ensuring effective coordination, planning, and oversight throughout this phase.

Key responsibilities during the Operate phase include:

Gaining a deep understanding of the project’s scope, tools, and workflows.
Establishing a steady delivery cadence—often structured around Scrum or other agile methodologies.
Identifying and resolving blockers that could hinder progress.
Tracking project performance and feedback while closely monitoring key performance indicators.
Holding regular governance meetings between the provider and client teams.
Investigating issues through root cause analysis and applying continuous improvements.
Bridging skill or knowledge gaps and integrating best practices.

The governance model during this stage is typically structured across three levels, with the project manager positioned centrally to manage communication and execution. This structure often includes:

Executive Committee: Bi-annual meetings focused on strategic direction and long-term business alignment.
Steering Committee: Monthly sessions to assess progress, evaluate KPIs, and resolve escalated issues.
Ramp-Up Reviews: Weekly check-ins to manage timelines, address risks, and remove operational impediments.

To support operations, the provider usually appoints a dedicated Delivery Manager—often at no additional cost—who ensures consistent support and maintains agreed availability levels for the development team. This phase enables the client to refine and validate their offshore strategy while benefiting from the provider’s experience in managing distributed software teams.

Transfer phase

The Transfer phase, also referred to as the final stage of the BOT model, typically spans between three to six months. This stage marks the formal handover of the operation from the service provider to the client, including personnel, intellectual property, and established business processes. There are two common approaches to executing the transfer:

Transitioning all employees and support functions to an existing legal entity owned by the client.
Transferring staff, support functions, infrastructure, and fixed assets to a newly established entity set up by the client.

Key focus areas during the Transfer phase include:

Managing legal and contractual aspects, such as employee agreements.
Completing comprehensive knowledge transfer and ensuring all critical documentation is handed over.
Developing continuity plans to minimise disruption during the transition.
Finalising financial terms of the transfer—typically calculated as five times the monthly billing rate or revenue, with extra costs if a new entity is established.
Defining post-transfer support, which often involves a staff augmentation model to ensure continued collaboration.

From a legal standpoint, the following considerations are essential:

New employment contracts should include clauses on potential transfer and non-compete terms.
For current team members, it’s advisable to secure voluntary annexes outlining transfer provisions.
Employees transitioning to the client’s entity should retain at least their existing compensation levels, particularly their base salary.

_Typical customers for the BOT model

The BOT model is particularly well-suited for specific types of organisations:

Technology companies in growth phase

These are often startups or scale-ups in Series B or C funding stages, with at least six months of secured venture capital and consistent revenue from early adopters. Their core offering is typically software—especially SaaS—and their leadership is commonly based in regions such as the US, Canada, Israel, or Western Europe. These companies need to rapidly expand their R&D capabilities to sustain growth but often lack the internal bandwidth or know-how to establish and manage a sizable offshore or nearshore development hub. The BOT approach enables them to partner with a seasoned provider who handles initial setup and operations. Once the team is mature and workflows are in place, ownership is seamlessly transitioned to the client—minimising upfront investment and operational risk while supporting rapid, focused scaling.

Large manufacturing corporations

These are well-established firms generating €300 million or more in annual revenue, typically operating across multiple sites with a clear roadmap for digital transformation. They often serve as Original Brand Manufacturers (OBMs) in industries like automotive, medical technology, high-tech, defence, industrial machinery, fast-moving consumer goods (FMCG), pharmaceuticals, chemicals, and semiconductors. As software becomes increasingly central to their business models, building an in-house development subsidiary can be both costly and complex. The BOT model offers a strategic alternative—helping them establish high-quality R&D centres in cost-effective locations, gain access to specialised talent, and advance their digital agenda without bearing the full burden of launching a new legal entity.

Established software providers and vendors

These organisations already offer mature SaaS solutions and are typically headquartered in North America, Israel, or Western Europe, without a current R&D footprint in Central or Eastern Europe. Whether scaling up or maintaining a strong market position, these companies often seek to expand their development operations to new regions for reasons such as diversifying their talent pool, reducing costs, or accelerating product innovation. With the BOT model, they can co-develop and validate a new R&D branch with an experienced partner—taking full control once operations are stable and aligned, while ensuring strong IP protection and process consistency.

Typical BOT project sponsors

Decisions to pursue the BOT model are usually driven by senior leaders such as CEOs, CTOs, COOs, company founders, VPs of Technology or Engineering, as well as Heads of Product Development or R&D.

_Benefits and advantages for customers

The BOT model delivers a wide range of benefits, which can be grouped into four key categories: strategic, operational, financial, and risk management advantages.

Strategic Advantages

Global talent access: Through partners like Transition Technologies PSC, the BOT model opens the door to Poland’s extensive pool of highly skilled IT professionals—helping companies navigate the global tech talent shortage.
Concentration on core business: Delegating the setup and initial operation stages allows internal teams to stay focused on strategic priorities and core competencies.
Cost-effective development: Leveraging external resources and expertise helps reduce development expenses.
Accelerated product delivery: The World Bank’s 2022 research shows that BOT-driven projects can be completed up to 20% faster than traditional models. The structured nature of BOT supports faster delivery from ideation through scaling.
Strategic R&D growth: The model offers a streamlined path for expanding development capacity in alignment with long-term business goals.
Market entry validation: Companies can establish and test new R&D operations with minimal risk, transferring ownership only after confirming success.

Operational Advantages

Expertise in SDLC and DevOps: Clients benefit from the service provider’s deep experience in managing software development and operational workflows.
Comprehensive infrastructure support: The service provider sets up and manages all necessary tools and IT infrastructure.
Proven process optimization: Clients gain access to refined, quality-driven development processes, including robust QA practices such as functional and performance testing.
Talent pool diversification: Expanding to new regions diversifies the workforce and reduces reliance on a single talent market.
Scalable operations: Development resources can be adjusted easily based on evolving project needs and business priorities.

Financial Advantages

Lower capital requirements: Companies avoid heavy upfront investment typically required for international expansion.
Cost-spread investment: Expenditures are distributed across the Build and Operate phases, rather than incurred at once.
High value for money: The BOT approach offers a strong balance of cost and quality.
Reduced overhead: Operating through a provider results in fewer administrative costs than setting up internal teams from scratch.
Significant savings: Costs can be reduced by up to 60%, largely due to leveraging offshore teams and infrastructure managed by the provider.

Risk Management Advantages

Reduced setup risk: Experienced providers handle critical tasks such as hiring, compliance, and infrastructure, which helps avoid common mistakes and delays.
IP protection: Clear contractual provisions ensure safe transfer of intellectual property, giving the client full control post-transfer.
Reputation management: Companies can scale operations down or transition teams without attracting negative attention.
Managed expansion: The phased structure of BOT supports steady, manageable growth.
Lower implementation risk: Providers bring local knowledge and operational experience to reduce the risks often associated with launching offshore teams.

_Key factors for a successful Build-Operate-Transfer implementation

Establishing a Build-Operate-Transfer (BOT) partnership in software development outsourcing involves a structured, multi-phase approach that demands meticulous planning, clear communication, and alignment between the client and the service provider. Drawing from industry insights and the accompanying presentation, the following best practices can help ensure a successful BOT implementation:

Selecting the Right BOT Partner

Demonstrated expertise: Partner with a software development provider that has a solid track record in delivering BOT projects and experience relevant to your sector. Review case studies, client feedback, and past results to evaluate their capabilities.
Cultural and operational compatibility: A shared set of values, communication norms, and business culture will facilitate smoother integration and cooperation.
Local expertise: For nearshore or offshore models, choose a partner familiar with the local business environment, legal landscape, and operational setup.
Sector-specific knowledge: Select a partner with proven experience in your industry to ensure they understand your specific technical and regulatory requirements.

Thorough Planning and Risk Mitigation

Initial evaluation: Conduct a comprehensive assessment of your current IT systems and business goals to align the BOT strategy with long-term objectives.
Realistic scheduling: Create a project timeline with defined milestones, resource plans, and risk mitigation tactics. Include buffer time for recruitment, onboarding, and technical integration.
Legal and financial structure: Establish a solid legal framework early on, typically involving three contract layers:
1. NDA for secure information sharing.
2. MSA to outline the overall service structure and future transfer terms.
3. SoW for detailed deliverables, timelines, and success criteria.

Effective Communication and Relationship Management

Consistent updates: Schedule regular check-ins—daily or weekly—to track progress and quickly resolve issues.
Governance framework: Implement a layered governance structure with:
- Executive Committee for strategic oversight.
- Steering Committee for monthly performance and risk reviews.
- Ramp-Up Review for weekly operational tracking.
Stakeholder involvement: Engage key team members from both sides early and continuously to build commitment and transparency.

Talent Management: Hiring, Onboarding, Retention

Utilize provider’s network: Leverage the partner’s hiring channels to access a wide talent pool and accelerate recruitment.
Structured onboarding: Introduce clear onboarding procedures, including training and alignment sessions, to help new team members understand tools, processes, and objectives.
Retention focus: Apply talent retention strategies such as career development plans, incentives, and growth opportunities to maintain team stability post-transfer.

Knowledge Management and Handover Planning

Early documentation: Begin collecting process knowledge, workflows, and system information from the outset.
Ongoing learning: Offer continuous training, workshops, and role rotations to keep knowledge fresh and evenly distributed.
Well-prepared transfer: Craft a comprehensive handover plan with documentation, training, and support mechanisms to ensure a seamless transition.

Technology and Infrastructure Readiness

Aligned tech strategy: Collaborate on choosing technology stacks, cloud services, DevOps tools, and security protocols that support your long-term needs and growth plans.
Compliance and security: Adopt robust cybersecurity and QA measures to meet local and international compliance standards. Partnering with a local provider helps manage legal nuances effectively.

Preparation for Transfer Phase

Start early: Begin preparing for the transition well in advance, taking into account legal, operational, and HR dimensions.
Gradual shift: Transfer responsibilities progressively to avoid disruptions and ensure a smooth knowledge and process takeover.
Post-handover support: Plan for ongoing support after the transfer to address any transitional challenges and maintain stability.

Flexibility and Scalability

Adaptability: Ensure your BOT setup is capable of scaling up or down to match shifting business needs or market changes. This adaptability is especially important in dynamic software development environments.
Staged transitions: Instead of a full handover, consider transferring specific teams or functions incrementally, based on project readiness.

_Conclusion

The Build-Operate-Transfer (BOT) model is a strategic pathway for software companies aiming to expand their development capabilities, tap into global talent pools, and retain operational control. In an era marked by a persistent shortage of tech talent and increasing pressure to innovate rapidly, BOT presents a well-rounded solution—merging the advantages of outsourcing with the ownership and stability of in-house operations.

By clearly understanding each stage of the BOT lifecycle, selecting the right implementation partner, and applying best practices in governance and transition planning, organisations can use the model to meet their strategic goals while reducing operational risk. BOT is especially well-suited for tech scale-ups, manufacturing firms pursuing digital transformation, and established software providers seeking to build R&D hubs in high-skill regions like Central and Eastern Europe.

When implemented effectively, BOT empowers businesses with access to advanced technologies, skilled engineering talent, lower costs, and accelerated product delivery. Each stage of the model is purpose-built to align with the client’s expectations and objectives, ensuring that the final software outcomes are high-quality and aligned with business needs. As companies continue to adapt to the demands of digital innovation and global competition, the BOT model stands out as a long-term strategy that delivers both immediate gains and enduring value.