Both current public bus operators have welcomed the new contracting model.
SBS Transit said it is a more sustainable option but added that the "paradigm shift" would have a major impact.
It said it is prepared for the challenge and will tap sister companies in London and Sydney, which operate under a similar model. SBS Transit chief executive Gan Juay Kiat said: "This is one of the most significant developments in the local bus industry in recent times. We look forward to working closely with the authorities as we transit into the new operating environment."
SMRT spokesman Alina Boey said: "We are geared up to participate in the competitive tendering exercise."
Both operators will begin negotiations with the Land Transport Authority (LTA) on moving to the new model after their operating licences expire on Aug 31, 2016. SBS Transit and SMRT have suffered losses on their bus operations in recent times. SMRT reported a loss of $28.4 million for the financial year ending March 31.
The Straits Times understands several international operators have expressed interest, including French firms Veolia Transport RATP Asia and Keolis, and Australian firm Tower Transit.
Keolis spokesman Segolene Deeley said it may be interested in bus and rail contracting in Singapore. The largest public transport operator in France, Keolis runs various transport systems such as the bus, tram and metro in 15 countries.