Multi-level knowledge transfer in software development outsourcing projects: The agency theory view

In recent years, software development outsourcing has become even more complex. Outsourcing partner have begun're-outsourcing' components of their projects to other outsourcing companies to minimize cost and gain efficiencies, creating a multi-level hierarchy of outsourcing. This research in progress paper presents preliminary findings of a study designed to understand knowledge transfer effectiveness of multi-level software development outsourcing projects. We conceptualize the SD-outsourcing entities using the Agency Theory. This study conceptualizes, operationalises and validates the concept of Knowledge Transfer as a three-phase multidimensional formative index of 1) Domain knowledge, 2) Communication behaviors, and 3) Clarity of requirements. Data analysis identified substantial, significant differences between the Principal and the Agent on two of the three constructs. Using Agency Theory, supported by preliminary findings, the paper also provides prescriptive guidelines of reducing the friction between the Principal and the Agent in multi-level software outsourcing.