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The scarcity of skilled information technology (IT) professionals on today’s IT labor market translates into a challenge for organizations to obtain the right skillset. These organizations use outsourcing as one approach to ensure access to valuable human capital resources. The vendor-client relationship success thereby depends on the vendor’s capability to provide the appropriate IT competencies and applications. Analyzing 8,000 projects for more than 900 customers at a large German IT service provider, this study investigates the effect of turnover rates on the outsourcing relationship. The results suggest that turnover of IT project team members has an inverted U-shaped effect on the revenue the vendor achieves with the customer. Utilizing a human capital lens on turnover in IT outsourcing (ITO), this study highlights that moderate levels of turnover have a positive impact on the outsourcing relationship.
IT outsourcing, turnover consequences, vendor-client relationship, human capital resources