Large international corporations commonly engage in IT outsourcing. However, the process of evaluating, selecting, and subsequently contracting out or selling the organization's IT assets, people, and/or activities to a third-party supplier creates the possibility of a "Winner's Curse." This occurs when the supplier overpromises on what can be delivered for the contract price. This article presents a longitudinal outsourcing case study that explicates the often abstruse Winner's Curse, its effect on post-contract management and the relationship, and how it was alleviated by a mutual renegotiation of the terms of the deal. Building on auction and IT outsourcing theory, the article provides both a model of IT outsourcing processes and a Winner's Curse typology for understanding IT outsourcing ventures. To avoid the experience of relational trauma as a consequence of a Winner's Curse, this article identifies six lessons that client and supplier companies should consider before signing IT outsourcing deals.

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