The outsourced software development process has traditionally relied on a requirements-driven black-box approach for transferring knowledge of customer needs to vendors. When this approach is feasible, the need for the customer and the vendor to deeply understand each others’ knowledge domain is limited. We describe this as symmetric division of knowledge. However, asymmetric overlaps in knowledge are necessary at the vendor-customer boundary in projects involving conceptual or process newness. In this study, we examine the conditions under which overlaps in knowledge at the vendor-customer boundary arenecessaryforenhancingthedevelopmentprocessin outsourcing relationships.Wedevelopandtestamodel using data collected in a large-scale field study of 209 software projects in 209 software development organizations belonging to three of the largest global software consortia. The study makes three contributions: (1) we empirically demonstrate that it is more important for a vendor to posse...