With changing business environments, the locus of value creation is no longer within the boundaries of a single firm, but occurs instead at the nexus of relationships between parties. With the growing importance of pooling knowledge resources, knowledge management will have to transcend organizational boundaries. Based on current research literature, this chapter develops research propositions to study causal aspects of knowledge management systems supporting IT outsourcing relationships. Perspectives from the research literature applied in this chapter include knowledge transfer, strategic intent, knowledge management technology stages, intangible assets, resource-based theory, vendor value proposition, value shop, and knowledge strategy (Gottschalk & Solli-Sæther, 2006). Research propositions in this chapter suggest that knowledge transfer is the most important knowledge process in an IT outsourcing relationship, increase in knowledge transfer between vendor and client will improve partnership quality in IT outsourcing relationships, a higher level of strategic intent for IT outsourcing requires a higher stage of knowledge management systems, and vendor and client need to be at the same technology stage of growth to be able to successfully communicate with each other through knowledge management systems.