As businesses have grown global, companies have become globally diversified in their operations. Companies have employed wholly owned subsidiaries as offshore centers for carrying out IT operations, business process operations and research and development activities. Offshore subsidiaries are a very popular strategy adopted by companies to source skills and capabilities. The extant IS outsourcing literature has considered various aspects of vendor client relationships but has not addressed the subsidiary based sourcing phenomenon. In this article, we try to bind the findings from existing literature to provide a predictive model for subsidiary based sourcing effectiveness based on a capability argument. We propose that subsidiary based sourcing effectiveness is dependent on the subsidiary capabilities under moderating influence of interdependence between the parent and the subsidiary.