Application Service Provision emerged in the late 1990s as a viable method for remote delivery of software to multiple clients. This form of outsourcing differs from traditional outsourcing on aspects such as attributes of vendors and clients, contracts coverage and length, and functions and customization offered. Such differences are expected to result in a different pattern of relationships between Application Service Providers (ASPs) and their clients. This paper compares traditionaloutsourcing with ASP model, and proposes a research model and propositions on vendor-client relationship development based on prior empirical work, popular media, and theoretical perspectives from economic and marketing literature. A profile of an actual ASP is provided for illustration. In addition to providing insight into this growing form of outsourcing, this paper rectifies a prior client- centric bias in outsourcing research by considering both the vendor and the client's point of view on relationship development.