This paper examines the impact of project management capabilities on the effectiveness of offshore outsourcing of application development activities. Offshore outsourcing is an important trend in today?s business environment and it is important for us to better understand what capabilities are required for a company to execute an offshore outsourcing arrangement. Using the lens of Dynamic Capabilities and the Resource Based View, this paper identifies key project management sub-capabilities that the client needs to possess in order to effectively offshore outsource application development. These sub-capabilities include project planning and control, project governance, and team management. Qualitative data from several mini-case studies is utilized to support the findings.