What does the term 'handoff tax' refer to?

• A. Taxes paid on outsourcing contracts.
• B. The inefficiencies and costs associated with transferring tasks between different service providers.
• C. A fee for using third-party vendors.
• D. A tax credit for outsourcing savings.

Answer: (B)

Handoff tax is the extra cost and delay that crop up when work is transferred from one service provider or team to another. It happens because different teams may use different tools, processes, and documentation, and because critical context and knowledge need to be re-communicated. This leads to rework, clarification meetings, alignment of requirements, and potential testing or integration issues, all adding time and expense to the project. It’s not about taxes on contracts, a vendor fee, or a tax credit; it’s the hidden cost of moving tasks between providers.