Offshore-outsourced software development (OOSD) projects involvemultifaceted risks throughout the project execution, as they are handed over tothird-party organizations and thus are exposed to more risks than in domesticoutsourcing or captive offshoring. We concentrate on failed OOSD projects inthis paper and analyze the unique aspects of such projects at the team level thatlead to failures. Using the grounded theory approach, we conducted semistructuredinterviews with 19 project managers involved in OOSD projectfailures from the vendor and client sides, who are based in India or Switzerland.We developed a set of propositions regarding multiple teams in the OOSDproject context to explain failures. Integration of inter-organizational offshoreand onshore teams from the vendor and client sides was found to beindispensable in avoiding project failures. Six categories of unique aspects thatlead to OOSD project failures were identified and discussed in this exploratorywork.