New digital services and products rely heavily on digital technologies and need to be deployed in an ever-shorter timeframe in response to rapidly changing market demands. To address this challenge, companies review their sourcing strategies to shorten tender duration for large-scale IT initiatives and to increase flexibility in contracting of IT services. This study aims at revealing how the application of agile practices impacts the sourcing and contracting of IT services. As the automotive industry is especially affected by digital transformation, this revelatory case study shows how the German premium car manufacturer CarCo increased agility in sourcing and contracting of IT services for an autonomous driving development platform. Agile practices turned out to be essential in dealing with technological novelty and hurdles, regulatory uncertainty, and frequently changing requirements. We found that applying agile practices to the sourcing and contracting of IT services has two implications: First, agile practices aim at reducing tender duration, decreasing pre-contractual uncertainty, and therefore lead to an increase of speed and flexibility. Second, agile software development changes contract nature as comprehensive requirements are replaced by high-level specifications focusing on early results and business outcomes. We contribute to the extant body of knowledge on IT sourcing and contracting by providing managerial recommendations on how agile practices could reduce time-to-market and increase flexibility in the sourcing and contracting of IT services.