Agency Principle is a concept associated with the traditional model of customer and supplier.
The Agency Principle expresses the fact that principals (customers) hire agents (suppliers) to deliver against some specific objectives. The agents act in good faith and represent the principal (for compensation (typically monetary)) and the principal provide direction, resources, funds and boundaries (constraints) that the agent has to act within.
Within the realm of IT Service Management the Agency Principle provides for business customers having two types of agents. Firstly, the traditional supplier of services (could be internal or external) and users of those services (who may or may not be direct employees of the customer).
The true value derived for a customer is exposed when there is a close synergy between principals and agents.