This study examines the impact of digital transformation on employee performance in Palestinian insurance companies operating in Bethlehem Governorate. As organizations globally embrace digital technologies to enhance efficiency and competitiveness, this research provides valuable insights into how such transformations affect workforce productivity in developing economies facing infrastructural and resource challenges. The investigation focuses on several critical dimensions including digital infrastructure quality, employee digital competencies, supportive administrative culture, and the extent of process digitization. Through a quantitative research approach, data was collected from (81) employees across insurance companies in Bethlehem using a comprehensive survey. The findings reveal that robust digital infrastructure significantly enhances employee performance, while other factors such as digital skills, administrative support, and process automation showed more complex relationships with performance outcomes. These results suggest that in resource-constrained environments, foundational technological investments may yield more immediate performance benefits compared to other aspects of digital transformation. The study contributes to understanding digital transformation in developing contexts by highlighting the intricate balance between technological, organizational, and human factors. Practical recommendations emphasize the importance of infrastructure development, tailored digital training programs, strong leadership commitment to digital initiatives, and a strategic approach to process automation. The research underscores the need for context-specific digital transformation strategies that address local challenges while incorporating global best practices.