Right, briefly going off trade, and into a former life, to note and discuss this interesting article by @DanielKorski on Government outsourcing in the UK 1/ politico.eu/article/opinio…
Interesting questions here. And one big answer not mentioned. Margins. Virtually non-existent, because outsourcing is supposed to save money, improve the service, and generate a profit. Without change here forget significant competition 2/ 
So then cost increases and profiteering are not due to poor oversight but are an essential part of the system, and provide the main profit motive for the outsourcers. 3/
Dividing large contracts into small ones means a greater management and contracting overhead so you face the same problems of trying to attack profit margins 4/
Next issue, covered in part, is skills shortage in the outsourcing companies. They tend not to have large teams of experts but a handful who work primarily in sales, and yes, often draw on smaller companies. This lack of skills depth often comes as a surprise 5/
This I agree with, a major weakness in outsourcing approach has been the lack of incentive for genuine innovators 6/
Ultimately though it all comes back to the reason for outsourcing. This article assumes outsourcing is good and starts from this point. Even after 30 years I don't think that case is proven, and we need to return to the basic discussion, why outsource 7/ ends
PS full disclosure, I worked for Serco and Capgemini in various roles including on outsourcing contracts for many years at the start of my career
