Went through a similar situation at my workplace. Welcome to 21st Century IT. Outsourcing purely to reduce costs generally works, but like with most things, cheaper means lower quality.
If you pay peanuts, you WILL get monkeys.
Outsourcing has its place and if done correctly works very well. In situations where the decision to outsource for purely financial reasons (bean-counter bonuses) it normally ends up being a complete fail.
Biting the hand that feeds IT
