"... take advantage of not having to pay for the engineers to sit around for large periods of time."
And there lies the problem. So few companies (or anything else) build in a bit of extra capacity for the times that things go wrong. If three companies employ one outsourcer, then there will be fewer than three solutions available when, say, a storm knocks out large chunks of capacity. If all three companies had the staff "sitting around" (which is a lie of monumental proportions anyway), then they'd be up and running much quicker than waiting for the outsourcer to provide the relevant work based on whatever priorities they have.
My belief is that outsourcing is fine for short-term things that are widely outside the competence of the organisation - this might include electric work, vehicle maintenance, setting up servers etc - but, beyond a certain point it is a false economy. There is often a perverse incentive for an outsourcer to do a bad job so that more work comes in, for example. Companies need to keep their core functions in-house if they are to run effectively.
Biting the hand that feeds IT
