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There is often a perverse incentive for an outsourcer to do a bad job so that more work comes in, for example.

I have actually seen this in person. *everything* was deliberately configured in such a way that if it fell over it'd stay dead until deliberate action was taken. I mean, it's obvious that people set mission critical services on servers so that if it stops it automatically restarts and writes to an error log.

Not if your outsourced; the action is set to "do nothing" so you have to phone somebody to them remote in to fire up services.msc and hit the "start" button on it. When the server restarts all services should start automatically? Again; if outsourced it makes more sense for them to be set to "manual" starts etc because that lets them bill for your telephone call reporting a problem, and then again for remote access work.

Redundancy that quietly fails over in the background has to be eliminated of course; you can't bill for things like that. The result in an unholy mess of biblical proportions. Frankly, there are so many things that you can do to systems to make them not work that even after ditching the outsourcer the systems only really reached a high level of reliability after the servers and systems in question were actually taken out of use, wiped and rebuilt from scratch, carrying over nothing but the data.