Nathan, I'm no expert on IT so not really aware what the pitfalls are. An IT contractor is operating a business to make a profit so they must operate more efficiently by necessity with a capped cost contract. I certainly can see potential to cut corners to achieve those objectives as well.
What are some of the pitfalls you are alluding to?
They rarely come in on budget, they usually use inexperienced people and rotate them often, thus ensuring that nobody becomes intimately familiar with the organization's particular infrastructure (and thus can fix it quickly), even when the contract calls for experienced personnel, and they have a bad tendency to attempt to sell expensive solutions only they can support. Those are the big ones. FWIW, in my experience it's pretty rare to have a fixed cost contract for an open ended scope of work like "maintain existing IT systems and support end users for one year". You might get that on a contract for installation of specific hardware and software or training a specific number of users, but even then the contractor rarely eats the entirety of any costs in excess of what was originally anticipated.
Even discounting deficiencies in the contractor themselves (good ones obviously exist, although usually on a smaller scale), it's hard for a contractor to get as good of a sense of the client's needs or as fast a response without having personnel on site equally as much, which ends up costing more than having in house employees. Of course, with the wrong employees, things go wrong anyway. Outsourcing the day to day IT functions of a large organization is as much of a fool's errand as trying to write custom software without an experienced project manager and an iron clad set of features and deliverables. It usually ends in failure.
Where they could use a consultant is in figuring out why their servers need so many people to keep running and help implement solutions that don't require so much intervention. Unless they have some unusual requirements, their head count seems excessive.
I feel a little bad saying that, because god knows my industry doesn't need any more unemployed, but it seems pretty ridiculous at a glance. I wish it took that much work..then I wouldn't be sitting on my hands (and posting here) as much as I end up doing, and I'd have more billable hours besides. Even five years ago it was a hell of a lot more work than it is today.
