I used to work for a subcontractor in the I.T. business a few years ago. Subcontracting is only as good as the contractor, AND the contractee, are.

Fortunately I worked with a good (contract) management team (as opposed to corporate management, that was another story) and a good client and for many years we were able to do the job, do it well, obtain more (and better) business, and so on. Our company also did work for other clients who could have cared less what we did - and it showed not just in the client, but also the managers and the employees assigned to those contracts. Gave our company a black eye.

When we made a mistake, our client called us on it. And when we did well, our client made sure we knew.

What happened: Our corporate management felt that we should work on volume, not quality. It was far, far easier to attract the second kind of contracts over the first kind (because, frankly, it cost us less to serve them, and it cost us less to attract them.) So more of our business went to those sorts of companies. And the corporates felt, if we could treat Client #B that way, why can't we treat Client #A that way too?

Client #A got wind of the plan, and started demanding lower charges. And so my work ultimately got punted off to India where service continued to falter. Ultimately - the client (along with several other U.S. I.T. companies) had to move work back into the U.S.; the company I worked for was a "discontinued operation" under the owner when I worked for them, and has since been sold twice; their reputation is in the gutter while other companies have received the business, and I've been working in an entirely new industry for the last seven years - and far away from I.T.

Companies that "insource" (or don't outsource) are not immune to poor performance, if their management structure doesn't keep quality in check. Outsourcing has its advantages - and its disadvantages; but when you expect outsourcing to be the cure-all, that should be a red flag that your expectations are too high, and really the problem lies within your own culture. Outsourcing is great if you are an expert at one thing, but you must do another thing that you're not so well at doing. Outsourcing is not good when you outsource your very existence.