While one might hope so from experience at a number of places as a consultan noticing such things is not a good policy for a senior manager. The person who originally decided to outsource may well have enough power to punsih anyone who challenges him while tha same person may not be an effective challenger to others at the same level seking advancement so it is not in anyone's personal interest to call attention to the unpleasent reality. just what I have seen of corprate politics in action of some places.
There are really several reasons the pointy-haired managers don't "get" it. And it all falls under the heading,
We have a couple of managers in that situation right now, in fact.
Big IT has historically had 70% project failure rate anyway, which I've never understood. Just because a bunch of projects failed hasn't meant anything to these clowns, in the past.
Remember, this group of managers is such a nation-wide joke that they've been the main focus of the successful 'Dilbert' cartoon. Pretty much everyone *but* them knows they're a joke.