[acdha]

One other big concern is the incentive structure. A contractor will do whatever their contract incentivizes, and any as complex as software has plenty of areas where that can be gamed or will encourage bad outcomes. Charging for defects encourages litigating each bug; not charging encourages skimping on QA, etc.

Not having in-house expertise has the really big problem you mentioned because the only way to avoid these problems is if you have experienced oversight and that's almost inevitably the first “expensive” staff cut.

Off-shoring takes all of those problems and amplifies them with a big communications latency hit. I've never seen that go well except when an entire product can be handed over, including the management.