Kellykelpie:
But this is not as far fetched as your story of a company agreeing to mass redundancies of skilled workers at the request of its contractor...
Mate, that's not far fetched at all. I've done it. The key to successful outsourcing is lobotomising the customer so that they become totally dependent on the supplier.
To do that you have to remove the customers technical expertise. The first thing you do is hire the customers best people to work for you. The customer needs no encouragement to get rid of the remaining workforce, that's why they outsourced didn't they - to save money!
Any remaining technical experts are a threat, so you run a character assassination campaign, pointing out the danger to the managers career of having an internal expert around who might become critical of the outsourcing program and have the credibility to make their criticism stick.
This is done routinely in the IT industry, you are being naive if you don't think it happens. These contracts are worth tens or hundreds of millions of dollars and the boys from Accenture, IBM, EDS, etc. play for keeps. Don't try to tell me that Rolls Royce haven't taken a leaf out of their books.
You make your customer totally dependant on you, then ....profit!