To what extent is this due to neo-liberal "small government" policies, where from the highest political levels - through lobbying - it is decided that outsourcing is a win-win that leads to financial savings and budgets that are cut, and later on cut some more, etcetera?

I've witnessed the crazy dance of enterprise consultants in large corporations (not government) and it is astounding how much money is wasted in inefficiency.

I was in a small tech shop and we had just won an RFP at a big corporation, with a very practical solution and for a limited domain. Our down-to-earth approach led to so much enthusiasm with corporate employees, that they sent all their consultants to us to investigate interfaces to ever more back-end systems. Scope ballooned, and we - being a small party - were dictated to support all this stuff. It was utter madness to such extend that we decided to more-or-less graciously wringle out of the contract. Just-in-time before we were committed to a monstrous project that was 100% certain to fail. And that was not the only time we experienced this phenomenon in big corp.