In the bigger picture of things 'expensive' is a highly relative. You have to also factor in risk and the other secondary costs.

Not sure if this applies to your company but I have some prior experience as one of those SME/consultant/contractor guys.

For one particular multi-national company whom we did a lot of work, they had an entire dedicated team of (underutilized) engineers/technologists that should have been more than capable of doing the work we provided.

Aside from the hour or two of daily PM work, the entire staff would disappear for the rest of their shift and reappear just in time to check out. To this day, I still have no clue where everybody would go. I'm not talking about an isolated incident, I saw the same pattern take place over the course of months.

Why was this allowed? Why was the company willing to pay us a premium to do work that could have been handled internally?

It was a non-union shop. The company had established a very firm and well defined scope of work. Adding additional responsibilities could screw up the balance and put the company and it's daily operations at risk. In the bigger picture of things, paying contractors/consultants a premium + expenses to do the extra work is an order of magnitude less expensive than the possibility of unionization. Just the cost savings on HR overhead (ex managing disgruntled workers, hiring new people) alone probably made up for what we charged.

You should've seen the amount of hell raised when the coffee provided was downgraded from Starbucks to a cheaper blend.

The whole work environment felt a lot like some sort of bizarre Mexican standoff between worker and company interests. The company would have a very difficult time maintaining operations and hiring replacements if their workers were pissed off enough to leave. Meanwhile, as much as their workers liked to complain, they had been working under such limited responsibilities for so many years that -- in terms of engineering and/or raw technical skills -- most of them would be useless elsewhere.

This may in part explain why many large corporations show a strong preference for H1-B workers. Not only are they incapable of unionization but they keep the senior staff motivated by fear of their jobs being replaced/outsourced. Whatever the overhead cost/complexity, it pales in comparison to disrupting operations and/or being bent over a barrel on union/compensation negotiations.

It also explains the preference for hiring millenials. Millenials have been screwed since day one. Starting from ridiculous education loans/costs. Extending to being forced to work unpaid/underpaid internships to make up for lack of unrealistic industry experience requirements. The idea of a company/union providing any form of protection is so far from our reality that we don't even consider it as an option.

Tired of being screwed by your company? Pack up and move on to another company. Resume shows lots of movement? Too much ambition is bad for business. Can't deal with the stress/complexity of regularly changing jobs? Better learn to enjoy being screwed.

Engineering for many industries is a cost center and hell hath no fury like a team of bored senior engineers with an over-inflated sense of entitlement.

Outsourcing can be used to reduce risk, avoid management complications, and shift CapEx (ie permanent employees) to OpEx (ie disposable contractors). Offshoring sucks but there's virtually no legal risk involved with firing overseas workers en masse. H1-Bs cost the same as local workers but have so many legal limitations that they're essentially the modern equivalent of indentured servants.