The point of going to big businesses for software services and support is that most customers don’t have needs that are large enough to justify the full-time staff needed for top-notch support. So companies that provide services amortise this over many customers and can employ n dozen full-time staff for a particular subsystem when the average customer might only need them a few times a year. So the tradeoff makes sense – even with a big profit margin, the customers still save money compared with DIY.
This logic doesn’t really hold when it comes to large governments. Their needs are large enough that they can justify employing specialists. At that point, the profit margin the service business is capturing is just inefficiency. Internal services should be more common in large governments.
Theoretically the advantage of outsourcing to a business instead of running it inhouse is that you can put it out to tender, picking the most competent of the entire industry, whereas your inhouse team is what it is.
In practice, Microsoft isn't going anywhere. You're just paying for an external inhouse.
If you're a government you absolutely have the ability to compete with big tech, it's "just" a matter of political will. If you decide that it's important enough you can hire competitively from the same talent pool. Strategically it makes little sense to depend on another nation's companies to run your critical infrastructure. You have to own your dependencies.
It depends? Sometimes it is the feature set, but for example with future VMware pricing we'd be cheaper off hiring two full-time staff and running proxmox, which is currently being evaluated.
This depends on the level of support you need. Two members of staff might be fine for non-critical systems but it’s not enough to support anything that needs to be up 24/7. There’s not enough coverage and less than zero slack. If my alternative is to hire two people, I would rather spend the money with a company that is large enough to employ more people, in different timezones. But if most support can be handled by a larger body of existing staff and you only need specialists occasionally, then it might make sense.
This logic doesn’t really hold when it comes to large governments. Their needs are large enough that they can justify employing specialists. At that point, the profit margin the service business is capturing is just inefficiency. Internal services should be more common in large governments.