One of the biggest problems with outsourcing is competence erosion. Here's an example of Dell's most critical competence - service - eroding fast. Service is really one of the last reasons why Dell provides consumers benefits over competitors, and why people continue to buy Dell.
It's price competition strategy, sadly, was and is completely at odds with this competence - so this result is hardly unexpected.
The fascinating thing about this example is that C-level is always convinced that the outsourcers will do a better job, because of education, etc, but a lot of the problems in this example are cultural ones.