They're using different definitions of efficiency.
There's efficiency in terms of price (which may or may not be related to cost - "my team is cheaper"/"my team gives better long-term value to the company"), and there's efficiency in terms of speed (output per unit time - "my team delivers on time"), and there's efficiency in terms of output per head ("my small team does a better job for the company than a cheaper army of workers in the Sahel"), and there's efficiency in terms of flexibility and nimbleness ("my team can do anything and do it on time and under budget"), and maybe a few more.
All management isn't equal. Presumably, e.g., $xx B/yr IBM Global Services contractors working for XYZ Corp have more layers of management than employees of $10 M/yr XYZ Corp do. It doesn't mean that the overall efficiency of the management of the contractors is worse than for internal employees. (E.g. IBM's management may have implemented processes that let them spread the management over more people more efficiently.) If XYZ Corp cans their IT people for IBM Global Services but keeps their same management structure that they had for their team, then I'd guess they're probably adding management inefficiencies. But it probably depends on the individual case.
They're both making good points, but they're not agreeing on what the terms mean so they're talking past each other.
My $0.02.
Cheers,
Scott.
