It is not surprising to see management throw employees under the bus to cover their behinds. Using consulting firms is a popular option. The consulting firm may recommend some sort of outsourcing arrangement, further generating $$$ for themselves.
They may even offer to "hire" the company's employees to take the employee problem off the company's hands. If employee A is hired and later fired by said consulting firm, the company protects itself from a lawsuit.
They claim that the entire outsourcing was a "business decision." It would be interesting to see what happens to these types of company after such a decision. Do they go down the drain, barely stay afloat, or experience true growth again?