Contractor is not an employee
In software management, is normally best practice, well used, to use contractors for development, to train new employees or to make innovation analysis on new technologies. You should not use contractors for maintenance jobs.
Never buy from the same Vendor. Competition is the key to keep control
Market and Competition are the key. Buy from different vendor and make them compete to deliver better quality. If you successfully make it, you will gain control and you will simplify the replacement of people, if needed.
A good manager is going to give to any company the same possibility and opportunities to get visibility and to struggle to delivery in time and with quality.
Don’t ask or impose people to decommission themselves
If you have the mandate to rebuild or replace some legacy project or application, you should never ask to do that to people that have worked there for more than 2 years. The obvious consequence is a lot of resistance and contrast on your way to get your mission.
I personally would create a team (not bigger than 5 people, but depends) with basically three different roles: 1 business expert (or Product Owner), 1 technical lead and developers (50 % of them can be an offshore team after the first 4/6 months). The legacy team would be in charge of the legacy documentation, and to support the new team on the implementation. They would communicate only with the business expert.
http://blog.foppiano.org/2012/12/17/3-recommendation-on-software-management/
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