It’s because managers get promoted for their social skills and their ability to sell ideas, not for their IQ (which is generally in the low 20s).
The answer is corporate accounting: wages are a fixed cost and look b-a-a-a-a-a-d to bean counters and stock analysts; costs paid to contractors are fluctuating and don’t set off the same red flags, even if on a per capita basis they are much higher.
I guess my puzzlement is why don’t those same low IQ managers hire H1B visa workers at an even lower contractor rate and look even better?