[jfengel]

Managers love the idea that contractors can be fired more easily than employees. Except that this flexibility comes at a cost; people insist on being paid more to have an insecure job.

The uncertainty never goes away. You can pay someone else to suffer it, but it will always cost more than dealing with it yourself.

And that can be ok. Just don't fool yourself into thinking you're getting a bargain.

[marcus_holmes]

I've seen this happen because of accounting/corporate finance policy.

Payroll is an ongoing commitment. Consultancy is a temporary service. Moving people from payroll to consultancy means they can reduce overhead in financial projections. Even though consultancy costs more, and employs the same people, it makes sense to do if it means you can convince shareholders and analysts that Opex will shrink in the future, and therefore profitability increase, and therefore the share price increases.

[OccamsMirror]

A stable environment with a great culture has lower costs.

But then they have to hire good managers and for that you need to be a good manager yourself.