Contractors are easy, you just throw money at a contracting firm and they solve your problem. Doing it inhouse means they have to hire managers and all other support personnel needed to hire and keep employees, that is a lot more complicated. The law makes it more complicated to throw money at contracting firms to make them solve your problems, hence why they get fired every 2 years etc.
In order to keep benefits tax free, companies have to make them lucrative enough for lower paid employees such that they pass non discrimination testing. It’s not a trivial expense even if the wage is lower, the total compensation cost can be higher.
