Comment by jdw64

In my experience, it's probably due to differences in budget line items. Usually, regular labor costs and outsourcing costs are budgeted separately. Some teams may not have the authority to hire an additional full-time employee, but they do have the authority to use external contractors. On top of that, the internal political landscape differs as well. When it comes to office politics, increasing headcount in a particular department means increasing that department's influence. There are also additional benefits and administrative costs that come with hiring permanent staff. Moreover, standard contracts usually come with overhead for contract management personnel and procedural costs, and these are often handled by the vendor side. In other words, direct employment comes with long-term responsibilities for performance and benefits, but when you outsource, most of that liability shifts to the external vendor.