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Chief
Personally I liked being a contractor. I liked not having to accept the company culture or be required to attend all the all-hands meetings. Holiday parties are overrated. What you call being an outsider I call being an independent. And besides, at least you've got a job. I'd wager there's a lot of people in this bowl who would love to be in your position.
Chief
They definitely do that because it’s cheaper. Not fair to you, but in this market, I honestly would take anything.
Used to be you got paid a lot more as a contractor, to account for the higher risk, shorter notice periods, no training, pension, lower liability for employer, etc and the fact that in principle you were more expert like an independent consultant & this could hit the ground running. Back then I knew people who’d been contractors in the same role at the same company for 10-20+ years.