For what it's worth, I've worked in multiple start-ups that relied on or made extensive use of contractors (one for the same reason: it was difficult to hire designers and engineers) and have seen this very dynamic. I've also worked at a company that made heavy use of "perma-temps", have contracted myself (when I was a full time student) and have heard (anecdotally, from many contractors) what the different reasons for going into contracting are (tl;dr top ones do it because the hourly pay is higher or to bootstrap their own business, but the majority do it because they can't find anything else).

That's the primary cause for this comment: bringing in unknown quality contractors makes it difficult to retain and hire quality full time employees.

I've also worked at companies that have built a talent brand and a big company that has squandered its (looking at my resume, you can probably guess what they are).

I don't claim to be a quarterback, but the idea the article suggest is just egregious. I would not want to work at that kind of a company. I am not suggesting whether or not that approach will do what the corporation intends to do: generate profit for their shareholders. There are many cases where poor quality engineering teams have created outsize returns on investment: the market, the timing, the business models matter too. I am not making suggestions on any of the other points in the article.