If you are equating contract labour to be cheap labour, sooner or later you will realise that it is not the case always. If there is an operational necessity like a sudden rush of orders or a breakdown issue, you can tide over the situation by means of outsourcing the activity at minimum cost. Otherwise, the liabilities will continue to increase over a period of time and the situation will become more and more difficult to handle as years roll by.
So when you are engaging contract labour, the liabilities will keep on increasing. With the new labour codes on the anvil, the liabilities will increase.