I would rather have a team of all-FTEs than a mix. But the company wants more contractors because when cost-pressures arise, they can dump them without any thought. In fact this happened during COVID, hundreds of contractors at my firm were let go in one fell-swoop. Some FTEs were also cut, but it was like a 4-1 margin of contractors to FTEs, maybe more.
If you work in a large company, HR is going to have a shit fit when they find out. And if you don't, why not just hire them full time?