The 1619 project made waves domestically for questioning and highlighting the speciousness of such arguments. It is because these companies are able to pay labor below market rate (by restricting mobility and creating indentured servitude conditions) that they are able to add "tremendous value" to enterprises in the first place. But of course, I question even that.
To those who have ever been in the unfortunate position of the counterparty in either inheriting a codebase or making the argument against them internally, the code produced by these kinds of body shops is frequently ROI negative -- they're the "high interest credit card" of engineering orgs. That is baked into the profit structure internally of these consulting companies. Your loss is their gain. They will promise whatever they need to secure the contract upfront, and fail to deliver results. They are incentivized to do so, because they are incentivized to think short term rather than long term as owners.
You pay less upfront, but the hidden risks and maintenance burdens continue to stack over time. And so from a discounted cash flow analysis, there is a strong argument to be made that they contribute negative enterprise value and serve only to extract cashflow through a sleight of hand. Of course, on a quarter to quarter basis, they provide an easy way for an enterprising management consultant (or corporate financier) to cut costs and increase apparent profit to expenses. But if it was so easy to achieve technical outcomes this way, why wouldn't everyone do it?
> they are operating in an environment where FAANGs spend a lot of money lobbying for favorable regulations
There are certainly myriad issues with how FAANGs operate. One only needs to look at their previous settlements with the DoJ for wage collusion to see they are no angels; far from it, they often behave in an anticompetitive manner reminiscent of Gilded Age robber barons. With that said, they are still able to create some kind of a long term incentive alignment by generally setting the market price for top talent quite high -- we need look no further than levels.fyi to see evidence of that. And the proof is in the pudding -- FAANGs have continued to capture a larger and larger percentage of the SP500, managing to create growth in market cap at scales that are scarcely possible in other sectors. Their P/E ratios reflect this, and it derives from their ability to turn technology into leverage over the market and a sustainable competitive advantage with network effects. That is a far cry from consulting body shops where technology is viewed as a cost center to be minimized rather than profit center to be fully exploited.