I think you’re missing the key component of payment. They cost very little, and, they work extra hours for free. It’s not really a myth. Some of the most successful companies in my region is doing exactly this sort of thing. The quality isn’t as good, and your know-how leaves once they “grow up”, but it’s proving to be a really good business model.
Which from a management perspective can be explained as the following: In non tech you buy software and development time, and projects almost always fail to deliver on time or within budget regardless of which company you go with. At the same time, the biggest note on your budget is the upfront cost. Even if you end up spending more by going with these junior exploitative companies in the long run, it’s still easier to justify picking them when you’re talking up the latter, because they charge 3-40% less an hour.
On top of that there are different kinds of productivity. There’s the senior developer who does things right, but non-tech clients don’t give a shit about that, they just want something that works most of the time. Which again is more expensive in the long run, but nobody in management is around for long enough to realise, and or, learn from past experiences based on real data. No, in management you learn with how much praise your project gets, and it doesn’t really have to be sound technically to get that.