Not everyone has the US culture of running their life on credit.
Because when life changes, it isn't only their phone they lose.
The only single time I had a contract, because it was the only way to get a Nokia N70, I learnt never to do another one ever again.
I mostly buy my phones outright too, but I am under no impression that everybody else does it as well.
As a result, quite a lot of people use the "I can't believe they could make and sell an entire phone at this price" Xiaomi and similar phones.
In many places the default is prepaid SIMs with separately purchased phones. Sometimes the prepaying can be automated (e.g. in Russia), sometimes it involves you physically going to a shop once a month or so (e.g. in Egypt).