Most people cannot survive running their own business, period. That said, skilled professionals who can should come out ahead doing independent contract work over full-time employment. You break even with around 1,000 billable hours in a year typically, if you can control your billing rate effectively. If you can't control your rate (or negotiate well), you end up needing to work about 1,600 billable hours to break even.
Target billing rate should be full-time equivalent salary/2080 hours*3.0, or roughly your current salary divided by 700.
Contracting of non-core functions does make sense for small and mid-sized companies. Large companies really should have in-house expertise though. When they contract the work out it is really just an MBA fantasy.