It was one of the most shameful incidents in a war full of them. On 16 September 2007, employees of the private security firm once known as Blackwater, assigned to protect a United States State Department convoy, opened fire on civilians in Nisour Square, Baghdad, killing 17 of them.

After the nauseating pictureshow of the abuse of Iraqi prisoners at Abu Ghraib, America’s reputation had sunk to another nadir: Blackwater became a symbol of a country so arrogant in its treatment of an Iraq it was professing to save that it allowed hired guns to use the capital as a shooting range.

And for a while, it seemed, arrogance would be piled on arrogance, as US authorities refused to permit the men to face an Iraqi court. But last week in Washington justice was finally was done. Four of those Blackwater employees were convicted of murder and criminal manslaughter, on charges brought by the US government.

They now face decades in prison while the families of the victims of the unprovoked fusillade have, to use the fashionable term, gained “closure” of a sort. Nor was the chief federal prosecutor overdoing it when he hailed the verdicts as “a resounding affirmation” of America’s “commitment to the rule of law, even in a time of war”.

But the affair, in which some 30 Iraqi witnesses were flown to Washington to testify during the 11-week trial, has raised as many questions as it answered. How many independent contractors, from what are known as PMSCs (Private Military and Security Companies) now supplement America’s official fighting forces and national security personnel? What is their legal status? How much do they cost – and why are these modern-day equivalents of mercenaries needed at all?

Mercenaries, of course, have been around ever since states started to fight each other. The ancient Egyptians and Greeks used them. There were the condottieri who served warring Italian city states in medieval times, and the Hessians, German soldiers who fought on the losing side with British troops in America’s war of independence. And to this day Swiss Guards, behind those colourful uniforms no more than highly trained mercenaries, protect the Vatican.

The outward difference is that these modern mini-Pentagons for hire are headquartered in glossy offices, with slick websites offering, in perfect corporate-speak, a vast range of services, lethal and less lethal. One such Florida-base firm is actually called Condottieri, and its website promises “security solutions to assessed vulnerabilities” and training for “the key roles for quick response needs”.

As for Blackwater, the name may no longer exist, but the company does. Rechristened first as Xe Services, and then as the yet more innocuous-sounding Academi, it does much work for the CIA and other arms of the US national security apparatus.

The biggest difference though is the sheer scale of their operations on behalf of the US – a topic on which Ann Hagedorn, a former Wall Street Journal reporter, sheds some long-needed light in a new book. It’s called The Invisible Soldiers, and largely invisible they are. Their overall numbers are unclear, their losses don’t show up in military casualty figures (though they may be greater than those of conventional soldiers) and no flag-draped coffins return home to mark their passing.

Private contractors, it should be said, are nothing new. They’ve been around since Vietnam, when they were mainly used for on-base work and logistics. Today it’s very different. According to Hagedorn, between 2009 and 2011 they accounted for the bulk of US personnel in Afghanistan and Iraq – and these activities are but a fraction of a huge industry worth $50bn or more.

PMSCs provide more than 90 per cent of US diplomatic security, and the Department of Homeland Security spends half its budget on them. Contractors are a key part of the vast secret security state that has developed here since the terrorist attacks of September 2001. Edward Snowden, let it not be forgotten, was an employee not of the National Security Agency but of the Booz Allen Hamilton security firm when he gained access to the NSA documents that represent the biggest intelligence leak in US history.

Despite the outcome of the Blackwater trial, contractors are not going away. Iraq 2003 was arguably the watershed moment, when the US invasion force assembled by an ignorant and over-optimistic Bush administration proved (as many predicted) far too small to complete the job. Contractors were an obvious solution. For one thing, they are a natural product of an era in which outsourcing and privatisation are driving forces. For another, they’re convenient for the federal government. They can be quickly mobilised, there’s no need to secure approval from Congress, and they occupy a grey legal zone, in terms of accountability. The Blackwater verdicts may be a milestone, but it took six years to bring the case to trial, and then only after an appeal that reversed a lower court ruling which had effectively thrown it out.

And there’s one more reason why PMSCs are here to stay. In an age of permanent budgetary pressures, when vast standing armies are simply too expensive, contractors are cheaper: they may be paid more than the regular military, but carry no pensions or health-care costs to be picked up by government. The government is behaving like any private-sector employer with an eye on the bottom line.