I could think of a few.
Something like a large country/continent with just too much trouble for it to be of any use to the big countries.
So merc and bounty hunters thrive in those areas as they provide a useful service to the people.
These areas could also suffer as a buffer zone which is actually realistic.
Think of something like a large piece of desert or forest or whatever between two large and strong countries.
Now this area is already a zone of absolute nightmarish qualities.
The people are rebellious, monster roam the lands, terrain is awful...etc.
So both countries kind of agree that this area is a buffer zone and that neither will directly control it.
You get a lot of spying and political playing in there, but it still active as free area.
Large city states as the norm.
They had no empires.
No Roman or Persian empires.
Imagine no Russian, Ottoman, English...etc empires or expansion and conquest and all that.
Basically people make a much smaller unified groups that never reach our current country levels let alone large global alliances.
Obviously you will need to change a lot from our world as we tend to get together more.
But if the people in your world and more individualistic then you can get away with it.
Think how a man from Spain or Syria might fight for Rome for the right reason like money or his future but in your world he will not even fight for his country, just family/tribe/city.
So the entire world is more cut into smaller groups with aversion to long time mixing and working with other groups.
So if people went that way then they will have smaller states that can only control so much land and then they have less access to people to begin with.
Think of how Rome could bring to bear resource from the entire Mediterranean while Sparte could only arm and armor a few thousands men at best.
Then imagine a world that is only made of Sparte and Athens and Thebes...etc.
Controlling land requires expenditure of money and men and wood and stone...etc.
So with less resource the smaller the states become.
No point in spending valuable resources protecting a large swamp because your grandfather was there.
Obviously that would mean that the more land a state controls the richer it is.
And it becomes a trade off.
You spend more resources watching and protecting larger borders in order to
give you an advantage in an upcoming war.
So you traded resources for that advantage.
Another state won't.
Comes in many forms.
People don't think as big as we do.
Why is this useless huge desert a part of our country that I should bleed and die for?
So don't spend my tax money controlling it.
Maybe people think that it is a necessary part of life to do, or be able to, this or that.
Like either we have a lot of desire for bloodshed that being a merc can satisfy.
Or maybe they have a bit of a tradition that kick in you reach a certain age.
Once at that age you are expected to do a sort of pilgrimage or soul searching or whatever.
You just pack your stuff and go find your own calling.
For obvious reasons many would first choose to become mercs.
Another is that is deeply impeded in their religion/ideology.
Perhaps bounty hunters are seeing as doing the God/gods will.
Maybe the world is plagued with enough monsters that they really do need bounty hunters and mercs.