How do I move from IC role to a people manager? I currently manage a contractor and have a dotted-line reporting of a FTE.

If you're managing a contractor, you are managing people. You need to frame it and look at it through that lens. You also need to consider if you're a PMM that has managed launches; there are likely dozens of people across different departments that you have successfully launched.

Now, if you're asking how you get a FTE direct report, then you'd need to come to the table with data. What are you working on that you can offload? How will this free up your time--and what would you be using that time to do? How will it improve the business? How will this hire align with the business goals? What are the pros and cons of a FTE vs another freelancer? What other options do you have?