Browse any software agency directory and you’ll notice something strange. Every single company claims to have the best team, the best processes, and the best hiring practices.
On Clutch alone, 27,000+ agencies are listed. Almost all have near-perfect ratings. There are hardly any negative reviews. One analysis found that agencies selectively showcase successful projects and actively work to suppress bad reviews. Companies have even rebranded entirely to wash away negative feedback and start fresh.
So how do you choose?
The honest answer is that you probably can’t. Not with the information available to you. According to a 2023 Clutch report, 60% of clients experienced delays with software agencies. A 2024 industry survey found that 45% of clients felt misled by cost estimates. Dun & Bradstreet reports that 20-25% of outsourcing relationships fail within two years. Half fail within five.
The agencies aren’t necessarily lying. They’re just playing a game where everyone says the same thing. Best team. Best processes. Best hiring. None of it can be proven until you’ve already paid. By then, it’s too late.
The Origin of the Problem
Most agencies that exist today provide offshoring services. This model emerged for a good reason. Hiring in developed countries was expensive. Talent was scarce. Salaries were high. Not every business could compete. Offshoring solved the cost problem.
But here’s what happened along the way. These staffing services got dressed up as solutions. Agencies started claiming they didn’t just provide people. They provided strategy, insight, partnership.
In practice, most still operate as staffing companies. Their job is to provide people who do what you tell them. This creates a fundamental incentive problem.
If they bill hourly, they get paid more when projects take longer. If they charge a fixed price, they either pad the quote by 30-40% to protect themselves, or they lock down scope so tightly that course-correcting becomes impossible. Either way, their success is disconnected from yours.
They build what you ask for. Whether it was the right thing to build is your problem.
More Competitors, Less Time to Figure It Out
This problem is getting harder, not easier.
In 2023, the US Census Bureau recorded 5.49 million new business applications. This was the largest number ever recorded in a single year. The Economic Innovation Group reports a 37% increase in likely employer applications since 2019. The Center for American Progress found that startups increased by 16% between 2019 and 2023, more than 2.5 times the pre-pandemic growth rate.
Building has become easier. Tools are better. AI is accelerating everything. The barrier to entry has dropped.
The result is more competitors than ever. Each one is finding a different wedge into your market. Everyone is moving fast. People focus less on their unique value proposition and more on just getting something out there.
This creates pressure. More competitors means less time to figure out what actually works. The runway to find your answer just got shorter. And the cost of building the wrong thing just got higher.
The Signals Have Become Unreliable
When there’s pressure to decide, people look for shortcuts. They look for signals that help them choose quickly.
Social proof is the most common shortcut. Reviews. Ratings. Followers. Case studies. Media mentions.
The data confirms this. According to WiserNotify, 92% of B2B buyers are more likely to purchase after reading a trusted review. Lead Forensics reports that 84% of B2B buyers use social media as a key information source during purchase decisions. Gartner Digital Markets found that 77% of B2B buyers read user reviews during decision-making.
This makes sense. When you don’t know how to evaluate something directly, you look at what others have done. You follow the crowd.
But here’s the problem. Gartner’s 2025 Software Buying Trends research found something interesting. Buyers who were ultimately regretful of their purchase relied more heavily on word of mouth, advertisements, and social media. The signals led them astray.
Confident buyers who made good decisions used different inputs. They relied on customer reviews with specific outcomes (42%), rankings from trusted sources (34%), and direct references with measurable results (34%). They looked for proof, not popularity.
The vanity metrics are easy to game. According to Tableau, you can pay $50 for 90,000 followers. A company with a polished LinkedIn presence and 5-star reviews might be mediocre. A company with no social presence might be excellent. The signals have become disconnected from reality.
Social fame and media visibility now affect decisions more than actual numbers. What’s visible through media has become more important than what actually works.
The Paralysis Problem
Put it all together and you get paralysis.
Too many options. Too much noise. Signals that don’t correlate with outcomes. Pressure to move fast. Stakes that are high.
The data reflects this. Columbia University research found that when presented with too many options, people are less likely to decide at all. Forbes reports that up to 84% of digital transformation initiatives fail. The Everest Group found that 73% of companies fail to get any business value from their digital transformation efforts. Info-Tech Research Group reports that 70% of these failures trace back to requirements issues. In other words, building the wrong thing.
What happens in practice is that decisions get made anyway. Not because clarity emerges. Because time runs out.
Internal pressures mount. Costs accumulate. Investors need returns. The board wants progress. The business has to move forward. So a decision gets made. But it’s based on urgency, not insight. On the need to act, not on knowing what to do.
This is how most digital investments fail. Not because the execution was bad. Because the decision was rushed.
A Framework for Choosing
There are two scenarios. They require different approaches.
Scenario one: You know exactly what needs to be done.
You’re confident that executing a specific thing will move your business metrics. For example: “We need to add payment integration X because 30% of cart abandonment happens at checkout.” The problem is defined. The solution is clear. The connection to business outcomes is direct.
In this case, find an extreme specialist in that exact area. If you have three to four months of work for that specialist, hire them full-time. If not, contract or offshore is the right choice. This is where offshoring actually works well. Clear specifications. Defined scope. Measurable deliverable.
The challenge is that most business owners don’t build networks of specialists before they need them. When the need arises, they scramble. They run from option to option. They typically go with whoever is cheapest or most available. The vendor overpromises. The project fails.
Having a network of trusted specialists before you need them is massive business leverage. Build these relationships when you don’t have urgent needs. You’ll make better decisions when you do.
Scenario two: You don’t know exactly what needs to be done.
This is increasingly common. In the age of AI and rapid change, knowing what to build is harder than ever. You can’t figure it out without running experiments. You need to read signals from the market. Most of the time, there is no obvious answer.
In this case, a vendor who just builds what you specify is the wrong fit. You need someone who can help you figure out what to do.
Think about how management consultancies work. A partner at McKinsey specializes in a vertical. Finance, for example. They’ve been working in that vertical for 20 years. They’ve seen the same problems across different organizations. Because they know what works and what doesn’t, they can guide the next company. They frame the problem. They manage stakeholders. They figure out implementation.
This is what most businesses actually need. Not someone to execute specifications. Someone to help identify what the specifications should be.
The problem is pricing. McKinsey charges $300-800 per hour. A typical strategy engagement costs $500,000 to $1.25 million. Most projects start at half a million dollars minimum. This doesn’t work for small and medium enterprises. They don’t have those budgets. They’re uncertain about outcomes. They need a partner with skin in the game.
A Different Model
What if the vendor’s success was tied to your business outcomes?
The traditional models don’t create this alignment. Hourly billing rewards taking longer. Fixed-price projects reward rigid scope and padding estimates. Neither model gives the vendor skin in the game for what actually matters: whether the thing they build moves your metrics.
Outcome-based pricing works differently. Instead of billing hourly, the vendor charges per sprint with defined outcomes. If they take longer, they absorb the cost. Their success becomes tied to your success.
This changes behavior. The vendor asks harder questions before building. They challenge assumptions, because a failed feature hurts them too. They focus on experiments and learning, not just shipping. They build less but validate more.
You get the McKinsey experience at a price that works for SMB budgets. Someone with industry experience who can guide you on what to do, not just execute what you specify. But with a pricing model that creates shared accountability.
How to Evaluate Partners
Before choosing a vendor, ask these questions.
What happens when things go wrong?
On review platforms, look beyond the star rating. Search for patterns in negative reviews. Missed deadlines. Scope creep. Communication breakdowns. Remember that agencies selectively showcase successful projects. Failures don’t make the portfolio. Ask directly: what happens if the project runs over budget? What happens if the feature doesn’t move my metrics?
How do they get paid?
Understand the incentive structure. Hourly billing means they earn more if it takes longer. Fixed-price means they either padded the quote or will fight any scope changes. Outcome-based means their success depends on yours. The pricing model tells you where their incentives lie.
Do they have experience in your specific challenge?
Not “we’ve built apps” but “we’ve helped businesses like yours solve problems like yours.” Ask for case studies with specific outcomes, not just deliverables. Look for patterns that match your situation.
Do they ask why before how?
A vendor who just says yes to everything is a red flag. They’re not thinking. They’re not challenging. They’re waiting for you to tell them what to do. That’s fine if you know exactly what needs to happen. It’s dangerous if you don’t.
Can you start small with high stakes?
Find a partner willing to take on a small, outcome-based engagement first. See how they think before committing to a larger relationship. A short project with real accountability reveals more than a long sales process.
What This Means for Your Business
Building things has never been easier. Knowing what to build has never been harder.
The agencies who treat digital investment as a staffing problem will continue to churn out failures. They’ll build exactly what you asked for. And it won’t move the needle. Because knowing what to ask for was the hard part. And that was left to you.
The partners who think strategically, with skin in the game, will help their clients win. Not by executing faster. By figuring out what’s worth executing in the first place.
At Wednesday, we structure our work around fixed-price sprints with business outcomes. We think this model produces better results because it forces alignment. We have to care whether what we build actually works, because our economics depend on it.
But whether you work with us or someone else, the principle remains. Choose a partner whose success depends on yours. Pay for outcomes, not hours. And invest in figuring out what to build, not just in building faster.
