The Standish Group's CHAOS Report says that 31% of projects are successful (on time, on budget, and with all the features they need), 50% are challenged (late, over budget, or missing features), and 19% fail completely (canceled or never delivered). This means that about 7 out of 10 projects don't meet basic success criteria, and this hasn't changed much in the last ten years. The same study also shows that more than 30% of software projects fail completely, and 45% of them are seriously behind schedule or over budget.

But this is the part that should really get your attention. CB Insights looked at more than 110 startup post-mortems and found that 35% of startups fail because they made something that no one wanted, and 38% fail because they run out of money or can't get more. A different study from CB Insights puts the number of people who don't need the product even higher at 42%. 

Why? Based on its 20+ years of tech expertise, from writing technical documentation to building an MVP, scaling, and support, the Belitsoft custom software development firm explains the main reason. Many companies create exactly what was in the specification document, which was based on untested ideas.

However, for new businesses, the stakes are especially high. You're not just looking for a programmer. You want a partner who can help you deal with the things you don't know when you make something new.

The Big Change: Thinking Like a Vendor vs. Thinking Like a Partner

Before we delve into checklists and evaluation criteria, we need to talk about the main point of this article. It has nothing to do with your hourly rate or level of expertise. All of it is in your mind.

Anthropic's 2026 Trend Report says that software development is undergoing the biggest change since the graphical interface was created. The time when programmers were just code writers is over; now they are agent commanders. This change has significant effects on how you should choose outsourcing partners.

What a Vendor's Mindset Looks Like

The goal of a vendor is to do exactly what the contract says. They measure success by finishing the agreed-upon features on time and within budget. Once they deliver the code, they are no longer responsible.

This model works well when you're fixing something that's already there, the requirements are very clear and won't change, or you've already found a good product-market fit. However, what about most startups before they find a product-market fit? It is a recipe for disaster.

What the Partner Mindset Looks Like

A partner thinks about outcomes, not just outputs. They say no to bad ideas. When you ask for a certain feature, they want to know why you want it and what problem it solves. They share ideas based on what they have seen work (and not work) on a lot of different projects. They care about your runway and will advise you to test your main ideas with a small amount of money before agreeing to a six-month project.

Gartner's 2025 predictions say that the trend of hyper-automation is leading to a new era of software engineering risk management because iterative development and intelligent technology are becoming more and more linked. This means you need partners who know how to use more than just waterfall thinking.

7 Critical Shifts in How Startups Should Think About Outsourcing

Here are the main differences between successful startup partnerships and costly mistakes, based on research from a number of different sources.

Shift #1: Go from "Build This" to "Solve This"

The vendor said, "I need users to be able to sign in with Google, email, and GitHub, reset their passwords, and use two-factor authentication." "Got it. That will take three weeks and cost $9,000," the vendor said.

The talk with the partner: The partner asks, "Why are we building custom authentication?" Most of your users are developers who like to sign in with GitHub. For $50 a month, you can use Clerk or Auth0, set it up in two days, and save $8,800 to spend on features that users really want.

Instead than prescribing a solution, partners try to solve the problem. Anthropic's report says that modern AI-assisted development can speed this up a lot. For example, one project that was supposed to take 4 to 8 months was finished in just two weeks with Claude. The same report said that internal engineers sent 67% more code merge requests, and 70% to 90% of the code was finished with the help of AI. The best partners use these tools in smart ways.

Shift #2: From "Deliver Features" to "Deliver Outcomes"

To see if they are successful, vendors check how many features are done, how good the code is, how fast the sprints are, and how many lines of code have been written. Partners look at how many people use the service, how many features they use, how long it takes to get value, and how much money it makes to see how well they are doing.

For instance, a Canadian startup that is making a SaaS ERP for car service bodyshops partnered with Belitsoft to get around their lack of in-house development resources. The client secured its first customers and started making money right away by launching an MVP in just three months with a critical mixed-tenant architecture. Over 200 B2B clients use the platform successfully today. They can work independently and safely, with fully autonomous databases and the ability to get custom features without affecting other tenants.

One analysis shows that using iterative development made responding to demand 2.7 times faster, customer satisfaction 41% better, and employee turnover 29% lower. It also notes that A/B testing can make decisions about features 65% more accurate. A partner who examines these results is much more valuable than one who just counts deliverables.

Shift #3: From "Fixed Scope" to "Adaptive Scope"

The vendor trap: You draft a thorough specification, agree to the terms of the agreement, and sign a contract. Three months later, you find out that the market wants something different, but you're stuck with the original plan.

CB Insights says that 42% of failed startups fail because they made products for markets that do not exist. The vendor model makes it difficult and expensive to change directions.

The partner approach works in cycles of building, measuring, and learning. Various research shows that iterative development reduces risk by releasing 80% of the risk that is usually concentrated in later project stages in each iteration cycle. This risk time compression cuts down on exposure from months to weeks. Also, iteration change window mechanisms cut the costs of change requirements above 70%. That's what makes a partner different.

Shift #4: From "Speed-to-Code" to "Speed-to-Trust"

The time of "Move Fast and Break Things" is over. Founders in 2026 have shorter runways and will not tolerate any mistakes. Speed is still important, but accuracy is even more so.

DesignRush examined outsourcing statistics and found that 78% of companies have worked with an outsourcing provider in the last six months. However, more providers mean more noise and more risk. The same study found that most outsourcing failures are due to problems with operations, such as keeping track of benefits, managing change, and not being able to fit well into operating models.

Founders now want full transparency: dashboards that show everything in real-time, automated reports, and full access to delivery health, not just after-the-fact reports.

Shift #5: From "AI-Added" to "AI-First"

By 2026, the phrase "adding AI" will no longer be meaningful. Founders want AI-native systems, which are products designed from the start to work on their own.

Anthropic's 2026 Trend Report says that programmers will stop writing code and start telling agents what to do. The report says that features that have been around for a long time have significantly improved. Early AI agents could only perform tasks that lasted a few minutes, but by 2026, agents will be able to work nonstop for days or even weeks. 

For instance, Rakuten engineers used Claude Code to get certain activation vectors from the vLLM open-source library, which has 12.5 million lines of code, in just 7 hours with 99.9% accuracy.

A survey of 138 IT leaders in the UK by Computing UK found that 43% use GenAI to automate paperwork, 34% use it to create initial frameworks, and 32% use AI like a pair programmer for everyday tasks. The same survey, though, shows that only 20% of tasks can be fully delegated to AI, even though 60% of developers use AI in their work. This shows that human judgment is still very important.

The same survey, though, shows that only 20% of tasks can be fully delegated to AI, even though 60% of developers use AI in their work. This shows that human judgment is still very important. A modern partner must provide agentic workflows, which are software programs that do things for users instead of just telling them what to do.

Shift #6: From "Rental Code" to "Owned Assets"

Buyers should verify that the company is adhering to security and compliance standards to ensure that the company is following GDPR, CCPA, or ISO 27001 rules. It is also advisable to request proof that the server is secure, that the code is safe, and that penetration testing has been conducted.

Your product is not something you rent; it's an asset. According to Gartner's research from January 2026, businesses that use smart automation can save 55% on costs. However, these gains only matter if you own the IP that goes with them.

Shift #7: From "Execution" to "Product-Market Intelligence"

Nowadays, doing something without understanding it is a problem. Founders want partners who can spot patterns – teams that understand what works, what does not, and why.

According to Business Analysis, "You don't have a project management problem. You have a value definition problem".

Business analysts should help come up with the investment rationale, even before the business case. To improve the chances of success, a PM to BA ratio of 1:4 is recommended.

A modern software partner helps you understand market signals, stay on top of emerging features, and prepare for the market. Ignoring the market in code is merely expensive noise.

Red Flags to Watch For

• When considering potential partners, keep an eye out for these red flags:
• If the first few times you talk to them are slow or they do not respond, it will only get worse once you are in a contract.
• If your partner never questions your ideas, they are not genuinely invested in helping you succeed.
• They cannot provide relevant case studies. If they cannot show you work that is similar to what you are building, you are taking an unnecessary risk.
• They are hesitant to do small test projects. It is a bad sign if a partner wants a big commitment before they can prove they can deliver it.
• They cannot explain how they do things. A professional partner should be able to clearly explain the development process, how they deal with changes, and how they talk to each other.

About the Author:

Dmitry Baraishuk is a partner and Chief Innovation Officer at a software development company Belitsoft (a Noventiq company). He has been leading a department specializing in custom software development for 20 years. The department has hundreds of successful projects in AI software development, healthcare and finance IT consulting, application modernization, cloud migration, data analytics implementation, and more for startups and enterprises in the US, UK, and Canada.