Why Most Web Development Companies Fail — Even After 10+ Years in Business

In India, the web development industry is booming. Every other person wants to start a development agency because they’ve heard there’s money in IT. So they register a company, make a website, and start hunting for clients. Sounds simple, right? But the harsh truth is that most small web development companies shut down within 1-2 years—and even those that survive for 10–15 years often collapse in a single blow. Why?

Lack of technical understanding by founders
The root problem starts at the top. Most small company founders have zero background in development. They have no idea how to manage a project or mentor a developer. They just believe hiring a cheap fresher will solve everything. “We’ll teach you,” they say—but the reality is, they themselves don’t know enough to teach anyone. And in most cases, there’s no structured training or process in place. So the project is managed through guesswork, shortcuts, and unrealistic deadlines.

Underpaid and unskilled developers
Inexperienced developers are hired at the lowest possible salaries, often Rs. 8k–15k, and expected to perform like pros. But when they fail, it’s not their fault—it’s the system that failed them. They’re told to “learn on the job,” but how can they when no one is teaching them? These developers are forced to rely on YouTube and ChatGPT to build entire client projects. Naturally, things go wrong. The work is full of bugs, deadlines are missed, and clients lose trust.

Toxic work culture and broken promises
To meet client expectations, developers are made to work on weekends and after hours. Saturday and Sunday vanish. And when it comes to payment, it’s delayed or deducted. The excuse? “Client hasn’t paid yet.” Over time, this creates a toxic environment where no one feels motivated, and burnout becomes inevitable.

Legal threats when developers try to leave
When a developer finally gets tired and finds a better opportunity, they resign. Instead of thanking them or offering an exit policy, some companies respond by sending a legal notice—often through a cheap lawyer. “You took our client,” “You left the project incomplete,” or worse. These are scare tactics to avoid paying the developer’s dues and to trap them through fear. It’s unprofessional, unethical, and sadly, very common.

No capital, no backup, no future
Running a tech company isn’t just about clients. You need capital to survive. Laptops, tools, licenses, salaries, training—none of this is free. Most small companies don’t even plan for two months of survival without clients. One bad month, one missed payment from a client, and everything falls apart. The company either shuts down quietly, or worse—vanishes without paying salaries.

Even 10–15-year-old companies collapse suddenly
You’d think a company that’s been around for over a decade is stable. But often, it’s just an illusion. These companies run on a small, loyal team of 3–5 people who’ve been around for years. They don’t get raises, they don’t get promoted, and they’re not allowed to grow. So one day, when they finally leave together—either for a better salary or a healthier work culture—the company goes from 15 years of experience to zero in a single week. No knowledge transfer, no backup, and suddenly, the founder is left with nothing.

The harsh truth
Starting a web development company is easy. Growing and sustaining it is an entirely different game. It takes proper systems, real technical knowledge, financial backup, and a strong team culture to survive. Without that, any company—whether 6 months old or 15 years—can collapse overnight.