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AI-assisted software development has been growing in popularity ever since the start of the AI era with the release of ChatGPT. Alongside GitHub Copilot, ChatGPT actually remains the most popular AI tool for developers, but recently, other noteworthy contenders such as Cursor and Claude (Code) have been gaining significant momentum as well.
In 2025, we’re witnessing the birth of a new concept/buzzword for this – “vibe coding”, which promises efficiency and time saving benefits for developers and non-developers alike, with businesses excited at the cost reduction prospects this may have for the business.
Certain companies are already tapping into the popularity of vibe coding with new specialized tooling (e.g. Vercel with v0). It’s pretty safe to say that this will lead – or rather, is already leading – to a huge shift in how businesses approach software development. But what exactly will this look like?
An important question that arises is how this shift is going to affect development agencies specializing in staffing and managed services. We’ve already written about how the rise of AI is impacting the agency business model, but now we’d like to focus more specifically on the impact on development staffing, armed with the power of hindsight as well as real-life experiences gathered over the past few years.
How does vibe coding stack up against traditional development?
No matter how empowering for non-developer users, vibe coding is still most effective when used by experienced developers who are deeply familiar with industry best practices as well as common issues and challenges. This understanding allows them to make use of AI as a tool rather than over-relying on it.
While AI brings unprecedented power and speed for non-developers, they are much more likely to fall for the inherent shortcomings of AI such as hallucinations and security issues in its recommendations, which are often impossible to spot and address preemptively without actual industry knowledge and experience.
So, vibe coding with AI models can be a great asset that enables faster development for developers who are already experienced, and use AI as a tool instead of as a crutch. However, companies should not be expecting comparable results from non-technical users relying on vibe coding for critical enterprise cases.
Does vibe coding free businesses of more substantial investments into their software development needs?
Alongside productivity gains, one of the main promises of AI has been cost reduction. An area in which this was immediately apparent was content production and management. Is vibe coding now offering a similar promise for the development needs of companies and organizations?
Well, the situation is a bit more nuanced with software development. As already highlighted, proper usage and vetting of the solutions provided by AI models requires a deep familiarity with industry and language standards, as well as a deep understanding of the problem you’re trying to solve and the common challenges that may arise in the process.
If anything, as AI-assisted vibe coding continues to rise in popularity, companies will need more developers experienced enough to work effectively with these tools and oversee how less technical employees are using them. So, while the nature of investments in software development is likely to change, the need for these investments is far from going away.
Should companies stop outsourcing their development and simply resort to vibe coding?
A question that logically follows is how these changes will impact companies’ approach to outsourcing development. If the right development skills for a project exist in-house and the only obstacle is a lack of developer capacity, wouldn’t vibe coding allow these in-house developers to get more from their skills? And would this not eliminate the need of hiring extra developers in order to see projects through on budget and within deadlines?
This may be true in cases where the lack of developer capacity and/or specific skills is relatively small, e.g. if you only need a few extra developers with skills very similar to those of existing in-house developers. In this case, AI would allow these existing developers to do more without spreading themselves too thin.
But this only covers a particular aspect of development staffing. Very often, companies are outsourcing for expertise in technologies they don’t possess in-house; or they might have employees with the required expertise, but they’re already working on other projects, which is preventing them from taking on new ones.
Another very common scenario is that companies or organizations don’t even have their own internal development team and need to outsource the entire development aspect to an external development partner, in a managed services setup.
While the lack of a few front end or back end developers can be easily compensated with AI-assisted development, businesses cannot expect to rely on vibe coding as a complete replacement for a well-structured development team and digital strategy.
Even when only replacing smaller team augmentation with more AI-assisted development, it’s important to consider the impact of the increased workload on current employees. While the productivity and developer experience improvements would tend to make this impact a positive one, businesses need to be wary not to treat the increase in productivity as a signal to have developers take on more and more work, which could lead to both burnout and a poorer output.
Is vibe coding the end of development agencies?
So, is vibe coding spelling the end of development agencies?
It’s undeniable that the agency business model is heavily disrupted by AI and agencies will have to significantly adapt in order to survive and thrive, but that doesn’t mean they’ll become obsolete – far from it.
As already mentioned, the managed services approach to agency partnerships will be the hardest to replace with AI, so we’re likely to see a move away from staff/team augmentation towards more and more managed services.
At Agiledrop, we’ve been seeing a rise in the demand for full projects that are self managed and typically more technically complex. It is an indicator of a broader shift towards full-service agencies, which can take care of their partners’ full digital strategy, from planning to design and development, and even content production.
The key advantage of development agencies over AI will be providing not only the execution or implementation, but also and especially the strategy part of the development process, allowing partners to benefit from their rich industry experience.
Can outsourcing help your development strategy even if you still use vibe coding a lot?
Vibe coding and outsourcing your development can actually work hand in hand really well. Your in-house development team can leverage AI to collaborate more effectively with your partner agency’s developers. You can also use it for building prototypes to make the development process more agile, and/or for writing documentation to facilitate maintenance and onboarding of outsourced developers.
Even more importantly, a reliable development partner can help streamline vibe coding for internal non-developer/business users, either by providing a greater insight into standards and challenges, helping to tailor the AI system and AI workflows to specific business needs, or evaluating and fool-proofing solutions proposed through AI-assisted coding.
How can developers – and businesses – use vibe coding to their best advantage?
Our developer manager Janez recently gave a talk on the pitfalls and best practices of using AI during developer onboarding. Most of the practices of responsible AI usage that he described can be put to great use by developers working on complex, enterprise-level projects. Effective vibe coding involves:
- Good collaboration and communication between team members, even with the use of AI
- An awareness of the shortcomings of AI models such as hallucinations
- Critical evaluation of the results and solutions proposed by AI, especially with regards to the security and stability of proposed libraries
- Making sure not to deprive ourselves of personal and professional growth due to using AI
- Taking responsibility and having accountability for development decisions
Conclusion
While no doubt transformational, vibe coding cannot serve as a replacement for a full team of experts who are used to high-level collaboration and have years or decades of experience on important projects for renowned businesses and organizations.
As is generally the takeaway with AI innovation, AI should be viewed as an opportunity rather than a negative disruptor, and used as a tool which optimizes work rather than as a replacement for the work itself. It can be used very effectively to spin up prototypes, minimum viable products, and/or very basic sites and applications.
However, for complex production-grade enterprise sites and products with a lot of integrations, dependencies, custom solutions and workflows, skilled developers with hands-on industry experience will still be very much needed.
While we might be seeing a shift away from the traditional agency business model towards a full-service model, the agencies focused on development will continue to serve as invaluable providers of high-level development services to their partners.
