CTO as a Service Explained: Roles, Duties & Costs

As businesses scale and evolve, they aggressively adopt new technologies and automate processes to gain an edge, so CTO as a service becomes quite popular. A 2023 McKinsey report on leadership priorities highlights this trend, showing a surge in technology investment by companies. The shift demonstrates the overall state of the market and the power backup behind the idea of hiring new specialists from professional companies rather than looking for those on a full-time basis. 

Additionally, a 2022 Gartner survey reveals that many CIOs (Chief Information Officers) are leaning on external expertise to navigate their digital transformation journeys, as we watch how they entered 2023 expanding their IT budget by 3.6%.

More broadly, partnering with the CTOs is a way forward. They provide businesses with benefits beyond software development, assisting in other IT areas like deployment, maintenance, security, etc. Our article on CTO as a service offers strategic guidance to ensure your company remains at the forefront of technology in its industry.

What is CTO as a Service?

CTO as a service, or CTOaaS, stands for part-time tech and business advisory of the Chief Technology Officer to assist small and medium-sized enterprises (SMEs).

CTO as a service provides the expertise needed to address tech-related challenges and ensure that investments are aligned with long-term business goals. By offering strategic insights, a service like CTOaaS helps organizations utilize the potential of new technology while avoiding costly mistakes.

Types of CTO services

The type of CTO services you need depends on what you’re looking for from your Chief Technology Officer and how you plan to work together. If you’re just seeking some guidance, a part-time external CTO could be a great fit. However, if you need more comprehensive technology expertise and business support, a full-time, in-house CTO may be the better option. Ultimately, it’s all about finding the right fit for your company’s unique needs.

There are 5 key CTO types:

• Full-time internal.
• Full-time offshore.
• Part-time offshore, or fractional.
• One-time services.
• Interim services.

The table below presents data on the average rates for CTOs based on their types.

CTO Type	Description	Average Salary
Full-time internal	Full-time technical and business support in real-time	$18K per month
Full-time offshore	Full-time remote support	$4K per month
Part-time offshore or fractional	Part-time support delivered according to the agreed number of hours	$100 per hour
One-time services	Hired for particular responsibilities or tasks like conducting an audit	$74 per hour
Interim services	Hired for temporary assistance with technical and business responsibilities	$97 per hour

Full-Time Internal

A full-time internal CTO can provide your company or project with thorough technical and business support. Chief technical officer responsibilities comprise full-time support in engineering, planning, and even soft skills management in real-time.

However, hiring a full-time CTO as a team member will create additional expenses for your company, such as HR expenses, office rent, and different labor taxes.

Full-Time Offshore

Hiring a full-time offshore CTO allows you to get all the advantages of full-time collaboration while still paying budget CTO salaries.

Thus, a specialist becomes literally an in-house expert. But still, a remote full-time CTO expert works 40 hours a week for the company. 

Part-Time Offshore or Fractional CTO Services

Part-time CTOs work the required and agreed number of hours. This way, a company can evaluate the needed services and time for them and pay only for that time. A fractional CTO is naturally the most cost-effective cooperation model with an external CTO.

One-Time CTO Services

This kind of CTO will focus only on the required spheres of responsibilities and processes. Such specialists are usually hired for CTO duties like troubleshooting in particular technical areas or conducting an audit.

Interim CTO Services

An interim CTO is a technical specialist hired to temporarily assist with technical and business responsibilities while the company searches for a full-time internal CTO.

When a company is looking for a new Chief Technical Officer, there is a risk your technological processes and decisions will grind to a halt. To avoid such risks and remain active and supported, it is possible to rent a CTO.

Moreover, such a technical consultant may not only temporarily replace your team member. He/she will also help with hiring the new CTO.

When Do You Need an External CTO? 

Whether you are just starting your business or have lots of large working products, a CTO can assist businesses and startups with many tasks.

While the role of the CTO is often related to technical consultations, you can also hire a CTO when you:

• have an idea of a product but don’t have enough technical expertise to choose the right technologies and a team;
• are not sure whether particular technologies are suitable for your business; 
• need an audit for your product; 
• have an MVP and want to represent it to investors;
• are a mature startup that requires a smart solution to outperform and stand out from the competitors;
• when your business is ready to scale and needs the right tech or business decisions to do this; 
• when your business is already big enough, but you face some issues with internal infrastructure or industry-specific regulations;
• see that your current organizational and technical tools are outdated and need to be upgraded;
• need a temporary CTO to provide the balance inside your company while you looking for a permanent replacement; 
• want to branch your business or integrate new technology and need more details and planning;
• don’t need or can’t afford a full-time CTO;
• require an unbiased consultation;
• get advice on an MVP tech stack;
• your team needs some senior guidance.

CTO’s Roles and Responsibilities

More and more companies plan to adopt digital technology to transform their business processes and services from non-digital ones. In 2022, $1.8 trillion was spent on digital transformation. And it is expected to reach $2.8 trillion by 2025.

Around 20 to 30 percent of company leaders aren’t sure that their most critical roles are occupied by the most appropriate people, according to McKinsey. More so, over 40% of employees think that organizational structure that is convoluted and complex hinders their work process. Organization of technical work processes has a direct tie to who is occupying the position, making it clear that from their roles and responsibilities, the whole process can be changed.

In this context, the role of the Chief Technology Officer (CTO) becomes increasingly critical. Tommy Gardner, the CTO of HP Federal, writes that the CTO’s role is constantly changing. This professional is no longer just a technical head, but a strategic leader who bridges the gap between technology and business objectives. 

They own and maintain the overarching tech strategy, ensuring alignment with the company’s vision (top of the pyramid). Simultaneously, they influence and guide implementation at the operational level (bottom of the pyramid). This dual focus positions the CTO as a crucial player in navigating the complex digital landscape and driving business growth through strategic technology use.

In addition, the CTO can assist businesses and startups during different stages of software development to soft issues like team conflicts. Let’s have a look at the responsibilities list of the Chief Technology Officer.

Discovery Phase

Most startups have bright project ideas but do not know how to implement them. In this case, you can hire an external CTO as a service for startups. This specialist will help you with the discovery phase of your product, which may include such steps as:

1. Architecture development.
2. Designing the technical solution.
3. Finding the best matching tools.
4. Clarification of the project goals. 
5. Selecting the set of features for the MVP software development.
6. Assessment and reduction of risks.
7. Competitors analysis.
8. Choosing the optimal technology stack.

Technical Solutions

The role of the CTO combines both deep software development expertise and business knowledge. Technical solutions are one of the most important among the Chief Technical Officer’s roles and responsibilities. Such specialists help to solve the most difficult technical issues and implement rare solutions. 

Generally, a CTO can assist a company with such technology solutions:

1. Choosing the functionality in accordance with business requirements.
2. Finding solutions for technical challenges.
3. Selecting the most cost-efficient and effective technologies.
4. Evaluating the effectiveness of the current technology stack.
5. Dealing with technical issues that the client’s team cannot solve due to a lack of digital expertise.
6. Extending functionality.
7. Architecture creation and improvements.
8. Selection of technologies for effective scalability.
9. Complex integrations.

Hiring

When it comes to young startups, founders and a CTO often serve as recruiters and hire the future team. In the later stages, the startup CTO helps human resource specialists to recruit the best matching candidates.

 A CTO can advise with such recruiting aspects as:

1. Creating criteria for the technical employees.
2. Evaluating the technical expertise of future employees.
3. Conducting technical interviews.
4. Determining the developers’ soft skills and checking whether they are good team players.
5. Motivating the team in case of issues.

Project Audit

An audit should be conducted once in six months or so to maintain the high quality of the product and keep it reliable. Hiring an external CTO to conduct an audit has a huge perk. Thus, it is possible to get an unbiased opinion.

The other option here is to hire a specialized audit company. But if a project is still not huge and has some budget limitations, this option would lose to hiring a CTO as a service.

During the project audit, a CTO can assist you with:

1. Evaluation of the code quality.
2. Verification of whether the team works correctly.
3. Project quality and functionality assessment.
4. Checking the effectiveness of outsourced teams.
5. Monitoring the delivery process.
6. Preparing the list of recommendations for improvements.

UX

A good technical officer will never work only with the tech aspects of the project, but also with the design. This specialist will also recommend how to design an application convenient and easy to use for your customers. 

CTO can assist you with:

1. UI analysis from the customer’s point of view.
2. UX analysis in terms of convenience and logic for the design.
3. Prepare recommendations to improve convenience and user-friendliness.

Project Scaling

A scaling stage is when an expert becomes a must. For instance, a product can be big enough to scale but still fail with the technical aspect of scaling. Here a good CTO will help you with business analysis, evaluate the current business needs, and create and design a complete scaling strategy.

During the scaling process, CTO can help you with:

1. Architectural and technical decisions.
2. Finding the most cost and time-effective solutions.
3. Riskless project expansion.
4. Analyzing the possible approaches.
5. Cloud, hosting, and other optimizations.
6. Engineering an overall technical scaling strategy.

Project Pitch

What is a CTO in business? A CTO has to be not only a senior developer. It is a person with a broad range of expert knowledge. This specialist is kind of a business analyst and business development manager with deep tech knowledge.

That is why vendors often hire CTOs as a service in their funding rounds to convince their investors.

CTO can not only represent an idea of the project. This expert also shows investors the expertise in effective software development and share the project’s technical solutions and business benefits.

When pitching your product, a CTO can assist you with:

1. Prepare a tech pitch deck. 
2. Explain the technical value of the project for investors.
3. Describe the business benefits.
4. Prove that the project’s team has deep expertise.
5. Answer any technical questions of investors.

Project Planning

External CTOs are often involved in planning the software development process, prioritizing the features, and selecting the features that need the biggest focus.

For example, a CTO’s role often includes plan creation and optimization – highlighting the process and functionality to simplify and make the whole business more cost-efficient.

This applied particularly when the project aims to scale. For instance, when the number of requests grows and a system can’t already cope with them.

CTO as a service can assist with the following planning aspects:

1. Improving the software development processes.
2. Prioritizing the features.
3. Enhancing the architecture.
4. Engineering a software development roadmap.
5. Estimating budgets and timelines.

Soft Issues

Unfortunately, it’s not that rare when issues occur. Back-end developers can blame front-end developers and those blame someone else. Hence, leadership is mandatory.

Thus, founders see that there are definitely problems in the team but can’t define them. An experienced CTO as a service can look into the situation and find ways to solve the problems wiht their leadership skills.

Lots of misunderstandings inside the team can affect the software development process. CTO’s leadership can deal with soft issues and work on morale.

In that case, a CTO can help you with:

1. Emotional support and leadership of a team.
2. Conflicts analysis and resolving.
3. Team management and leadership.
4. Development of new collaboration processes.

Benefits of an External CTO Service 

Here are some benefits of hiring an external CTO.

Costs

Lots of startups, small and medium businesses need a CTO. But they simply cannot afford to hire one full-time as sometimes the cost is hefty. That’s why hiring a part-time or outsourced CTO can be a cost-efficient solution. You get all the required services for a budget cost. For instance, the average CTO startup CTO salary and cost in Europe and Asia are quite budget-friendly.

No Need to Hire

Working with an external CTO, you don’t have any additional expenses, so cost-efficiency is maintained. For example, hiring an in-house CTO will require you to bear recruiting expenses, pay office rent cost, and labor taxes. While outsourcing CTO responsibilities, you pay only for the work and services you request.

Bigger Pool Worldwide

Outsourcing gives you a bigger choice of experts. Moreover, as mentioned, hiring an offshore CTO helps to reduce software development expenses and pump up the leadership.

Independence

CTO as a Service provides access to seasoned tech leadership without the long-term commitment of a full-time hire, allowing businesses to adapt their tech strategy with greater agility. It empowers you to gain an objective perspective on technology investments. Overall, this step might even reduce internal bias, fostering a new approach to decision-making.

Increased Agility

It’s possible to build a business without hiring a CTO. However, that would be a long journey with a trial and error method. At the same time, even a few technical consultations may clarify the core business and technical issues. And you can get some fresh ideas on how to start or develop your business much faster. 

How to Choose a CTO as a Service: Must-Have Skills of Your CTO

You’ve decided to hire a CTO. What criteria to pay attention to when hiring an ideal technical specialist? Check the below CTO qualifications. 

Years of Experience

It’s not all about the years. Let’s face it. Even if a person has been 15 years in software development, he or she can still remain a middle or even a junior developer. But still, the practical background is not a single, but one of the core points to consider.

Choosing a CTO, follow these tips:

1. Choose a person with no less than 5 years of experience, ideally 6-7 years.
2. Make sure your CTO has a practical background.
3. Pay attention to the spheres your CTO worked with.
4. Check if a candidate has at least a year of experience in each front-end, back-end, and mobile software development.

Tech Expertise

Analyzing your CTO’s technical skills, look at the technical competencies that your project needs. For example, if you are working on a web product, it’s not required (however would be an advantage) for your CTO to have experience in mobile software development. Versatile expertise will tell you that your CTO is an experienced professional to work on your product.

Therefore, your future technical consultant should have:

1. Expertise in the technologies your project uses. 
2. Minimum one year of practice in each technical area.
3. Broad understanding of all the technical terminology.

Business-Oriented Min

There is a big difference between an experienced developer and a CTO.

CTO should understand not only the technical but also the business component of the project. This person offers solutions based on his experience. Also, a CTO selects tech solutions that will help solve the current business problem. 

Communicative

CTOs are the people who manage the work of other employees,  present their business and technical ideas to the founders and a team, and pitch the product to the investors. Without solid soft skills, a CTO won’t be able to perform the required tasks.

Critical Analysis Skills

Following the software development trends and the desire to use new technologies is great. However, every CTO should be able to think critically about the hype solutions and trends to choose only those technologies that can help to boost productivity and desing a successful product. 

Big Picture Thinker

While the rest of the team can focus on the product details that are working on, the CTO should be able to think strategically to see the whole picture to do the right steps to achieve the final goal.

Where to Find a CTO as a Service?

There are a few tricks to help you find a CTO faster.

Outsource Companies

As a rule, outsourcing companies offer software development and quality assurance. CTO as a service is still not that common service in offshore companies. However, outsourcing a CTO becomes more and more trendy each day. 

Surely, outsourcing may be risky sometimes. So we recommend you to study companies’ portfolios, find feedback from other companies’ clients, and discuss your future collaboration in detail. This will help you to choose a responsible CTO.

For companies just getting started, it may be helpful to visit trusted rating and review websites like Clutch or Goodfirms. These are good platforms that can significantly simplify hiring decisions. By comparing, identifying the difference, reading what people are saying, and analyzing alternatives, you can choose a vendor that offers advanced CTO services.

For example, Sloboda Studio is already 13 years on the market. Our team is proud to be recognized as global leaders in providing tech consulting, web software development, and project management and leadership services by Goodfirms, TopDevelopers, and DesignRush. We earned high recognition from top freelance marketplaces, such as Clutch and Upwork.

Recommendations

References and recommendations from your co-workers or partners may be very helpful when looking for a responsible employee like CTO. Start by asking people you know for advice. Maybe some of them already hired CTO as a service or know someone who did? These people won’t lie to you if something in this collaboration goes wrong and vice versa. They will probably recommend you a chief technical officer who makes their business flourish. Someone’s success will be proof of the seniority and professionalism of your future CTO.

Networking

How does it work? You just communicate with others:

• visit tech events;
• software-dedicated conferences;
• simply communicate with other businesses and startups. 

All these actions will definitely help you to meet new people. And, who knows, maybe your perfect technical specialist is already among them?

Our Experience

Engaging a CTO in Stripe Integration

The most recent case when we rented out our Chief Technical Officer was to conduct a complicated Stripe integration for a startup.

Our client needed the custom and complicated integration of Stripe. And the expertise of his own development team wasn’t enough to build such a complex architecture for Stripe. There was a challenge as far as our client’s business required a very specific Stripe integration with the fund’s withdrawals, onboarding, and validation.

Involving CTO in Developing Difficult Features

Lately, our client wanted to develop an interesting and pretty unique feature that was important for users’ convenience. Our client’s internal software development team claimed that it was impossible to implement the feature as a client wanted it to see. 

Thus, the founders hired a CTO as a service from Sloboda Studio to consult the team. Having analyzed the project and requirements, our CTO found 2 possible strategies to implement the functionality and drafted instructions for the in-house team of a customer.  This vital feature was brought to life.

Our solution:

We studied the technical features of integration specifically in their product and planned how to implement this into the existing architecture.

Final Thoughts

CTO is an excellent solution to assist you with almost every business and technical question. 

Such a service may be good for different types of companies, especially for startups.  It is the most cost-effective way to have an expert with such deep knowledge and experience in the team.

A CTO as a service can help you with:

• Choosing the right technologies.
• Solving complicated technical tasks.
• Determining core features.
• Finding the right business and tech approaches.
• Hiring new employees, team creation, and support.
• Pitching your project to investors and many more.

In Sloboda Studio, we involve a CTO in most of our projects, especially in startup software development. Besides, we offer a separate service of an external CTO for your product.

You are welcome to contact us to learn more about this service.