#Guides | 16 min read | Updated: 9/20/2022

A Full Guide on CTO as a Service: Roles, Duties, Costs

Updated: 9/20/2022
, Project Lead
#Guides
16 min read

In today’s rapid-fire innovation time, company leaders are actively adopting technology and disrupting their processes with automation.

According to the recent Deloitte research of directors and corporate leaders, two-thirds of respondents feel optimistic about their progress in embracing technology to achieve competitive advantage. About half of them admit they rely on support from an external specialist like CTO as a service to steer their technology plan.

Collaborating with the CTO (Chief Technology Officer) for any company leader exploring new tech opportunities is becoming increasingly relevant. 54% of C-suite respondents see this as a critical to-do and plan to invite these tech specialists to meetings more frequently.

Whether you have an idea for a startup or desire to scale your current business, hiring CTO as a service comes in handy. 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, and more.

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).

The core benefit of a startup fractional CTO compared to an in-house CTO is the price effectiveness of such a service, as a company only pays for the services needed.

Benefits of CTO as a service

Types of CTO services

CTO types depend on the technical chief technical officer’s duties and the form of cooperation with a CTO.

For example, if you only need a CTO consulting, you can hire a part-time external CTO. he complex tech and business support will require full-time in-house employment.

There are 5 key CTO types:

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

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 developing, planning, and even soft skills management in real-time.

However, hiring a CTO as a full-time 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 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.

Types of CTO as a service

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

CTO TypeDescriptionAverage Salary
Full-time internalFull-time technical and business support in real-time$18K per month
Full-time offshoreFull-time remote support$4K per month
Part-time offshore or fractionalPart-time support delivered according to the agreed number of hours$100 per hour
One-time servicesHired for particular responsibilities or tasks like conducting an audit$74 per hour
Interim servicesHired for temporary assistance with technical and business responsibilities$97 per hour
*Data were taken from Indeed.com, Salary.com, Freelancemap.com

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 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.

CTO as a service statistics
Statista.com

This increased demand will require developing a solid and adaptable technology strategy. In the meantime, 3 in 10 company leaders are not sure whether technology is well integrated into their strategy. 4 in 10 of them name the inability to see the cause and effect between tech investments and growth as their biggest challenge.

In this respect, a CTO becomes one of the most crucial players among all C-suite positions. This technical specialist owns and maintains tech strategies at the top of the pyramid below and influences them at the bottom.

CTO as a service’s Role in Technology Strategy
Understanding the CTO’s Role in Technology Strategy by Gartner

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

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 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 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.

Project Planning

External CTOs are often involved in planning the 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 development processes.
  2. Prioritizing the features.
  3. Enhancing the architecture.
  4. Creating a development roadmap.
  5. Estimating budgets and timelines.

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 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. Creating 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 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.

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.

Soft Issues

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

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.

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

In that case, a CTO can help you with:

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

UX

A good technical officer will never work only with the tech aspects of the project. This specialist will also recommend how to make 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.
  3. Prepare recommendations to improve convenience and user-friendliness.

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. That’s why hiring a part-time or outsourced CTO can be a great solution. You get all the required services for a budget price. For instance, the average CTO startup CTO salary in Europe and Asia is quite budget-friendly.

No Need to Hire

Working with an external CTO, you don’t have any additional expenses. For example, hiring an in-house CTO will require you to bear recruiting expenses, pay office rent, 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 allows reducing development expenses.

Independence

By hiring an outsourced CTO, you get a digital pro