2021/08/17

CTO as a Service: Ultimate Overview [Pros and Cons]

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CTO as a service is a popular service that many countries worldwide use to improve their business processes.

A common problem many companies face: they have a great idea, but they don’t know how to turn it into reality. Creating a new product is a challenging process as it needs to be made from scratch. 

Many business owners do not know where to start. The decisions you make early on will lay the foundation for the entire project.

If something goes wrong, it will take a lot more time and money to fix. Who, then, can help you set up your design and product development process? Based on the title of our article, the answer is obvious: CTO as a service.

All You Need To Know About CTO as a Service

CTO as a service is a new way of cooperation with the CTO: the company hires an external specialist to solve technical problems, develop and solve problems of the technical team, and help implement your ambitious ideas.

Every company that provides digital solutions to their clients needs CTO consulting, especially startups or companies where CEOs don’t have enough expertise in the field. Before discussing where to find a CTO as a service and what benefits your company can get hiring a CTO, let’s find out more about CTO as a service concept. 

CTO as a service, simply put, is a third-party consultant and partner who is involved in all design and development processes of a company’s product. CTO advisory services can help your business enhance product development processes, and you as an owner will have an excellent opportunity to benefit from best practices and expert opinion. 

Why CTO as a Service Became More Popular?

In recent years, more and more organizations are using CTO as a service. Why has it become so popular? The fact is that it is a great way to quickly and efficiently adjust all product design and development processes and increase team efficiency.

There are lots of examples of successful startups with non-technical founders that, at a certain time, hired a CTO as a service to help them. Among them were Snapchat, YouTube, Lyft and others.

Here are some examples of cases when the help of an outsourced CTO can be useful for your business:

  • you have an excellent product idea, but you do not understand how to translate it into action; 
  • you have developed your first product or a product part, but you realize that its architecture does not correspond to the following stages of your product or service, or it is outdated;
  • you need an objective view of various technical issues and an expert who will guide and help your design and development team;
  • at the current stage of your company’s development, you do not need a full-time CTO, but you need the maximum level of flexibility and cost-efficiency, allowing you to pay only for the services that your company needs; 
  • your business needs a specialist with years of technical leadership experience to help create a product, effectively negotiate technology aspects with investors, evaluate contractors, and create project technical roadmaps.

If you agree with at least one or more of the above statements, then CTO outsourcing services are what your company needs. Let us find out what are the main advantages of hiring CTO as a service.

The main advantages of the CTO as a service

The main advantages of hiring a CTO as a service for companies can be described as follows:

  • Observing industry market trends and business transformation. Given the large number of projects the CTO works with, it is essential to define and implement development strategies in line with modern development methodologies and best practices, focus on target business markets, and implement projects to support the customer experience.
  • Team building support. Team mentoring, coaching and professional development assistance, recruiting new employees, filling technical gaps in finding the necessary technical specialists.
  • Reducing operational risks. The CTO helps establish resilient operations, processes, and infrastructure by monitoring IT budgets and improving resource planning by engaging in business crisis management, security issues through overall governance and risk management, product management, and planning.
  • Creation of a digital transformation strategy by overseeing the transformation of each business process and proposing options for how technology can help a company achieve greater success.

CTO as a Service for Startup

If your business is a product, you need to plan all aspects of its development from the very beginning, including the development team and responsibilities, technology stack, development tools and organize all processes to minimize the risk of failure.

Turning to the services of CTO as a service, startups can get expert advice on the best technologies and architecture, professional management of the development and design team, operational coordination of tasks, as well as technical consultation.

If you want to hire a CTO as a service but don't know any details or are not sure if you need one, contact Northell.

Thanks to our many years of experience, we can help you and give free consultation on any question.

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CTO Advisory Services

CTO advisory services are now very common. Startups turn to agencies that provide CTO consulting services in the early stages of product development, and sometimes just before the start when the company has only an idea. CTO can help a startup:

  • Create a product architecture and a set of tools that are tailored to the company’s specific requirements.
  • Create technical strategies and plans for deployment.
  • Participate in and oversee the development of products and production schedules.
  • Support, lead, manage and employ tech talent.
  • Test a product. Identify possible problems and suggest solutions.

CTO as a Service: Model of cooperation

There are three main types of cooperation with CTO as a service that differ from each other. To determine which type of cooperation is more suitable for your company, let’s consider each of them. 

CTO consulting

This model is suitable for companies that only need one-time consultations on any design and development issues.

Let’s say you’ve designed a product and it’s time to move to the development stage. Your team cannot decide which technical stack is the best to choose for development. At this point, a consultation from an experienced and skilled CTO will come in handy more than ever. 

Also, let’s say if you have already developed a product, but during the testing process, some problems arose. Your team does not understand how to quickly and efficiently fix these issues. A consultation from the CTO will help you deal with this and successfully fix any errors. By choosing this model, you will pay the CTO a one-time fee for each consultation.

CaaS fixed price

This model is suitable for companies that want the CTO to be involved in their processes on an ongoing basis. Before starting cooperation, you will agree with the CTO on the price for services, and then your cooperation will act as a subscription.

Usually, such a model of cooperation is chosen by companies that want to develop a complex product with many features, complex logic and navigation, unique design, etc. They need a CTO to provide ongoing support and assistance in specific product creation processes.

CaaS time and material

By choosing this model, you will pay for CTO services on an hourly basis. Time and material cooperation model suitable for companies that need to implement large long-term projects.

Your idea deserves special attention. Close communication and discussion of all the details will help create a project that will really solve your company’s problems, which means it will be effective, popular, and have the prospect of further development.

In-house or Outsource CaaS?

There are two basic ways of hiring a CTO startup expert: in-house and outsource. To understand which one is more suitable for your business, let’s look at the pros and cons of each of them:

In-house CaaS [Pros, Cons]

Hiring in-house CTO as a service, you will get a full member of a team. In-house CTO will be a good option if you want to control all the processes. Here are main pros and cons of hiring in-house CTO:

Pros:

  • Constant control. Access to the specialist in-house will give you an excellent opportunity to control and manage all processes in which a person is involved. 
  • Deep understanding. The in-house CTO will work on your project from the very beginning to its completion. So, a specialist will know your product from A to Z, its functionality and features, etc. 
  • Quick start. With an in-house CTO as a service, you will be able to start working on a project immediately, skipping all preparation processes. 

Cons:

  • Great costs. An in-house CTO is not a cheap thing. You will need to spend a lot of money on the hiring process and pay the salary.
  • Time. A high-quality CTO to hire takes quite a long time. Talented specialists already have a good job, so you will need time to find one perfect for your project. 

Outsource CaaS [Pros, Cons]

Nowadays, CTO outsourcing is a great choice for startups, and most companies give preference to it. CTO outsourcing is beneficial to large corporations because you will have access to global talent regardless of your or the CTO’s location. However, let’s take a closer look at the pros and cons of this option.

Pros:

  • Quick CTO specialist change. In case you don’t like the quality of the CTO’s work, you can always find a new one. It is more challenging to do with in-house team members, and this process will take much more time. 
  • Cost efficiency. Outsourced CTO as a service will save you money. You will not need to organize many interviews, think about the workplace, and pay salaries once a month. You will just pay the agreed-upon rate per hour or for the entire project.
  • Concentrate on essential business activities. You will delegate some of your jobs and be able to focus more on crucial business demands, devote resources for them, and so on.

Cons:

  • Communication problems. That is not a significant issue in the twenty-first century, but you must be aware of the time zones and select the CTO with the suitable one.
  • Management problems. When it comes to projects, you may participate, but you can’t control everything. Even though you won’t need to handle everything yourself if you have a reliable CTO, many business owners are still reluctant to relinquish essential management duties.

CTO as a Service: How It Works on Each Project Stages 

We have already figured out who a CTO as a service is, how this person can help your company, what advantages a CTO has, and many other things. Let’s now take a closer look at how it all works at different stages of project development.

Business Plan [Budget & Goals]

At the first stage of project development, CTO helps draw up a business plan, taking into account the specificity of the business, industry, target audience, etc. CTO can conduct a competitor analysis if it is needed.

A specialist also helps set the budget for the project based on the capabilities and desires of the company. CTO also helps with all things related to the technical part.  

An essential task for the CTO as a service in the early stages of a project is setting goals. These can be global business goals, as well as the goal of the product to be developed.

Functional Specification [Software Requirements]

For the work on the project to begin, CTO as a service will help write the functional specification. It is a document that includes all the basic requirements for the product (functionality, design, etc.). 

This document is needed so that designers and developers clearly understand what they need to do. Such a document often speeds up the development process and makes it more organized. CTO also helps choose the right technology stack.

CTO as a service knows well how everything works, so his software requirements will be clear and understandable for the development team. CTO also may provide support during MVP development.   

Project Planning

The CTO can then be involved in project planning. That is, CTO will help prioritize tasks and draw up a clear plan of action. Project planning makes it possible to monitor work progress, identify critical factors to prevent a threat to the project, and implement a goal-oriented use of project resources.

What will happen without a CTO?

  • You will not have a clear plan of action.
  • You will not be able to control all the processes of product development. 
  • It will be difficult for you to understand how well the team is doing its tasks. 
  • It will be difficult for you to budget and prioritize. 
  • You will not be able to assess the results of the team’s work accurately. 
  • You will not be able to solve the problems that arise quickly. 
  • It will be difficult for you to test the product.

Hiring Process

To end up with a great and valuable product, you need a strong and talented team. Based on the CTO’s knowledge and experience, the CTO will assist in the hiring process. 

The CTO will prepare the basic requirements for specialists, draw up a test task that will accurately show the level of a future team member, conduct a series of interviews and share feedback. Thanks to CTO as a service, you can hire skilled and experienced professionals to turn your project idea into reality.

UX/UI Design

CTO as a service can supervise designers and check how their work meets the requirements for the product. Having enough knowledge, the CTO can help the design team make the product user-friendly and develop a great user experience.

The CTO can also be involved in prototyping, system design creation, wireframes creation, etc.

Development process

The development stage is one of the most challenging processes. Here, control over each step is necessary, which can be provided by the CTO as a service.

The CTO will provide support to the development team, help choose the tech stack that suits the project, set up the development process, etc. He can also help conduct an audit, participate in the testing process, and provide recommendations for improvements.

Quality assurance and testing

To eliminate all possible problems and get a product that will work smoothly, conducting high-quality testing is necessary. The CTO will help keep this process organized and structured. 

CTO as a service will help define testing objectives, choose a testing method, find representative users, create task scenarios, replicate the testing environment and analyze the results.

Pitch Deck

At this stage, CTO as a service will help your company present your product and business plan to investors. The CTO will be able to compile basic answers to questions that investors will want to hear. 

Investors make decisions based on the quality of the team. An excellent presentation requires quality preparation from the team. And if the presentation is weak, it tells investors that we weren’t really trying to get things done.

Poor preparation and condescending attitude towards investors torpedo any attempts to raise capital. They signal that the team is not ready, it is not mature, and perhaps not trainable. A CTO will help avoid this and will help prepare the pitch deck at the highest level.

If you are engaged in developing a digital product, then a CTO as a service is a must for you. Together with the CTO, you can not only prepare a presentation, estimate a budget or draw up a business plan. You will be able to quickly and clearly answer questions regarding the implementation aspect.

Support

For any problem that arises at any stage of product development, CTO as a service will be there to provide support in solving them. Thanks to daily meetings, for example, you will be able to discuss each stage of development and identify possible problems and look for solutions to fix them.

Product Development

CTO is actively involved in product development and scales it. He helps develop new functions, directions, change modules or parts of the product, improve it, etc. You can rely on the CTO to ensure your product doesn’t stay in place. The CTO will develop it using new trends and technologies.

CTO as a Service: How It Works In Current Project

Since we have already described how the CTO can help at different stages of new project development, it is fair to tell how the CTO is involved in an existing project.

Project Audit

By involving the CTO as a service in an existing project, you can get a high-quality project audit where the CTO will identify the main problems of your product, study the issues that lead to a decrease in conversion, help draw up a plan to fix issues, and find ways to change all processes in your favor.

Hiring Process

At this stage, the CTO will analyze the work of the existing team, point out the shortcomings and help in the process of hiring new employees. The CTO will find specialists who can quickly join a new team and take on additional product development tasks.

Roadmap

A CTO as a service can help you build a project roadmap consisting of a list of tasks that need to be completed to achieve your desired goals over the long term.

Using this tool, it is easier for different departments or specialists to establish parallel execution of work on separate tasks within the project. That is, the roadmap contributes to the formation of teamwork, regardless of the project’s complexity.

Knowledge Sharing

If you find a skilled and experienced CTO, you have an excellent opportunity to learn from experience and knowledge. The CTO has probably worked with different projects and products, so such a person has lots of things to advise and share.

CTO as a service can share his knowledge in the field of different stages of project development, ideas for product improvements, etc.

CTO as a Service: How to find the right person?

If you decide to hire a CTO as a service but are afraid that you might choose the wrong specialist, read the following points that you should pay attention to.

Experience

The level of professionalism of the CTO determines his experience. The more a specialist has worked in this position and the more projects he had, the better. It is obvious.

It is also essential to understand what projects the CTO worked with, how complex they were, and what the result was for the company. Also, to ensure how good and experienced the CTO is, you need to know which companies the specialist worked with and whether they are well known.

Reviews

Reviews will help you find a good CTO as a service. You can read the reviews from the companies with which the CTO has previously worked. If you notice that a specialist has no reviews at all, this may mean that either he did not have enough experience or the reviews were bad and he simply deleted them.

Technical skills and knowledge

To find the right specialist for your project, you need to assess their technical skills and knowledge in this area. It is vital that the CTO has a solid technical background and can quickly get involved in a new project.

To make sure that the CTO has a sufficient amount of knowledge, you can view his portfolio in which there will be projects on which he worked previously.

Personal skills

Personal qualities are essential for a CTO as a service. The CTO should have leadership qualities, as he will oversee the teams and be an authority. Communication skills are also essential for the CTO since he will have a lot of communication with different team members during the work on the project. It is crucial to convey his thoughts clearly.

CTO as a Service: How To Hire?

Now is the time to find out how to hire a highly qualified CTO as a service.

Preparation (short guide)

The first stage of hiring is the preparation stage. The Northell team has prepared a short guide to help you and your team prepare for the process of finding and hiring a CTO as a service. 

  1. Determine if your company and project really need a CTO as a service.
  2. Think about what project you need a CTO for and what tasks he should perform.
  3. List the basic requirements for a CTO. Include required technical and personal skills.
  4. Decide if you need a full-time CTO or if hiring a part-time CTO is suitable for you.
  5. List basic interview questions.

Outsourcing companies

Development and quality assurance are common services offered by outsourcing agencies. Outsourcing a CTO is becoming increasingly popular. The danger of outsourcing is always present, which is why we suggest that you look at the portfolios of different agencies, get feedback from their clients, and discuss your potential partnership in depth. That will assist you in selecting a responsible CTO for your organization.

Freelance services

You can try to find a freelance specialist. It is a cheaper method, but it may be of lower quality. You can find a freelance CTO on freelance platforms where you can evaluate the rating of a specialist, see customer reviews and portfolios, etc. 

Recommendations

Recommendations from coworkers or partners may be quite beneficial when seeking a responsible employee such as a CTO. Begin by seeking advice from someone you know. Perhaps some of them have previously used CTO as a service or know someone who has? 

If something goes wrong in this cooperation, these people will not lie to you, and vice versa. They will most likely propose to you a chief technical officer who helps their company thrive. Someone’s achievement will demonstrate your prospective CTO’s seniority and professionalism.

CTO consulting rates: CTO Cost

To find out how much it will cost you to hire a CTO as a service, take a look at the table below. We described CTO average hourly rates in different regions.

 Eastern EuropeWestern EuropeSouth AmericaAsia
Hourly rate    $50-120/hr   $80-200/hr   $45-110/h4 <$65/hr

Consider employing an Eastern European CTO. With nearly a million highly qualified specialists, this area has evolved into one of the world’s major IT outsourcing centers. Its biggest outsourcing centers are Ukraine, Poland, Romania, and Belarus.

While the rates in Eastern Europe are pretty cheap, the quality is also promising. This region has a strong and established IT expertise due to its availability of technical educational institutes.

How Northell Can Help You?

Having a wealth of experience in design and developing digital solutions, we can provide you with a highly qualified CTO as a service. In a couple of years, we have successfully completed more than 155 projects for 40 countries worldwide.

Whether you need advice on your new project or want to improve your existing project, Northell can help you by providing the best talent.

If you decide that CTO as a service is what your project needs, contact us, and we will try to do our best to implement your project.

Hire CTO

CTO as a Service: Summary

CTO is a fantastic option for nearly any business and technological issue. Such a service is beneficial to all sorts of businesses, but it is especially helpful to startups. It is the most cost-effective method to have an expert with such extensive knowledge and expertise on your team.

A CTO as a service can assist you with the following:

  • Selecting the best technologies.
  • Performing difficult technical challenges.
  • Identifying key features.
  • Choosing the best business and technology approaches.
  • Hiring new employees, forming teams, and providing support.
  • Pitching your project to investors, and many other things. 
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