Outsourced CTO — Advantages and Disadvantages
With new technologies emerging all the time and old technologies constantly evolving, it’s essential that organizations keep up and adopt them to stay ahead of their competitors. This is why the role of a chief technology officer was designed and is very crucial.
While the role and responsibilities can slightly differ from company to company, the general idea and need remain mostly the same. A CTO is a member of the executive team that is in charge of a business's technological needs as well as research and development.
What does a CTO do?
Chief Technology Officer (CTO) examines the long and short-term needs of your organization and then invests in new technology or updates and redesigns old technology to meet those needs. This way, your company can effectively reach internal objectives and create products that meet consumer demands and provide value.
CTO duties can also be shifted at various stages of startup growth. For Example, a startup might hire some technical staff which will most likely change the responsibilities of a CTO. Now CTO can direct the technical staff with his decisions to get the job done. Check our CTO Services for Startups for more details.
Can I outsource a CTO?
However, while the demand dramatically outstrips the supply, this doesn’t necessarily mean a skilled CTO is necessary for every company. The job description for a CTO might look like one that requires bringing on full-time staff to handle but many startups do not have the budget to hire a full-time CTO and so have to look into more affordable alternatives. This is where the outsourced CTO services come in.
An outsourced CTO position usually acts as a manager for your company’s technologies, engineers, IT support, and tech partners. He can help to identify risks in company cybersecurity systems and ensure that your company’s services and products are up to required standards. The answer, therefore, is Yes, you can outsource CTO. But should you?
Let’s look at the views for and against CTO outsourcing.
The argument for outsourced CTO
The main argument for CTO outsourcing is the experience. Nothing beats real-life experience from someone who has a clear picture of the technological space and can give you an unbiased view of your service or product as a whole. This person will:
- Ensure your business and technological strategies are aligned
- Provide in-depth advice on tech stack and technical issues to help inform the decision-making process for stakeholders
- Effectively plan your monthly and yearly IT budget
- Define a clear roadmap for your management and developer teams. Where you’re starting from and where you’re headed in the long run.
- Define short-term and long-term goals for the business to ensure everyone has a clear direction.
- Prepare you for a due diligence process, identify risks and define risk-reducing operations.
- Review and analyze your IT department, company's technologies and advise on how to increase productivity.
- Supervise and lead the tech team recruitment process.
- Handle delivery of technology initiatives and ensure risk-reducing operations.
- Tie-up management team and software development team in the company.
For this to work effectively however you are looking for someone with clear experience and a proven track record. This means if you can’t afford a full-time CTO, outsourcing CTO might be the way to go.
The argument against outsourcing CTO
Most people in the tech environment ay their biggest issue with outsourcing a CTO is commitment and loyalty to the company. They argue that having an external body come in to do the work takes out the commitment of building with the team. This is on the basis that the person comes in for a short period, does the basic evaluation and review, get paid, and leaves. Without seeing the project through to completion.
These people prefer to hire someone committed to the company and its achievement and values. Someone who is a part of the dream is likely to put in their best and commit to the company’s success whereas to get the same commitment from an outsourced CTO will require paying a lot of money which defeats the purpose of working with a budget.
There is also the feeling that technical experience is not enough. The person also has to have the knowledge of business needed to create a product that people will actually want to use. That and the fact that outsourcing a CTO doesn’t guarantee they have enough knowledge in that specific business niche makes for a great argument.
Another reason many people kick against outsourcing is the idea that there will be little room for in-depth and advanced testing and implementing new updates. Bringing in new ideas for updates and including new features will be restricted and so will the opportunity for testing the product until it is clearly ready for market.
Competitors who are more dedicated to a product will hire a full-time in-house CTO which reduces your chances of growth and scaling up. This is a very valid argument because taking a product to market and ensuring that it is top of mind with a consumer can be difficult when you have other competitors in the same race with more resources and a dedicated team.
So how do I decide on an outsourcing CTO?
The question to ask yourself is at what stage in your company are you and what are your technological requirements. Most start-ups and midsized companies do not need an experienced full-time CTO. Rather, someone to manage the software developers, the software development life cycle, and partner with the management team to establish short and long-term technology strategies.
You have an option to outsource at the beginning when there might not be a specific structure and all that matters is getting a working product to market. At this point, all you’re looking for is someone to manage the development team and ensure that all features are working and all the technological needs are met. While also dealing with the management and stakeholders and ensuring that the company’s short and long-term goals are put in focus while developing the product.
This is usually done during the beta testing phase of the product and while sourcing for funding. Your specific company needs, just how much there is to do and how much money you can afford to invest will be the determinant factor for deciding if you want to outsource your CTO position or hire a full-time CTO.
Take the time to review what your company needs and what roles the CTO will be fulfilling. Ask yourself if someone who comes in once in a week or only when it’s necessary will be the right choice to handle these responsibilities and then figure out just how much you are willing to pay for the service. If your budget cannot be stretched to pay for a full-time business CTO, then you might have to settle for outsourcing.
The good news is, there are a lot of places to get outsourced CTOs that will fit into almost any budget you can afford. You will also find suitable candidates based on the experience level you need to fill the role and the responsibilities that will be involved.
Actually, CTO outsourcing is a perfect interim solution that will cover all your needs before you are ready to afford a rockstar full-time CTO. Once it is time to scale up, you would want to look into hiring a full-time CTO as a dedicated staff that comes on board to smooth things over, create a proper working structure and fine-tune the development team.
With all of the above in mind, if you do want to outsource a CTO position, you want the best person, of course. Experienced CTO can lead a product development team to achieve your business goals much faster and cheaper, by leveraging the latest technology. So take your time to do the research involved, check out all the top outsourcing companies, and do a thorough background on any candidates you’re considering.
Ensure that they have proven track records to back up their experience and success rate and be sure that they are able to handle what is needed not just for the technological aspect but for the business aspect too. Usually, for early-stage startups, an outsourced CTO is the person in charge of your first product development and launch. You want to make sure they know exactly what they are doing and are capable of handling the job without any major setbacks to the company.
All startups are not equal and while there is a benefit in getting an experienced individual to close technological implementations for a company, outsourcing CTO as a service might or might not be ideal for your particular startup. It does offer a great way to navigate the initial technology-related hurdles that most startups are plagued with. Hence if you don't have the role already filled and you are in need of experienced hands, this might be the route to take.