Outsourced CTO Vs. Inhouse CTO What’s The Best Choice?

The importance of innovation for modern-day companies is indisputable. The business environments are evolving, and all methods of operation are being updated.

But can you afford to spend your revenue on technology that may fail to drive the business goals? The answer is “no.”

To implement new technologies, a company needs a larger talent pool, a scalable infrastructure, and a strategy for continuous improvement. Otherwise, the spending will be a waste, and technologies will bring no expected results. This is why you need a CTO for your company.

A Chief Technology Officer or a CTO plays a critical role in a business. A CTO is a C-level executive accountable for all technology in the company, from hardware to software to teams and vendors. You can also opt to go for an outsourced or Virtual CTO.

A Virtual CTO has similar roles and responsibilities. While a full-time CTO makes a full-time commitment to the company, a virtual CTO could be available as a consultant and be part-time or full-time. A Virtual CTO tenure may be defined by focused time-bound goals as well.

Let’s understand what a virtual CTO or an outsourced CTO is and how it differs from the in-house expert!

What Is A Virtual CTO?

A Virtual CTO is someone who decides the technical direction of your company, developing a plan with strategies for how the technology will be used in the company. They ensure that short and long-term goals are achieved by utilizing innovative tech.

A CTO stays on top of emerging trends and evaluates those in the context of business needs, and decides on procedures to deliver quality products.

The strategy designed by CTO can help dedicate how the tech plan should direct the course of action taken by other team members. These decisions can decide technical plans, technology choices, architecture, security protocols, initiatives, etc.

Outsourced CTO Vs. Inhouse CTO

In recent years, we have observed increased demand for global development teams. It means that teams can collaborate and work together since the physical space won’t limit them. Companies can access tech talents worldwide at lower operating costs.

This trend also favors demand for Virtual CTO services, although there are certain variations you must consider before committing to outsourcing VCTO services.

👉 Inhouse CTO

Partners complementing the skills is a tried and tested technique in how teams are set up. While the CEO focuses on the business side, a CTO can take calls on the technical side. Having a full-time CTO is always a good choice. A CTO creates a roadmap for product development, thinking through different stages and estimating time and risk that may come on the way. 

✔️ Pros

• They are available day in and day out
• They follow the business goals from the onset 
• An in-house CTO will understand the company’s unique needs 
• They are fully aware of how you use the IT resources. 
• Has a good rapport among the team members 
• Tech issues are resolved faster

❌ Cons

• Local tech talents are getting scarce 
• They cost around $150K 
• Requires bonus (equity in some cases) 
• Sometimes a technology lead may lack multi-domain expertise. 

Suitable For

• Mid-size to large businesses 
• Enterprises 

👉 Virtual CTO

While planning a tech startup, the need for CTO is crucial. But not all founders can become CTO on time. The most viable solution to the situation can be finding a Virtual/ On-demand CTO.

A Virtual CTO is a cost and time-effective solution to your CTO needs. In addition, they serve as a technical voice within the company and as an individual who can help you increase return on investment and manage vendors and internal teams. 

✔️ Pros

• With a virtual CTO, getting started quickly without committing long-term is easy. 
• They contribute fresh perspectives to the business 
• Offers effective tech solutions as they have expertise across extensive domains 
• They stay on top of the emerging trends and best practices
• They have a proven track record
• Opting for a virtual CTO allows stakeholders on core business functions. 

❌ Cons

• Finding the right virtual CTO requires trust-based relationships 
• The activities or functioning are difficult to control 
• There are chances of having mismatched schedules
• They may be less focused on the project due to other schedules. 

Suitable For

• Startups and small businesses 
• Mid-sized businesses. 

So How Do I Decide On Whether To Outsource CTO Services Or Not?🤔

Before making any decisions, ask yourself- at what stage is your company, and what are your technology needs? Historically, most startups and midsized companies are not in much need of an experienced full-time CTO.

All that is required is an individual to manage the software development cycle and the team while keeping technical strategies up to the mark. 

Your specific business needs or how much money you can afford to invest will also decide if you want to outsource the CTO position or go with in-house experts. You can review the needs and roles that you expect to be fulfilled by the CTO.

Ask yourself if you need the service daily or to handle certain responsibilities timely. If the budget cannot be stretched to pay a full-time CTO, then an on-demand CTO can be a feasible solution for you. 

Related Read: Steps To Determine The Need For A Virtual CTO

How To Assess A Virtual CTO?

With all of the above discussions, if you want to outsource a CTO position, you want the best person. When you outsource CTO service, it is essential to focus on finding the right individual capable of building a strong IT infrastructure and strategic thinking. 

We have listed down some of the questions on the basis on which you can assess the right CTO before hiring one;

1. The Past: 

Before opting for a virtual CTO service, you may study their past work. What projects have they worked on? Have they done similar work in the past?

2. Quality Of The Question They Ask:

Make sure they have quality assessments too. What is the quality of their questions asked? Did they ask questions about architecture, team, etc.? 

3. Communication:

Observe the communication between you and the CTO. Was he/she able to articulate his thoughts in a structured and coherent way?

4. Technical Understanding:

What was the depth of technical questions? Were they able to show a strong understanding of technicality?

5. Work Process:

What is their work process like? How do they plan the processes?

6. Entrepreneurial Background:

Does the person have an entrepreneurial background? Will he be able to make any managerial decisions? 

7. Passion/ Knowledge/ Leadership/ Commitment: 

Try to find a CTO who fully commits to your project. Will he lead the team with determination?