The Financial Advantages of a Fractional CTO

Technology today is no longer a luxury. It is a must-have factor for any business that wants to thrive in this competitive market. It is impossible to imagine a business with no technology solution. Not just streamlining internal and external operations of a business, but IT solutions also do a wonderful job of enticing new customers and retaining the old ones with impeccable services through handheld devices.

Every company, a startup or an established enterprise, requires a strong tech foundation to stay in the market and grow. While global digital transformation spending has reached to a whopping figure of US $2.49 trillion, the need for specialized tech leadership has grown manifold. Nevertheless, hiring a full-time Chief Technology Officer could be a costly affair, especially for startups and small businesses.

Here is where the concept of hiring a fractional CTO enters – it is an innovative approach with a win-win situation to help businesses with tech leadership that could prove a game-changer for a company. In this short guide, we will learn how hiring a fractional CTO can help you save money. You can also take a look here to understand what/who is a Fractional CTO.

The Financial Benefits of a Fractional CTO

When you hire a fractional CTO from a reputed IT agency offshore, you have benefits: financial, management, and operational. Some of the financial benefits are as follows –

Tech Leadership at Affordable Costs

Hiring a full-time CTO is a costly affair – it requires hefty salaries, overheads, and wages. On the other hand, a fractional CTO comes with hourly charges or project-based charges. This means the hiring company will only pay for the services used.

Avoid Hiring Mistakes

Finding the right CTO is a costly affair too. It could be time-consuming and quite expensive. A bad hire can cost your company quite dearly. You lose money, productivity, effort, and most importantly morale. With a fractional CTO in place, you get seasoned tech leadership without the risks of bad hiring.

Staff Scaling

The needs of businesses fluctuate and so do the demands of the market and customers or users. When you hire a fractional CTO, they can easily adjust their workload to suit your company’s evolving needs. Such flexibility ensures that you always have the right intensity and level of tech expertise.

Affordability and Quality

You have access to top talent – the tech veteran at affordable costs. Full-time CTOs are hard to recruit and bear the costs. Fractional CTOs, on the other hand, have access to a wider pool of talent and network. Hence, you can tap into the expertise of world-class tech leaders with no botheration of a full-time hiring process.

Saved Money Invested Better

As you outsource a fractional CTO, you save money and time. The tech leadership provided by the fractional CTO sets you free to invest your time, money, and efforts elsewhere. You invest more in high-value initiatives and business expansion.

Faster Time to Market

A fractional CTO quickly assesses your technology requirements and builds a software development roadmap to ensure your business goals. It remarkably brings down your time to market for newer services and products.

Cost-Comparison Scenario: Full-Time CTO vs Fractional CTO

Consider a mid-sized SaaS company looking to scale its technology operations:

A Case of Full-Time CTO

• Salary: US $250,000 per annum
• Benefits: 30% of salary (US $75,000), including health insurance, retirement contributions, paid time off etcetera.
• Overheads: US $50,000 (office space, professional development, equipment, etc.)
• Total cost: US $375,000 per annum

A Case of Fractional CTO

• Hourly rate: US $100 – $250 per hour
• Estimated hours per week: 20 hours
• Total hours a year: ~1040 hours
• Total cost: US $104,000 to $260,000 per annum

Analysis

The scenario reveals that the fractional CTO model is remarkably less expensive compared to hiring a full-time CTO. The hiring company can save anywhere between US $271,000 to US $115,000 annually by hiring a fractional CTO from an offshore IT company.

Note: these figures are tentative and can vary based on location, project type, industry type, company size, and specific qualification and experience of the fractional CTO. In addition, the fractional CTO model also has hour or project-wise flexibility and the hiring company can decide to use services as and when they want.

Other Factors that make Fractional CTO a Better Choice

There are certain factors you need to consider when you hire a fractional CTO from an offshore IT agency. You will see added advantages of having them compared to a full-time hire.

• Multifaceted: Both a fractional CTO and a full-time CTO can bring excellent tech expertise; nevertheless, the fractional CTO generally offers a broader range of experience due to working with ample enterprises.
• Unbiased: A full-time CTO, in one or the other way, is driven by the company’s history and internal politics. An external or fractional CTO works neutrally with no bias.
• Control: A full-time CTO has more control over your tech team and strategies leaving you a bit concerned about the outcome. A fractional CTO typically works in collaboration and with your leadership.

Full-Time CTO vs Fractional CTO – A Comparison Table

Here’s a table that compares a Full-Time CTO with a Fractional CTO, highlighting the advantages of a Fractional CTO:

In this comparison, the Fractional CTO comes out ahead in terms of cost, flexibility, scalability, and the ability to quickly bring strategic value to a company. Hire a fractional CTO now and witness a remarkable acceleration in the digitalization of your business.