Outsourced CTO vs Fractional CTO: Which Approach to Choose?
Both options offer external technical leadership, but with different interaction and accountability models. Let's explore the details.
Comparison Table
| Feature | Outsourced CTO | Fractional CTO |
|---|---|---|
| Work model | Through agency | Direct |
| Specialist selection | Agency chooses | You choose |
| Personal relationships | Through manager | Direct |
| Replaceability | Easy to replace | Personality matters |
| Business understanding | Basic | Deep |
| Cost | Higher (agency margin) | Lower (direct payment) |
| Transparency | ||
| Long-term partnership | Contract with agency | With person |
When to choose each option
Choose outsourced CTO if:
You prefer working through an agency
- Want to minimize search risks
- Need guarantee of replacement if doesn't fit
- Prefer working with legal entity
- No time for search and verification
- Need one contract for multiple services
- Formalized reporting is important
Choose Fractional CTO if:
Want direct relationship with expert
- Personality and specific person's experience matter
- Want direct communication
- Prefer long-term partnership
- Want to save on agency margin
- Deep business immersion is important
- Planning to involve in fundraising
Cost Comparison
Typical costs per year
Outsourced CTO
Monthly rate$7,000-12,000
Agency margin30-50%
Setup fee$2,000-5,000
Actual payment to expert~60-70%
Total:$90,000-150,000
Fractional CTO
Monthly retainer$5,000-8,000
MarginNone
Setup feeNone
Payment to expert100%
Total:$60,000-96,000
Help Me Decide
Answer questions to determine the best approach
Question 1 / 4
What's more important in work?
Frequently asked questions
Let's discuss your situation
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