Outsourced CTO or freelance CTO: how to choose

An outsourced CTO is a technical director who is not an employee of the company: they take charge of technical decisions a few days a month, or more during a busy period. They can be an independent working alone, the freelance CTO, or a professional backed by a company that provides the service with a team, the CTO as a service. This guide compares the two options with each other and with hiring, then gives the criteria for choosing and the clauses to put in the contract.

It is aimed at founders and SME executives who have no technical director, or no longer have one, and who still need to decide: architecture, recruitment, choice of providers, budget. Entrusting these decisions to someone from outside, without hiring full time, is the principle of outsourced technical leadership.

Outsourced CTO: what are we talking about

The CTO, or Chief Technology Officer, is the technical director: they link technology to the company’s objectives, choose the architecture, manage the team and providers, and answer for the technical side to management. They are outsourced when they are not an employee of the company: they work under a service contract, for part of their time.

Several names describe the same idea. People speak of a part-time or shared CTO when they divide their time between several companies, of a fractional CTO, and of CTO as a service when a company turns it into an offer. The interim CTO is a separate case: they hold the post almost full time, for a fixed period, long enough to replace a departed technical director or get past a milestone.

Outsourcing technical leadership does not mean handing it to someone who merely advises. An outsourced CTO decides, within the limits set by management: that is what distinguishes them from a consultant who hands in a report and leaves.

Freelance CTO, CTO as a service, employed CTO: the three options

The three options meet the same need, technical leadership, but not with the same guarantees. The table compares them on what makes the difference day to day.

These reference points describe common practice: a freelancer can work with fellow professionals, a company can offer a single contact with no back-up. The contract is what counts, not the name of the option.

A CTO, outsourced or not, leads: they do not come to produce in the team’s place. If the need is first and foremost to deliver more, what you should look for is reinforcement from dedicated developers.

Five criteria for choosing

Before comparing profiles, define the need. These five criteria are enough to decide in most situations.

• The need of the moment. A one-off question, such as an architecture choice or an opinion on a quote, does not call for the same thing as technical leadership held over time. For a one-off opinion, a technical audit may be enough; for decisions every month, you need someone who stays.
• Who keeps control of the roadmap. The technical roadmap commits the company for years. Whatever the option, it must be written down, shared with management and readable by someone other than its author.
• Continuity. What happens during holidays, in case of illness, or if the person stops? With an independent working alone, the answer depends on them; with a company, it can be written into the contract. Ask the question before signing.
• The skills behind the person. No technical director masters everything: security, infrastructure, data, artificial intelligence. Ask who steps in when a subject goes beyond their expertise, and on what terms.
• Cost, for the same scope. Compare proposals that cover the same thing: number of days a month, subjects included, availability in an emergency, handover at the end of the contract. A lower day rate means nothing if back-up or neighbouring skills are not included.

What to put in the contract

An outsourced CTO touches the code, the access rights and decisions that commit the company. Six points are settled in writing before day one, whether the contract is signed with an independent or with a company.

• Scope and decision-making authority. What they decide alone, what they propose, what goes up to management: budget, recruitment, choice of providers.
• Presence. The number of days or frequency of check-ins, expected response times, what happens in an emergency.
• Rights to what is produced. Code, documentation, diagrams: a written assignment clause in favour of the company (see below).
• Access. Code repositories, hosting, domain name, third-party service accounts: opened in the company’s name, never in the individual’s name.
• Confidentiality and independence. Secrecy on the company’s information, and transparency about any link with a provider they might recommend.
• The exit. The notice period, the content of the handover file, the return of access rights and documentation.

The question of rights deserves a closer look. Under French law, for software written by an employee in the course of their duties, the economic rights go to the employer (Article L113-9 of the French Intellectual Property Code). This rule covers employees: it does not apply to an independent or a service company. Without an assignment clause, the code and documents they produce may therefore remain their property.

The same code governs the assignment of copyright: each right assigned must be mentioned separately, and its scope of exploitation defined in terms of extent, purpose, place and duration (Article L131-3). Have this clause drafted or reviewed by your legal adviser.

Freelance CTO: the risk of reclassification

Under French law, an independent registered for their activity is presumed not to be bound to their client by an employment contract. This presumption falls if they work for the client under a permanent legal relationship of subordination (Article L8221-6 of the French Labour Code). The contract can then be reclassified as an employment contract; and if the company intentionally evaded its obligations as an employer, it is exposed to the offence of undeclared work.

The Cour de cassation defines this relationship as performing work under the authority of an employer who has the power to give orders and directives, to monitor their execution and to sanction failures (ruling of 13 November 1996). The risk is real with a freelance CTO, because the role tends to pull them into the organisation: present every day, reporting to management, held to set hours and instructions, they end up looking like an employee.

What counts is how the assignment actually runs, not only what the contract says: an assignment defined by objectives, the organisation of work left to the independent, no day-to-day orders. With a service company, the question arises differently, but the arrangement should also be checked with your legal adviser.

When to move to an employed CTO

An outsourced CTO is not meant to last indefinitely if the company needs a technical director every day. Three signs show it is time to recruit.

• An in-house team to lead day to day. When several employed developers wait every day for decisions and guidance, a few days a month are no longer enough.
• Technology at the heart of the value. When the product is the company, its technical leadership belongs in the management team, with the commitments that go with it.
• Everyday decisions. When technical subjects come up at every management meeting, a presence of a few days becomes a bottleneck.

The outsourced CTO can then prepare this recruitment: define the post, assess candidates on technical substance, then organise the handover. If the post is vacant and the need is urgent, an interim assignment covers the time of the recruitment.

Frequently asked questions

Outsourced or freelance CTO: choose continuity

The freelance CTO and the CTO as a service hold the same role. What separates them is what happens around the person: the skills they can draw on, back-up in case of absence, and the record they leave behind. Ask these questions before comparing profiles or rates.

iones, a French-speaking nearshore technical partner, carries out outsourced technical leadership assignments with its CTO as a Service offer. You can write to us for a first discussion.