Managing a tax organization is a complex, costly operation. The technology that’s essential to optimizing the tax function, with a robust system that provides the insights needed for the C-suite, can be difficult and costly to implement. In addition, tax organizations may struggle to find a flexible and scalable workforce solution to suit their needs in this ever-changing regulatory environment.
PwC’s Insourced Solutions for Tax (IST) group understands the human and tech challenges that tax leaders are facing every day. The tax world did not get any less complex in the US with the passage of tax reform and only adding to the complexity is the demand for increased transparency from taxing authorities around the world. Effective tax rate optimization, cash repatriation and sound compliance execution are just a few examples of issues companies are grappling with as a result of these changes. Bottom line is tax functions are expected to drive greater value at less cost in an ever increasing digital world.
How can Tax organizations address this critical issue? The obvious option is for companies to recruit, train and retain skilled tax professionals, while also evaluating, deploying and updating the latest technologies. That’s doable for many enterprises. In fact, we work with many companies eager to build the Tax function of the future.
Other enterprises prefer to insource their tax organization, which moves execution, technologies, and employees to a third-party provider. PwC’s had conversations with business leaders who are concerned about this approach, often because of misconceptions about insourcing. For one thing, insourcing is not synonymous with outsourcing.
With insourcing, as we define it, the majority of a company’s tax employees are provided the opportunity to join PwC. They are not assimilated into the general tax practice; instead, they join our IST group, which focuses on providing tax managed services and creating an “in-house” experience for our clients. These professionals continue to serve their former employer, but they also have the opportunity to tackle tax projects for other IST clients, thereby honing their skills and increasing their knowledge.
The company benefits by having access to tax professionals with deep in-house experience--with their relevant skills, knowledge of the operations, and relationships within the company --without having to directly manage those workers. In addition, it has access to PwC’s technology tools and broader global network of professionals who have expertise in a wide variety of fields.
In contrast, with a traditional outsourcing arrangement, a company leverages service providers to complete only certain activities within the tax lifecycle. This can result in a decoupling of tax lifecycle elements and a loss of relationships and familiarity with the business by those performing the tax function.
Our insourcing clients are supported by IST’s approximately 300 (US) professionals, who average more than 14 years of in-house experience and understand the needs of stakeholders across a company. This team works with corporate leaders to help them make informed decisions on critical issues involving the IRS, the C-suite, customers, and the broader tax planning function, providing a seamless in-house feel.
For insourcing solutions to be successful, the service provider must have the resources to train, upskill and manage people effectively.
That’s what we offered Synchrony, which just joined our growing base of IST engagements. The Synchrony tax team was an important part of the company, effectively partnering with the business to drive high-value tax advice and seamlessly integrate tax into operations. PwC’s ability to sustain Synchrony’s world-class tax resources in today’s changing environment and provide that tax team with the opportunity to expand their skill sets, leverage existing IST processes and technologies, and take advantage of the career-building opportunities available at PwC helped the company decide to insource with PwC.
In addition to managing people and their careers effectively, an insourcing provider should also offer state-of-the-art tax-focused technology. That’s a costly and challenging undertaking for many companies to replicate on their own. But with PwC’s insourcing initiative, multiple clients can be supported with a single platform, so we’re able to deploy and continually enhance advanced tax systems cost-effectively.
"We believe we’ve struck the right balance in offering our clients first-class service, the latest technologies, and talented, dedicated tax professionals who we train, nurture, and reward."
PwC has a suite of technology applications that were built specifically for tax professionals by tax professionals. The IST technology, which was developed to be master-data driven throughout the tax lifecycle, is flexible and responsive to tax departments’ reporting needs.
It’s important to choose an insourcing provider that not only has deployed advanced technologies, but also can train employees to use them. Of course, providing essential technologies and training without losing the human touch is a delicate balancing act, and the insourcing provider you select should be adept at achieving that balance.
Insourced Solutions for Tax and Managed Services Leader, PwC US