Give tax ‘rightsourcing’ a good cultural fit

Transform the tax function to be innovative and strategic

Monarch Chrysalis What happens when an in-house tax professional learns a company plans to co-source or outsource the tax function? “Probably the knee-jerk reaction is that they’ll be ‘outsourced’ out of a job,” said Katherine R. Jackson, experienced manager with Grant Thornton LLP’s Tax Reporting and Advisory Services. The reality can be very different, she said. The right “rightsourcing” tax arrangement can shift the focus of tax department resources from primarily a compliance to a strategic, value-added role. This shift will occur because data gathering and reporting will be automated and executed through innovative tax technology. This arrangement presents opportunities for the tax function to increase its visibility and further execute strategic activities to support broader enterprise objectives.

A key driver behind rightsourcing is eliminating the need for tax professionals to stay mired in low value-add work, said Jackson. “They’re spending a whole lot of time gathering data from multiple sources, going into systems, pulling it together, reformatting it in a spreadsheet, massaging it, breaking it out and putting it on specific lines on a tax return form.

Grant Thornton insight The right “rightsourcing” tax arrangement increases efficiencies by using technology and innovation to eliminate manual data gathering, and it presents opportunities for the tax function to be a strategic partner to the C-suite. “Sure, those things need to happen for compliance,” she said. “But are these activities contributing to the business and adding value by opening up tax planning and strategy opportunities? No, they are not. That’s why the idea of shifting to rightsourcing, and layering in technology and innovation, is so appealing.”

Yet, when the words “automation,” “AI” and “robotics” are added to the rightsourcing mix, people think they are going to be replaced with a robot, Jackson said. “In my experience, those reactions are often unfounded. When innovation and outsourcing ideas are introduced in a company, the typical result is a shift in the types of work people are doing, not in eliminating positions.”

Where a tax professional spends the most time should be proportional to what is most important to the business, said Jackson. “Rightsourcing a company’s tax operating model represents a paradigm shift, so that low value activities such as data-gathering become the lowest component of how a tax professional is spending time. Analysis and tax planning, as well as adding value through insights, become the biggest piece.”

Selling a new approach takes smart change management Mitigating tax professionals’ concerns about rightsourcing requires a solid change management strategy. “Thinking about this, and planning for it in advance, is sometimes the piece that companies miss,” said Jackson. “When you undertake co-sourced, outsourced and innovation projects in tax, you should take steps to alleviate concerns.”

Effective change management involves bringing in all players at the outset — with leadership communicating to the tax department what the North Star is. “When you start this rightsourcing process, there is a North Star from leadership to reach their goals and future growth,” said Jackson. “To get buy-in, you must effectively communicate vision and have teams actively involved. You want their input and ideas from the very beginning. You do not want a situation where people feel you are doing something to them. You want them actively involved in coming up with ideas to achieve your goals.”

Even in the initial stages — when a company is considering what a rightsourcing arrangement should look like and is reviewing potential providers — the tax team should be actively involved, said Jackson. This involvement should continue throughout the process, with frequent communication around what is happening.

The benefits to culture of having a ‘project champion’ A good way to smooth the process and gain buy-in is having a “project champion” from the company’s pool of tax professionals. “You don’t necessarily want to rely solely on a project manager from the service provider,” said Jackson. “You want someone embedded on the team who is communicating and keeping people actively involved when moving forward. When the engagement is at the point of transitioning some of the tasks, you need someone collaborating with the service providers with an eye toward the future.”

A company undertaking rightsourcing needs to be realistic that there will be resistance to the idea of changing what people are used to. “It’s always scary to do something new,” Jackson said. Up-front, you have to come up with plans to assuage resistance. Having people actively involved as project champions helps alleviate concerns and resistance.

Grant Thornton insight A project champion should be a tax professional who is part of the in-house team going through transition. You get much greater buy-in that way. The champion explains why the company is doing what it is and that their roles are going to be better. As rightsourcing rolls on Rightsourcing a tax function is an evolving process, said Jackson. “It’s not a one-time deal. To have an effective change management strategy, you have to work on it over time. Have a communication plan and know all individuals involved. Convey the plan before beginning, and repeat or update it during the process,” she said. “Make sure communication stays strong and people remain aligned with the objectives. Transparency and tax function involvement are crucial to making the rightsourcing model and the new roles work, and to ensure a healthy culture.”


Michael Colagiovanni
Tax Reporting Advisory Services
Grant Thornton
T +1 216 858 3565

Katherine R. Jackson
Experienced manager
Tax Reporting and Advisory Services
Grant Thornton
T +1 415 318 2244