Determine what to build: Keeping tax and finance activities in-house generally requires some degree of internal transformation aimed at optimizing a company’s existing people, process, data and technology. Oftentimes, companies will want to maintain or build activities that are considered higher-value, or best-in-class, as they should be performed with optimal effectiveness and control.
Examples of best-in-class activities include tax planning and managing controversy.
Determine what to buy: Activities that are considered lower-value, or best-in-cost, should be performed at minimal cost through centralization, sourcing from lower-cost locations, or via third parties. This provides high efficiency performance of those activities at a lower cost. Some typical activities with lower cost or efficiency objectives include completion of tax returns and data collection.
Find the right mix: Once a decision has been made to designate an activity as best-in-class or best-in-cost, companies need to decide whether they want to “own” that task by keeping it in-house or alternatively “buy” or outsource the task to an external provider. Many businesses choose a hybrid approach in order to maximize the effectiveness and efficiency of their tax function.
In-house versus outsourcing