Struggling to harness the power of new technologies
Converting tax and finance functions into modern, data-powered operations is being driven by many factors, yet one in particular is a need to be responsive to tax authorities who are increasingly asking for real-time data. Businesses also want their tax and finance functions to provide high-value strategic counsel on the business’s overall direction and to do so quickly and efficiently. However, 48% of respondents cite the lack of a sustainable plan for data and technology is the biggest barrier to achieving this vision.
Tax and finance leaders are also skeptical that emerging technologies like generative artificial intelligence (AI) will have an impact on their work. Eighty-five percent state that they do not believe generative AI tools will help drive increased effectiveness and efficiencies within their tax function.
Tax departments faced with talent challenges
The survey revealed that tax leaders are grappling with a range of talent issues. Fifty-one percent of leaders say they have moderate to significant struggles with motivating talent and avoiding burnout within the teams. Meanwhile, 63% say their employees will need to augment their tax technical skills with new data, processes and technology abilities in the next three years. And 29% say they do not have enough highly skilled professionals capable of monitoring, evaluating and implementing tax legislative and regulatory change around the world.
Notably, respondents that co-source 25% or less of their workload are more likely to report that they are struggling with these issues than those that co-source higher concentrations.
Co-sourcing surges as a solution
These collective pressures are causing companies to analyze their options for creating modern, agile tax operating models, and co-sourcing with third parties is emerging as a preferred way to achieve this. Ninety-five percent of businesses are now more likely than not to co-source tax and finance activities, a 22-percentage point increase since 2020. Meanwhile, 35% of companies say co-sourcing with a provider who has significant capabilities in data, technology and shared service center delivery is the most important change they need to make to their operating model.
More than half (59%) say the ability to develop their team and provide opportunities to work on more strategic activities is the most significant benefit of partnering with a provider to co-source multi-country tax compliance and statutory reporting activities, while 18% identify cost savings as the biggest benefit.