Cracking the ‘niche team’ conundrum – what we can learn from tax functions
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
External consultants/ partners often have access to all specialist skill sets under one roof. Leveraging these outsource partners can enable access to a dozen specialist resources at the cost of three to four resources.
With business growth and change happening at a pace never seen before, the battle for quality talent is, only naturally, at its peak today. Within this battle, the staffing and retention of niche teams are probably the most complex.
Niche teams are those that need highly specialised skill sets and deal with significant complexity. A very good example is the tax function of companies. So, learning how tax functions are managing their talent could give us a good sense of tools available to meet other niche team challenges.
Tax is a very specialised area and requires deep technical expertise. While a layman looks at tax as one subject, a tax specialist would know there are several specialty areas within tax (Goods and Services Tax, transfer pricing, income-tax, international tax, etc). Each of these specialty areas poses different complexities and the need for depth. To add to this, the constant change in tax law makes tax even more complex to handle. Therefore, the tax function of companies makes for a perfect example of a ‘niche team’.
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An inadequately staffed tax team could cost a company millions of dollars in tax demands, penalties, etc. As it is sometimes said, “If you think hiring professionals is expensive, try hiring amateurs”. Therefore, investing in the tax function is crucial. Companies know this. But they face myriad challenges in doing so. Some examples are as follows:
At the helm is cost pressure. An appropriately staffed tax function of an average company might need the involvement of six to seven different specialties. But these specialties may not be required full time. Therefore, there is often a budget for only three to four full-time employees in an average tax team. However, these individuals may not necessarily have expertise in all specialty areas.
Tax specialist resources are limited. Attracting talent and retaining them with the promise of career growth within the organisation is very challenging. Since tax teams of companies cannot grow proportionate to business growth, creating a regular promotion cycle for the tax team professionally is difficult. To add to this, there are significant learning and development needs for tax professionals (since the tax law keeps changing).
As the tax administration and businesses have gone digital, the need for technology and process experts in the tax function has also increased multi-fold over the years. This adds to the skill set requirements of the tax function (while budgets don’t correspondingly increase as easily).
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How are tax teams addressing these challenges? The answer lies in agility. Tax teams have moved from traditional in-house functions (with limited outside help) to an agile model built for specific scale and needs.
To start with, tax functions have become smart about where they need to hire versus where they need to outsource. Looking at outsource partners as an extension to the in-house environment (rather than an external supplement) is a fundamental shift we are seeing.
External consultants/ partners often have access to all specialist skill sets under one roof. Leveraging these outsource partners can enable access to a dozen specialist resources at the cost of three to four resources (since it becomes possible to use, for example, 30 percent of the time of a GST expert rather than hire him and pay for the whole). Some outsource partners have even made heavy investments in process and tax technology, which could help reduce risks and achieve better economics.
Of course, the answer isn’t simply outsourcing. Each company needs to look at its unique internal environment and need to strike the right balance. This is where tax functions have been getting it increasingly right. In a recent survey conducted by EY, 90 percent of the respondents said they are looking at re-engineering their tax functions. This is a reflection of the agility that tax functions have started embracing.
The learning of tax functions can quite usefully be adopted across other niche functions as well. But tax functions are still at the beginning of their journey of adopting these new operating models. The progress and learnings of the new age tax function will therefore be an interesting space for all to watch. How well will they adopt this new agile approach? Will we soon start seeing specialised IT, design, risk functions, etc going the ‘tax way’?
Whichever way you look at it, there is a need for transforming traditional operating models at their core to win the battle for niche talent. This will need some out-of-the-box thinking. In doing so, it will be useful to remember that “it’s easier to think outside the box if you don’t draw one around yourself!” It is time leaders of niche functions start questioning the norm and re-articulating the problem statement. Many are doing this already. It is time for others to catch up.
The author Jitesh Bansal is Partner and Leader – Tax and Finance Operate at EY India. Komal Grover, senior tax professional, EY also contributed to the article.
Views expressed are personal
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