In today’s complex regulatory landscape, tax departments are being pushed to do more with less time, fewer resources, and tighter budgets. As businesses scale and globalize, the demands placed on tax teams only intensify. Tax technology can be a critical tool for navigating these challenges, but implementing and managing it isn’t easy. Tax technology has become one of the biggest obstacles tax leaders face.
This is where co-sourcing tax technology services comes in. Co-sourcing means partnering with an external provider to enhance internal capabilities—without replacing your team as in an outsourcing model. Co-sourcing delivers the flexibility, support, and strategic guidance that tax departments need.
Tax Technology Resources Are Hard to Find
Finding good tax technology talent is extremely challenging. There simply isn’t a large pool of professionals who deeply understand both tax and technology, and even fewer who have mastered the nuances of direct and indirect tax. Thus companies face multiple challenges, among them:
- Talent is scarce. Organizations typically have strong IT professionals and finance experts, but few individuals possess the hybrid skill set needed to configure, manage, and optimize tax technologies such as Onesource, Vertex, Alteryx, or enterprise resource planning (ERP) systems. The right person must understand both data architecture and the complexities of tax legislation—a rare combination.
- Retaining talent is even harder. Once you do find someone with the right experience, keeping them can be another challenge. Tax technology professionals are in high demand, and they are frequently recruited for more lucrative or varied roles. Internal development pathways are often unclear or underfunded, pushing talent to look elsewhere for growth.
- Skill sets must span direct and indirect tax. Most tax professionals specialize in either direct or indirect tax, but with technology playing a critical role in both areas, today’s organizations need someone who understands how sales and use tax affects an SAP S/4HANA workflow while also grasping the implications of BEPS Pillar Two for the global provision process.
- Knowledge of multiple platforms is rare. Companies typically use a patchwork of tools: Alteryx for automation, Onesource or Corptax for compliance and provision, Vertex for indirect tax, and SAP or Oracle as the ERP backbone. Expecting a single in-house hire to be fluent across all of them is unrealistic.
- Deep tax understanding takes time. Understanding tax technology isn’t just about knowing how to click the right buttons. It requires a foundational understanding of how tax works, how it’s reported, and how it affects the broader business. Gaining that knowledge takes years, which is time most tax teams don’t have.
The “Champion” Model and Its Pitfalls
Because of these challenges, many tax departments rely on a single “tax tech champion”: the person who has learned the systems, understands the processes, and makes things work. Although this person is invaluable, this model is fraught with risks, four of which are particularly important.
- Single point of failure. When one person holds all the knowledge, the tax technology function becomes vulnerable. If that person leaves, goes on extended leave, or is simply stretched too thin, critical systems and processes can grind to a halt.
- Underuse of tools. Most tax technology platforms offer rich features and automation capabilities, but many organizations use only a fraction of them. Without dedicated support, tools remain underused and fail to deliver return on investment.
- Process optimization gets ignored. Instead of refining workflows or improving data quality, your champion is likely stuck fighting fires and dealing with error messages, missed deadlines, or last-minute requests. The “important” is sidelined by the “urgent.”
- Strategic initiatives get delayed. Tax technology has the potential to drive real transformation. But without a broader team or partner to share the load, your champion often must deprioritize strategic projects such as data transformation, automation, and compliance modernization.
The Case for Co-Sourcing Tax Technology
Unlike full outsourcing, co-sourcing allows you to retain control and institutional knowledge while partnering with a provider who fills in the gaps and strengthens your team. The right co-sourcing relationship can deliver countless benefits.
- Training and enablement. A good partner doesn’t just do the work for you; they train your team, empowering staff to use tools more effectively, understand processes better, and become more self-sufficient. These abilities build institutional resilience and reduce dependence on any one person.
- Backup and redundancy. Co-sourcing provides a buffer. When your champion is unavailable, the partner steps in. The co-sourcing team can also help manage workload peaks during filing seasons, audits, or system upgrades, preventing burnout and missed deadlines.
- Best-practice advisory and project support. When you need to roll out a new tax engine, integrate a new ERP module, or overhaul your compliance process, a co-sourcing partner brings battle-tested best practices. They’ve done this across multiple clients and know what works—and what doesn’t.
- Access to high-level expertise. Need someone who understands BEPS Pillar Two modeling, e-invoicing mandates in Latin America, or the nuances of the effective tax rate changes driven by ASU 2023-09? Co-sourcing provides on-demand access to that expertise without hiring full-time specialists.
Choose Your Co-Sourcing Partner Carefully
Not all co-sourcing providers are created equal. Some simply chase projects. Others try to push proprietary tools. The right partner aligns with your goals, works within your ecosystem, and takes a long-term view. In short, the right partner:
Is not in it just for projects. A true co-sourcing partner isn’t looking to parachute in for a one-time implementation. They are in it for the long haul, helping your tax function to evolve and supporting you as your needs change.
Doesn’t push specific (or bleeding-edge) tech. Your business has invested in certain platforms for a reason. A good partner doesn’t try to rip them out or push something trendy that doesn’t fit your purpose. They work within your environment and optimize what you already have, ensuring that your department retains full access and to control of its technologies and work papers.
Covers all the bases. You don’t want to juggle multiple vendors to cover your tax technology stack. Look for a co-sourcing provider that understands and supports all your systems and can work across all functional areas of tax.
Technology Is Too Important to Be Left to Chance
Tax technology is no longer optional; it’s a necessity. But building and sustaining the internal capabilities to run it effectively is increasingly difficult. The cost of failure is high: underused tools, overworked teams, compliance risks, and stalled innovation. Co-sourcing offers a flexible, sustainable path forward. It allows your tax team to stay in control while getting the training, support, and expertise needed to thrive. When done right, co-sourcing transforms tax technology from a liability into a competitive advantage.
So, if you’re relying on a single champion or struggling to maximize your systems, it might be time to ask: Is co-sourcing your best bet? Chances are the answer is yes.
Anthony Sorrentino is managing director, tax automation services, and Dante Colonna is director, tax automation services, at GTM Tax.
