The Consulting Cost Fallacy: What Big Consulting Firms Don’t Want You Know

You Can Automate Your Indirect Tax Process In-House. Here’s How.

For years, companies have relied on big consulting firms to manage their tax automation systems. While these firms offer valuable expertise and have historically provided essential support, they also come with hefty fees that don’t always yield significantly better outcomes. What they don't emphasize is that modern tax departments are capable of managing their own automation systems, eliminating the need for ongoing, expensive consulting services in many cases. By shifting this investment internally, companies can potentially save millions over time.

Technology is on Your Side: Better Tools, Better Results

Modern indirect tax automation tools deliver more accurate results up front, reducing errors that historically required external intervention. Technologies like CypherTax and other advanced reporting tools provide tax departments with detailed insights into transaction-level data, making it easier to spot recurring errors and address them before they snowball into larger problems.

These tools are designed to operate seamlessly with your existing finance systems, granting direct access to the underlying details of indirect tax transactions. This capability allows teams to identify patterns of issues and resolve them internally. By focusing on continuous process improvement, tax departments can address errors in real time and make strategic adjustments without needing ongoing consulting support.

That said, consulting firms remain an important partner for businesses looking for specialized expertise and short-term solutions, particularly for companies who may not have the internal resources or desire to manage complex tax systems in-house. For businesses that still prefer to rely on outside experts, modern technologies give consulting firms the tools to streamline operations and offer more efficient, cost-effective services, ensuring that clients still receive high-quality outcomes without the added burden.

Empower Your In-House Tax Department

One of the main reasons companies outsource their tax automation is the perceived complexity of managing these systems. However, today’s automation tools are more advanced and user-friendly than ever, allowing companies to maintain and configure their tax systems with minimal external help. Properly maintained and configured sales tax systems can significantly reduce the need for continual consulting support, saving companies millions over time.

Instead of paying exorbitant fees for every system adjustment, companies can invest in training their teams, building in-house expertise that drives better, faster results. This shift not only cuts costs but also puts control directly in the hands of those who understand the company’s needs best: the internal tax and finance teams.

For consulting firms, the opportunity lies in embracing these modern technologies to enhance their value proposition. By working alongside in-house teams and empowering them with the latest tools, consulting firms can play a pivotal role in ensuring companies get the most out of their automation systems while still benefiting from external guidance where needed. This kind of collaboration fosters mutual success, allowing both firms and their clients to thrive.

Visibility is Key: If You Can See It, You Can Manage It

One of the greatest advantages of managing your indirect tax systems in-house is visibility. When you can see every aspect of your tax data in real-time, you gain a clear understanding of where issues arise and how to fix them. This visibility enables timely reporting, improved communication across teams, and a proactive approach to managing tax compliance.

If a company outsources these tasks, they often lose this visibility. Consultants manage the data, meaning tax departments must rely on third-party reports that may not always reflect real-time issues. By keeping tax management in-house, companies can maintain continuous oversight, making it easier to monitor and improve tax compliance processes.

However, for businesses that prefer to outsource, choosing consulting firms that leverage modern tax technologies can still offer enhanced visibility through advanced reporting capabilities and collaborative platforms. This ensures that businesses maintain access to critical data while benefiting from the external expertise of trusted partners.

Continuous Improvement: Fix One Problem at a Time

Continuous process improvement is often seen as a lofty goal, but it is achievable with a systemic approach. It starts with identifying one issue, fixing it, and learning from the experience before moving on to the next problem. By tackling problems one at a time, companies build momentum and drive ongoing improvements in their tax systems.

A common challenge for tax departments is feeling overwhelmed by the sheer volume of data. However, instead of trying to solve every problem at once, an effective approach is to start small: analyze a small sample size, identify recurring issues, and resolve them. These initial fixes often apply to the broader dataset, setting the stage for a scalable approach to continuous improvement. This process-oriented mindset is critical to optimizing in-house tax management and achieving long-term success.

The consulting model of the big consulting firms is fundamentally at odds with the principles of continuous improvement and in-house process maintenance. Large consulting firms thrive on implementing extensive ERP systems, bolt-on solutions, and selling ongoing audit-related services, not on empowering clients to manage their systems independently. However, if companies don't want to take on this responsibility themselves, there is a light at the end of the tunnel. Consulting firms have the opportunity to reduce their costs and improve their approach by shifting from talking about technology, to embracing continuous process improvement and adopting the technologies they speak of. They can pivot and offer clients the best of both worlds—specialized expertise and cost-effective solutions—while still delivering top-tier services.

The Path Forward: Invest in Your Team, Manage Consultants More  Effectively

By managing tax automation in-house, companies can maintain control, visibility, and flexibility over their tax operations. Investing in your tax department’s skills, leveraging modern technology, and committing to continuous process improvement yields better results and a higher return on investment than traditional outsourcing models.

It’s time for tax directors and CTOs to rethink their approach to tax automation. The tools, technology, and talent are already at your fingertips. By choosing to manage tax automation in-house, companies can reduce costs, improve accuracy, and drive ongoing success. And for those who still want the support of external partners, the best consulting firms will be the ones that embrace this change—helping you manage more while costing you less.

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