Successfully managing international outsourcing projects – how to keep track of everything

Differing legal and tax rules

Each country has its own laws, especially those related to commercial and tax law. So tax and compliance processes and approaches can’t simply be transferred from one country to another. Factors such as a complex business structure, decentralised organisation, sector-specific requirements or current transformation processes also affect management of the outsourcing project. This makes a project that was already multilayered even more complex. The requirements on the coordinating team are high; they not only need to have management and project management capabilities, but also an awareness of cross-border and interdisciplinary matters.

Unclear responsibilities

A risk factor that is frequently underestimated in international projects is the unclear division of responsibilities, particularly at the interfaces between countries and regions. But also within the individual processes themselves, misunderstandings can occur in the responsibility between the customer and the service provider. Without defined roles and responsibilities, an uncoordinated chaos in management soon comes about that jeopardises efficiency. Fixed contacts and digital tools simplify collaboration. 

Quality and performance management

A central requirement on international tax and compliance outsourcing projects is to guarantee consistently high quality and legal compliance, regardless of the delivery structure selected (especially in configurations with centralised or partly centralised processes). Clear process standards and continual optimising them are decisive. Key performance indicators (KPIs) make performance measurable, create transparency and allow trends to be quickly identified. These outsourcing-specific KPIs and service requirements should be laid down in a service level agreement (SLA) in consultation with the service provider.

Coordination, communication and data exchange across country borders

It is in decentralised structures that companies typically lose track of their own accounting processes, especially if the processes are maintained by local in-house teams or service providers and there is no standard reporting. Coordinating teams and experts in difference countries requires management to spend considerable time and results in missing out on costs savings through inefficient decentralised efforts. A central platform solution can provide support here. 

Cultural differences and different ways of working

Different styles of communication, understandings of hierarchy and working speeds can quickly lead to misunderstandings. These impact collaboration and ultimately the success of the project. Furthermore, working times, holidays, busy periods and time zones differ, which makes coordination more difficult and holds up decisions. This not only can hinder efficiency but also impact the quality of the project, such as if queries and corrections are not made quickly. Intercultural training courses prepare those involved for cultural differences and foster mutual understanding. Regular coordination meetings also help to prevent misunderstandings.

Success factors for managing international tax and compliance outsourcing projects

Standardised processes & uniform documentation

In practice there are considerable differences in processes, documentation standards and approaches between country organisations and local service providers. This makes management more difficult, holds up decisions and makes errors more likely. Uniform global processes are crucial for efficiency and quality assurance. Companies should lay down cross-country standards for working processes, reporting formats and documentation policies in the planning stage. Thorough, understandable documentation ensures transparency and is essential from the regulatory viewpoint (e.g. in a tax audit).

Transparency and increasing efficiency with digital tools and automation

Managing international tax and compliance projects requires a complete overview of local deadlines, duties, responsibilities and risks. To minimise manual sources of error and speed up processes considerably, it is recommended to use digital workflow or project management tools. A global engagement management platform helps to keep track of deadlines, exchange data securely, compile evaluations and simplify communication.

Risk management & compliance monitoring

Local non-compliance can have serious consequences, from fines to reputational damage all the way, to having to cancel local projects.

Proactive risk management should be a central component of every outsourcing project. This includes:

• early risk analyses before the start of the project
• continual monitoring of regulatory requirements (e.g. with legal and tax tech tools)
• training courses for staff and decision-makers

Establishing a compliance framework, e.g. for a tax control framework (TCF) also helps to minimise regulatory risks. It serves as an overarching structure to comply with legal provisions in all the countries involved and should be updated regularly and supplemented by local legal advice.

Defining central management & clear responsibilities

A defined single point of contact makes communication and coordination simpler and to many companies is a central requirement on international service providers. A central contact point and personal advisory ensure not only communication is faster and more efficient but also reduce the risk from unclear responsibilities and misunderstandings. 

Conclusion: The key to success for international outsourcing projects

Only those who identify and control challenges and risks early can successfully manage an outsourcing project long-term. The success factors include transparent communication, selecting the right partner and carefully planning. Companies should rely on defined processes, digital tools and centralised management. Constant monitoring and adjustment are necessary to be able to respond to changes flexibly.