outsourcing deal is a new entry this year
The deal to integrate the tax department of US multinational
General Electric (GE) with PwC in a new global tax division was
a major event in 2017. It was the first deal of its kind, with
GE transferring its world-class tax team to the Big 4 firm.
Under this five-year deal, PwC hired more than 600
accountants, lawyers and tax advisers covering 42 different
jurisdictions from GE's tax department to establish a new
global solutions team to oversee the company's tax affairs.
But this is not to say that GE has outsourced its entire tax
A streamlined team of 20 corporate tax professionals
remained with GE to manage the new set up, with a further 250
tax employees staying to provide services to GE's many business
units. This arrangement came into effect on April 1 2017 and
will likely be renewed on a five-year basis.
Before the deal, GE's tax team was known as the "Harvard of
tax departments", whereas PwC had the one of the largest tax
practices globally with an international network of 41,000 tax
professionals across 157 countries.
"The calibre of talent joining our firm from GE is
remarkable," Mark Mendola, PwC vice chairman and managing
partner, said at the time. "This arrangement will enable us to
continue providing our clients with the very best tax services
in an increasingly volatile and uncertain environment."
"The agreement allows us continued access to the world-class
expertise of global leaders along with the flexibility to scale
to the requirements of the changing GE portfolio," Mike Gosk,
GE vice president and senior tax counsel, said.
"Integrating GE's talent with PwC's broad capabilities will
allow us to deliver upon the tax function of the future in an
increasingly digitally enabled world," Mendola added.
The GE-PwC merger sets a bold new precedent for the
relationship between big business and law firms. It has been
described as a hybrid model where the company gets a team they
know and can trust, supplemented by the capacities of a Big 4
The benefits of the arrangement are significant. PwC's tax
business could increase its annual revenue of $9.1 billion to
more than $10 billion as its global solutions team can serve GE
as part of its diverse client base, according to the Wall
Street Journal. Not only does the firm expand its resources in
terms of tax professionals, PwC has gained the technology wing
of GE's tax department.
With the rise of demand for data as a fixed commodity, PwC
is looking to hone in on the firm's digital strategy in its use
of analytics and automated services for finance and tax
processes. This is a major focus for all the Big 4 as they look
towards the future.
This landmark deal may see more corporations outsourcing
their tax teams.