EY’s approach to managed services is a boardroom rather than operational discussion
While the nuances around the definition of managed services vary across vendors and buyers, the common theme of supporting organizational functions resonates with all. As a result, there is a fair amount of confusion and sometimes little-to-no differentiation among suppliers that are simply trying to expand client mindshare. While the advent of AI, cognitive and similar technologies, along with the firm’s desire to participate in the “as a Service” space, has fueled EY’s efforts to build its information systems management capabilities, the firm’s position in the managed services space is largely determined by its role as a trusted tax partner. While buyers have engaged with EY for years around its tax expertise, outsourcing and/or in some cases co-sourcing, tax technology and tax operations are somewhat newer areas of opportunity for the firm. Delivered through EY’s Tax and Finance Operate framework, the firm’s relationship with the CFO buyer allows it to capture strategic tax activities typically managed by in-house tax professionals including financial crime, tax policy administration and cyber, among others.
EY has seen its fair share of success in the space, most recently signing a long-term managed services agreement with Nokia (NYSE: NOK), which followed a similar deal with a global insurance provider back in 2018 for managing tax and compliance. As part of the Nokia deal, EY will provide tax, finance, data and technology managed services supporting the mobile provider across 127 countries, leveraging EY Global Tax Platform and global delivery centers.
Adding technology to a business framework, as EY did with the inclusion of Microsoft Azure in the EY Global Tax Platform, and platformizing micro-processes to support corporate applications, including corporate income tax, provisioning and value-added tax, is one way EY’s Managed Services practice is trying to bridge the gap between tax services and IT, which can then drive other opportunities, including in advisory services. As digital permeates all services and the regulatory environment across the globe continues to evolve, EY’s investments position it to carve a niche applicable to its strengths rather than building one inorganically, similar to rivals that have been investing heavily in areas such as marketing operations to better appeal to the CMO buyer.