For hire: As the labor market improves, demand for PEO services will increase

Steady growth in the number of small- to medium-size businesses (SMBs) has been the key driver of industry performance over the past five years. In addition, improving macroeconomic conditions have also spurred industry growth, with the number of businesses increasing and resulting in more job opportunities for Americans. The Professional Employer Organizations (PEO) industry is expected to experience consistent growth over the next five years, as small- to medium-size businesses continue to outsource administrative duties to PEO service providers. However, industry operators will continue to experience mounting competition from external industries, many of which provide similar services to business clients, albeit on a smaller scale...read more.

Industry Statistics & Market Size
Revenue
$168bn
Annual Growth 12-17
8.7%
Forecast Growth 17-22
Profit
Employment
2.5m
Businesses
4,314
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Industry Threats & Opportunities

  • Industry demand will grow in line with the increasing number of US businesses
  • Small businesses have turned to PEOs so they can focus resources on core operations
  • The industry is expected to benefit from improvements in broad economic factors
  • Industry Report - Industry Analysis Chapter

    Companies in the Professional Employer Organizations (PEO) industry provide comprehensive human resource (HR) management and administration services through a coemployment relationship. In this relationship, industry operators are responsible for employee administration and serve as the legal employer while employees work for the client on-site. Industry operators also pay wages and associated employment costs to employees on behalf of clients. Over the past five years, the PEO industry has experienced strong growth, driven by falling unemployment rates and strong demand from small- to medium-sized businesses (SMBs) due to the rising complexity of labor and benefits regulations. Overall, industry revenue is expected to rise an annualized 8.7% o...purchase to read more.

    Additional Insights for the Professional Employer Organizations Industry

    IBISWorld identifies 250 Key Success Factors for a business.The most important for the Professional Employer Organizations Industry are

  • Proximity to key markets
  • Ability to quickly adopt new technology
  • Ability to effectively manage debtors
  • IBISWorld analysts also discuss how external factors such as Number of employees and Number of businesses in the Professional Employer Organizations industry impact industry performance..

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    What is the Professional Employer Organizations Industry?

    Operators in this industry provide HR management and administration services through a coemployment relationship. Professional employer organizations (PEOs) are responsible for employee administration; they serve as the legal employer while employees work on-site for the client. PEOs pay wages and associated employment costs in exchange for a fee, which covers the expenses, plus a margin for services, including payroll, tax remittance and benefits administration.

    Industry Products
  • Comprehensive PEO services for small businesses
  • Comprehensive PEO services for medium-size businesses
  • Comprehensive PEO services for large businesses
  • Co-employed payroll administration
  • Industry Activities
  • Employee-leasing services
  • Professional employer organizations (PEOs)
  • Coemployment services
  • Comprehensive HR management services
  • Table of Contents

    Industry Definition
    Main Activities
    Similar Industries
    Additional Resources
    Industry Statistics Snapshot
    Industry Structure
    Executive Summary
    Executive Summary
    Key External Drivers
  • Number of employees
  • Number of businesses
  • Demand from human resources and benefits administration
  • Corporate profit

  • Current Performance
  • Economic drivers of performance
  • Benefits of outsourcing
  • Competition and structure
  • Chart: Revenue Growth

  • Industry Outlook
  • Expanding businesses
  • Outsourcing trends
  • Increased regulation
  • Industry structure
  • Table: Professional Employer Organizations Industry Revenue Outlook

  • Industry Life Cycle
  • Life cycle reasons
  • Chart: Benchmarking - Professional Employer Organizations Industry Lifecycle vs The Economy

  • Supply Chains
    Key Buying Industries
  • Construction
  • Manufacturing
  • Wholesale Trade
  • Finance and Insurance
  • Professional, Scientific and Technical Services

  • Key Selling Industries
  • Financial Planning & Advice
  • IT Consulting
  • Workers' Compensation & Other Insurance Funds

  • Products & Services
  • Comprehensive PEO services for medium-size businesses
  • Comprehensive PEO services for small businesses
  • Comprehensive PEO services for large businesses
  • Co-employed payroll administration
  • Other
  • Chart: Professional Employer Organizations Industry Products and Services Segmentation

  • Demand Determinants
  • Relative cost to downstream demand

  • Major Markets
  • Other professional and administrative services
  • Information technology
  • Manufacturing, retail and wholesaling
  • Financial
  • Other
  • Construction and engineering services
  • Chart: Major Market Segmentation for the Professional Employer Organizations Industry

  • International Trade
    Business Locations
    Chart: Business Locations by State
    Market Share Concentration
    Key Success Factors
    Cost Structure Benchmarks
    ProfitWagesOther costs
  • Chart: Cost Structure Benchmarking – Sector vs Professional Employer Organizations

  • Basis of Competition
  • Internal competition
  • External competition

  • Barriers to Entry
  • Table: Barrier to Entry Checklist for the Professional Employer Organizations Industry

  • Industry Globalization
    Automatic Data Processing TriNet Group Inc.Insperity Inc.
  • Table: Automatic Data Processing - financial performance
  • Table: TriNet Group Inc. - financial performance
  • Table: Insperity Inc. - financial performance

  • Capital Intensity
  • Chart: Level of Capital Intensity for the Professional Employer Organizations Industry
  • Chart: Tools of the Trade: Growth Strategies for Success

  • Technology & Systems
    Revenue Volatility
  • Chart: Volatility vs Industry Growth

  • Regulation & Policy
    Industry Assistance
    Table: Industry Data for the Professional Employer Organizations Industry
    Includes:
  • Industry Revenue (2008-2022)
  • Industry Gross Product (2008-2022)
  • Establishments (2008-2022)
  • Businesses (2008-2022)
  • Employment (2008-2022)
  • Wages (2008-2022)
  • Number of employees (2008-2022)

  • Table: Annual Percentage Change for Key Industry Data
    Table: Key Ratios for Industry Key Data
    Table: Industry Financial Ratios
    Co-Employment
  • An employment relationship where two or more companies share employer responsibilities with a common employee.
  • Employee Benefits
  • A form of compensation that may be mandated by law (e.g. social security or unemployment insurance) or voluntary (e.g. life insurance or retirement).
  • Employee Leasing
  • A term that is often used interchangeably to refer to PEO companies.
  • Outsource
  • To procure goods or services under contract with an outside supplier.
  • Professional Employer Organization (Peo)
  • A firm that provides integrated services to business owners by outsourcing workers for human resources, employee benefits, payroll, workers' compensation and other services.
  • Why buy this report?

    The Professional Employer Organizations industry market report contains data and analysis of the most influential current and future trends shaping the industry. IBISWorld’s in-depth industry market research is presented in a logical, user-friendly format, and provides growth and profit forecasts for a five-year outlook period.

    IBISWorld industry market research reports enable you to:
    • Find out about key industry trends
    • Identify threats and opportunities
    • Inform your decisions for marketing, strategy and planning
    • Quickly build competitive intelligence
    This report on Professional Employer Organizations:
    • Provides Market Size information to assist with planning and strategic decisions.
    • Includes the necessary information to perform SWOT, PEST and STEER analysis.
    • Helps you understand market dynamics to give you a deeper understanding of industry competition and the supply chain.
    • Analyses key performance and operational metrics so that you can benchmark against your own business, that of your customers’ businesses, or your competitors’ businesses.
    The Professional Employer Organizations market research report includes:
    • Historical data and analysis for the key drivers of this industry
    • A five-year forecast of the market and noted trends
    • Detailed research and segmentation for the main products and markets
    • An assessment of the competitive landscape and market shares for major companies
    • And of course, much more

    IBISWorld reports on thousands of industries around the world. Our clients rely on our information and data to stay up-to-date on industry trends across all industries. With this IBISWorld Industry Research Report on Professional Employer Organizations, you can expect thoroughly researched, reliable and current information that will help you to make faster, better business decisions.

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