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

The Professional Employer Organizations industry comprises organizations that specialize in providing human resource management and administrative services through a coemployment relationship. Over the past five years, demand for professional employer organizations (PEOs) has increased dramatically as overall economic activity recovered and the number of small businesses expanded. In addition, corporate profit has grown over the five-year period, driving new demand for outsourced human resource administration from larger businesses. Over the five years to 2022, the industry is expected to continue growing, although at a slower pace, as the number of businesses and employees in the United States gradually increase...purchase to read more.

Industry Statistics & Market Size
Revenue
$170bn
Annual Growth 12-17
9.0%
Forecast Growth 17-22
Profit
Employment
2.7m
Businesses
4,236

Industry Threats & Opportunities

  • Over the past five years, demand for PEOs has increased dramatically as the number of small businesses expanded
  • Working with a PEO service provider typically offers smaller businesses cost advantages
  • The industry is expected to benefit from improvements in broad economic factors
  • Industry Report - Industry Key Buyers Chapter

    The Professional Employer Organizations industry has a moderate level of concentration, with the largest operators expected to account for just over 40.0% of industry revenue in 2017. Despite the presence of a few national PEO service providers, the industry as a whole is fragmented because of relatively low barriers to entry and the need to be in close proximity with workforce locations. Overall, the industry is characterized by large operators with a national presence and hundreds of smaller operators that operate regionally or locally. According to industry trade association NAPEO, the PEO industry manages the payroll and HR functions of 2.7 million to 3.4 million worksite employees (WSEs) in total. Ind...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's in this report

    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
  • Employee leasing services for firms with less than 50 employees
  • Employee leasing services for firms with 50-249 employees
  • Employee leasing services for firms with 250+employees
  • 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
  • Employee leasing services for firms with less than 50 employees
  • Employee leasing services for firms with 50-249 employees
  • Employee leasing services for firms with 250+employees
  • 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 competitionExternal 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.
  • What Our Customers Say

    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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