Professional Employer Organizations

Published by: First Research, Inc.

Published: Nov. 26, 2012 - 10 Pages


Table of Contents

Industry Overview
Quarterly Industry Update
Business Challenges
Business Trends
Industry Opportunities
Call Preparation Questions
Financial Information
Industry Forecast
Web Links and Acronyms

Abstract

Brief Excerpt from Industry Overview Chapter:

Companies in this industry provide outsourced human resources and human resources management services to client businesses. Major US companies include Automatic Data Processing (ADP), Ceridian, Insperity, Paychex, and TriNet Group.

The US human resources (HR) services industry includes about 4,000 companies that operate as professional employer organizations (PEOs) with combined annual revenue of about $95 billion. Moderate growth is forecast for the next two years. Key growth drivers include business activity and job growth.

Unlike other providers of outsourced human resources services, PEOs serve as co-employers of their clients' employees. Personnel staffing agencies, which include temporary help and executive search services as well as PEOs, are covered in a separate industry profile.

COMPETITIVE LANDSCAPE

Job growth drives demand for PEOs. The profitability of individual companies depends on good marketing and efficient use of information technology. Large companies enjoy economies of scale in marketing and back-office operations. Small companies can compete successfully by specializing in an industry or a job function. The industry is concentrated: the 50 largest companies generate 55 percent of industry revenue.

PEOs of all sizes face competition from abroad. India is quickly emerging as a prime destination for HR outsourcing companies, due to the abundance of low cost, English-speaking labor there.

PRODUCTS, OPERATIONS & TECHNOLOGY

PEOs provide human resources management services to business clients, sharing responsibility as a co-employer. Specific services include payroll services, benefits administration, workers' compensation services, unemployment claims management, insurance sourcing, and risk management.

Payroll services involve...

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