Payroll Services
Description
Companies in this industry generate paychecks, payroll reports, and tax filings for clients. Major US-based companies include ADP, Dayforce, Insperity, and Paychex, and others include Neeyamo (India), Nethris (Canada), and Populis Servicos (Brazil).
The global payroll services market is expected to grow by about $6 billion at a compound annual growth rate (CAGR) of about 4.8% from 2023 to 2028, according to Technavio. More than half of the growth in the industry will come from North America.
The US payroll services industry includes about 5,700 establishments (single-location companies and units of multi-location companies) that generate annual revenue of about $22 billion.
Professional employer organizations (PEOs), which may also provide payroll services, are covered further in a separate industry profile.
COMPETITIVE LANDSCAPE
Demand for payroll services is driven by employment. The profitability of individual companies depends on the efficient use of information technology and effective marketing. Large companies can better compete for business from customers who operate from multiple locations. Small companies can compete by serving local or regional markets. The US industry is concentrated: the 50 largest companies account for about 70% of industry revenue.
Companies in this industry may compete with other providers of outsourced human resources (HR) management services, including professional employer organizations (PEOs), business process outsourcing (BPO) firms, or financial institutions. Companies may also compete with organizations that have in-house payroll services, typically conducted through their accounting or HR departments.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major services include full-service payroll services (about 95% of industry revenue), other payroll services sold separately account for the remainder.
Payroll services companies collect employee information, such as wages, hours worked, deductions, and other compensation-related data, then process it to generate employee paychecks and reports on behalf of employers. These services generally include deposits and filings related to federal, state, and local taxes. The payroll services industry doesn't include offices of CPAs, which may provide payroll services in addition to their other offerings.
Payroll services companies usually charge a monthly amount per employee, along with a fixed administrative fee, which depends on the level of service the client chooses. Transferring payroll monies from customers generally occurs one to two days ahead of actual disbursements of checks to employees and tax authorities, thereby allowing the payroll services company to enjoy the "float" (interest earned during the short period that the payroll services company controls the monies). For larger payroll services companies, float can be a significant portion of profits.
The global payroll services market is expected to grow by about $6 billion at a compound annual growth rate (CAGR) of about 4.8% from 2023 to 2028, according to Technavio. More than half of the growth in the industry will come from North America.
The US payroll services industry includes about 5,700 establishments (single-location companies and units of multi-location companies) that generate annual revenue of about $22 billion.
Professional employer organizations (PEOs), which may also provide payroll services, are covered further in a separate industry profile.
COMPETITIVE LANDSCAPE
Demand for payroll services is driven by employment. The profitability of individual companies depends on the efficient use of information technology and effective marketing. Large companies can better compete for business from customers who operate from multiple locations. Small companies can compete by serving local or regional markets. The US industry is concentrated: the 50 largest companies account for about 70% of industry revenue.
Companies in this industry may compete with other providers of outsourced human resources (HR) management services, including professional employer organizations (PEOs), business process outsourcing (BPO) firms, or financial institutions. Companies may also compete with organizations that have in-house payroll services, typically conducted through their accounting or HR departments.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major services include full-service payroll services (about 95% of industry revenue), other payroll services sold separately account for the remainder.
Payroll services companies collect employee information, such as wages, hours worked, deductions, and other compensation-related data, then process it to generate employee paychecks and reports on behalf of employers. These services generally include deposits and filings related to federal, state, and local taxes. The payroll services industry doesn't include offices of CPAs, which may provide payroll services in addition to their other offerings.
Payroll services companies usually charge a monthly amount per employee, along with a fixed administrative fee, which depends on the level of service the client chooses. Transferring payroll monies from customers generally occurs one to two days ahead of actual disbursements of checks to employees and tax authorities, thereby allowing the payroll services company to enjoy the "float" (interest earned during the short period that the payroll services company controls the monies). For larger payroll services companies, float can be a significant portion of profits.
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
Search Inside Report
Pricing
Currency Rates
Questions or Comments?
Our team has the ability to search within reports to verify it suits your needs. We can also help maximize your budget by finding sections of reports you can purchase.
