Professional Employer Organization (PEO) Market: Information by Offering (Solution, Services), Deployment Mode, Organization Size (SMEs), Industry Vertical, and Region — Forecast till 2029

Sep 02, 2020   Market Overview The professional employer organization (PEO) market was valued at USD 48.69 billion in 2019 and is expected to reach USD 140.29 billion by 2029, with a CAGR of 11.4% during the forecast period, 2020–2029. As per the SR Analysis, the overall market size of the PEO industry is valued at USD 50–-600 billion. The scope of the PEO market is limited to the PEO solution providers that offer various HR solutions and services to the range of industry verticals. The solution i...
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Report Description

Market Overview

The professional employer organization (PEO) market was valued at USD 48.69 billion in 2019 and is expected to reach USD 140.29 billion by 2029, with a CAGR of 11.4% during the forecast period, 2020–2029. As per the SR Analysis, the overall market size of the PEO industry is valued at USD 50–-600 billion. The scope of the PEO market is limited to the PEO solution providers that offer various HR solutions and services to the range of industry verticals. The solution includes payroll management solution, tax, and benefits administration solution, workforce management solution, compliance management solution, and employment screening solution. The market is highly focused on small and medium enterprises, facilitating to emphasize their core offerings rather than administrative operation.

The rapid growth of SMEs, surging demand for healthcare depended on benefits leading to employee retention, and increasing costs for employee compensation drive the market growth. The increasing demand for highly sophisticated automated technological solutions to manage HR, payroll processing, and benefits administration in a single platform fosters the market growth. However, dependence on third-party providers, such as financial institutions, data centers, and cloud service providers, hinders the market growth.  

https://straitsresearch.com/photos/Professional  1.png

Growth of Overall PEO Industry in the U.S.

PEO solution has increasingly made an impact on umpteen industrial verticals. Rapidly expanding cloud-based infrastructure and need for an automated process have significantly reduced the overall costs of HR solutions. The PEO industry has witnessed tremendous growth owing to favorable government regulations in the last few years. For instance, in the U.S., approximately 990 PEO service providers have employed around 3.7 million employees for around 180,000 clients. Leading PEO service providers, such as ADP, Insperity, and Trinet, are working incorporation with the National Association of Professional Employer Organizations (NAPEO) to develop a favorable regulatory framework that safeguards the employees and client interest and protects against fraudulent and suspicious PEOs.

Impact of COVID-19    

The COVID-19 pandemic is projected to make a negative impact on the PEO industry. Over the last two-three years, the global economies witnessed an economic slowdown, followed by nationwide lockdown, in developed and emerging economies. This resulted in layoffs and salary cuts that have created ambiguity among various industrial verticals to keep new worksite employees (WSE) on hold. Therefore, the current market scenario is unlikely to make any growth in the current year.

On the contrary, the market for the PEO solution continues to show a nominal growth owing to the adoption of the solution on a yearly subscription basis. The PEO solution, such as payroll management solution, tax, and benefits administration solution, workforce management, continues to witness a nominal growth in the current fiscal year.    

PEO Market: Segmentation

Solution Segment to Hold about 65% of the Market Share

The solution segment holds about 65% of the market share as it offers payroll management, workforce management, benefits and tax administration, talent management, compliance services, and employment screening solution to the clients. Increasing adoption of a cloud-based automated solution that streamlines business processes, coupled with the growth of HR outsourcing solutions, drives the segment growth. On the other hand, the services segment is anticipated to grow with a significant CAGR during the forecast period.

Versatility of Cloud-Based Human Resources Software Drives the Segment Growth

The cloud segment held the largest market share in 2019. The seamless automated solution offered by the cloud-based human resources software provides integrated payroll, HR administration, employee onboarding, benefits administration, and reporting and analytics features. The on-premise segment, on the other hand, is projected to witness slow growth in the market.

Budgetary Constraints to Drive the Adoption of POE Systems in the SMES

The SME segment accounted for the largest market share of 65% on account of the budgetary constraints of SMEs. As per the Straits Research Analysis, most of the PEO clients are small to mid-size companies, averaging around less than ten employees. Such clients of usually emphasize on the most basic HR requirements, such as employee onboarding, getting them paid on time, and other compliance needs. These business processes are time-consuming and likely to have potential errors. Therefore, the adoption of PEOs service solution eliminates such risks to a certain extent where these tasks are professionally handled and administered at affordable costs. The professional services segment, on the other hand, held about 25% of the market share.  

https://straitsresearch.com/photos/Professional 2.png

Regional Overview

https://straitsresearch.com/photos/Professional 2.png

The U.S. Spearheads North America’s POE Market

North America held the largest market share in 2019 and is expected to dominate the market during the forecast period. The U.S. spearheads the regional market growth on account of favorable government regulations, such as the Small Business Efficiency Act (SBEA Act). This act was framed for the payment of wages to WSEEs and reporting and remittance of federal payroll taxes on those wages paid by PEOs certified under the statute (CPEOs). Several industry leaders such as ADP Inc,. Trinet, and Insperity have actively supported the SBEA Act.

https://straitsresearch.com/photos/Professional 3.png

Asia-Pacific to be exhibit the significant CAGR

Asia-pacific attained the third spot in terms of market share and is expected to grow with the highest CAGR during the assessment period on account of the rapidly expanding SMEs in the region. Developed markets such as Japan, South Korea, and Australia are already witnessing a mature growth owing to the early adoption of automated PEO services.  Moreover, countries such as India, China, and Southeast Asia are likely to gain huge traction during the forecast period. Surging adoption of HR outsourcing services in countries such as the Philippines, India, and Thailand provides an impetus to the regional market growth.

Key Players

  • Automatic Data Processing (ADP)
  • Insperity
  • TriNet Group, Inc
  • Paychex Inc
  • Total Leasing Company, Inc.
  • CoAdvantage
  • Ahead Inc
  • GMS
  • Alcott HR
  • Total HR Solutions
  • FrankCrum
  • Premier Employer Services
  • XcelHR
  • Abel HR
  • OneSource Business Solutions
  • Pinnacle PEO
  • Synergy HR
  • Acadia HR
  • Emplicity
  • Fortune Industries, Inc
  • Resource Management Inc
  • Justworks

Key Developments

  • In April 2020, ADP, one of the market leaders in the PEO market, started working with the U.S. federal government to support businesses and overcome the negative impact caused by COVID-19.
  • In January 2020, ADP strengthened its geographical presence by offering ADP TotalSource to Hawaii Businesses community. The launch of this service allows businesses to streamline their business operation by integrating with automated solutions.
  • In October 2019,Insperity, one of the market leaders in the PEO Solution providers, launched Insperity People Analytics Solution. This new solution allows the HR professional to have better data insights that are required to be well-informed and assist clients in making data-driven decisions based on workforce metrics.

Frequently Asked Questions (FAQs)

Solution Segment is expected to be leading segment in Professional Employer Organization (PEO) Market during the forecast period.
The global Professional Employer Organization (PEO) Market is valued at USD 48.69 million expected to grow at a CAGR of 11.4% during the forecast period, 2019–2029.
North America is expected to hold the highest market share in Professional Employer Organization (PEO) Market.
Automatic Data Processing (ADP), Insperity, TriNet Group, Paychex Total Leasing Company, CoAdvantage, Ahead GMS, Alcott HR, Total HR Solutions, FrankCrum, Premier Employer Services, XcelHR, Abel HR, OneSource Business Solutions, Pinnacle PEO, Synergy HR, Acadia HR, Emplicity, Fortune Industries, Resource Management Inc, Justworks are the top players in Professional Employer Organization (PEO) Market.
Basically choose Pay by Purchase Order when you are checking out. We will connect with you via email to set up your order.
Call us, email us, or chat with us! We encourage your questions and feedback. We have a research concierge team available at all times, and included in every purchase.
We will send you an email with login credentials to access the report. You will also be able to download the pdf.

Market Overview

The professional employer organization (PEO) market was valued at USD 48.69 billion in 2019 and is expected to reach USD 140.29 billion by 2029, with a CAGR of 11.4% during the forecast period, 2020–2029. As per the SR Analysis, the overall market size of the PEO industry is valued at USD 50–-600 billion. The scope of the PEO market is limited to the PEO solution providers that offer various HR solutions and services to the range of industry verticals. The solution includes payroll management solution, tax, and benefits administration solution, workforce management solution, compliance management solution, and employment screening solution. The market is highly focused on small and medium enterprises, facilitating to emphasize their core offerings rather than administrative operation.

The rapid growth of SMEs, surging demand for healthcare depended on benefits leading to employee retention, and increasing costs for employee compensation drive the market growth. The increasing demand for highly sophisticated automated technological solutions to manage HR, payroll processing, and benefits administration in a single platform fosters the market growth. However, dependence on third-party providers, such as financial institutions, data centers, and cloud service providers, hinders the market growth.  

https://straitsresearch.com/photos/Professional  1.png

Growth of Overall PEO Industry in the U.S.

PEO solution has increasingly made an impact on umpteen industrial verticals. Rapidly expanding cloud-based infrastructure and need for an automated process have significantly reduced the overall costs of HR solutions. The PEO industry has witnessed tremendous growth owing to favorable government regulations in the last few years. For instance, in the U.S., approximately 990 PEO service providers have employed around 3.7 million employees for around 180,000 clients. Leading PEO service providers, such as ADP, Insperity, and Trinet, are working incorporation with the National Association of Professional Employer Organizations (NAPEO) to develop a favorable regulatory framework that safeguards the employees and client interest and protects against fraudulent and suspicious PEOs.

Impact of COVID-19    

The COVID-19 pandemic is projected to make a negative impact on the PEO industry. Over the last two-three years, the global economies witnessed an economic slowdown, followed by nationwide lockdown, in developed and emerging economies. This resulted in layoffs and salary cuts that have created ambiguity among various industrial verticals to keep new worksite employees (WSE) on hold. Therefore, the current market scenario is unlikely to make any growth in the current year.

On the contrary, the market for the PEO solution continues to show a nominal growth owing to the adoption of the solution on a yearly subscription basis. The PEO solution, such as payroll management solution, tax, and benefits administration solution, workforce management, continues to witness a nominal growth in the current fiscal year.    

PEO Market: Segmentation

Solution Segment to Hold about 65% of the Market Share

The solution segment holds about 65% of the market share as it offers payroll management, workforce management, benefits and tax administration, talent management, compliance services, and employment screening solution to the clients. Increasing adoption of a cloud-based automated solution that streamlines business processes, coupled with the growth of HR outsourcing solutions, drives the segment growth. On the other hand, the services segment is anticipated to grow with a significant CAGR during the forecast period.

Versatility of Cloud-Based Human Resources Software Drives the Segment Growth

The cloud segment held the largest market share in 2019. The seamless automated solution offered by the cloud-based human resources software provides integrated payroll, HR administration, employee onboarding, benefits administration, and reporting and analytics features. The on-premise segment, on the other hand, is projected to witness slow growth in the market.

Budgetary Constraints to Drive the Adoption of POE Systems in the SMES

The SME segment accounted for the largest market share of 65% on account of the budgetary constraints of SMEs. As per the Straits Research Analysis, most of the PEO clients are small to mid-size companies, averaging around less than ten employees. Such clients of usually emphasize on the most basic HR requirements, such as employee onboarding, getting them paid on time, and other compliance needs. These business processes are time-consuming and likely to have potential errors. Therefore, the adoption of PEOs service solution eliminates such risks to a certain extent where these tasks are professionally handled and administered at affordable costs. The professional services segment, on the other hand, held about 25% of the market share.  

https://straitsresearch.com/photos/Professional 2.png

Regional Overview

https://straitsresearch.com/photos/Professional 2.png

The U.S. Spearheads North America’s POE Market

North America held the largest market share in 2019 and is expected to dominate the market during the forecast period. The U.S. spearheads the regional market growth on account of favorable government regulations, such as the Small Business Efficiency Act (SBEA Act). This act was framed for the payment of wages to WSEEs and reporting and remittance of federal payroll taxes on those wages paid by PEOs certified under the statute (CPEOs). Several industry leaders such as ADP Inc,. Trinet, and Insperity have actively supported the SBEA Act.

https://straitsresearch.com/photos/Professional 3.png

Asia-Pacific to be exhibit the significant CAGR

Asia-pacific attained the third spot in terms of market share and is expected to grow with the highest CAGR during the assessment period on account of the rapidly expanding SMEs in the region. Developed markets such as Japan, South Korea, and Australia are already witnessing a mature growth owing to the early adoption of automated PEO services.  Moreover, countries such as India, China, and Southeast Asia are likely to gain huge traction during the forecast period. Surging adoption of HR outsourcing services in countries such as the Philippines, India, and Thailand provides an impetus to the regional market growth.

Key Players

  • Automatic Data Processing (ADP)
  • Insperity
  • TriNet Group, Inc
  • Paychex Inc
  • Total Leasing Company, Inc.
  • CoAdvantage
  • Ahead Inc
  • GMS
  • Alcott HR
  • Total HR Solutions
  • FrankCrum
  • Premier Employer Services
  • XcelHR
  • Abel HR
  • OneSource Business Solutions
  • Pinnacle PEO
  • Synergy HR
  • Acadia HR
  • Emplicity
  • Fortune Industries, Inc
  • Resource Management Inc
  • Justworks

Key Developments

  • In April 2020, ADP, one of the market leaders in the PEO market, started working with the U.S. federal government to support businesses and overcome the negative impact caused by COVID-19.
  • In January 2020, ADP strengthened its geographical presence by offering ADP TotalSource to Hawaii Businesses community. The launch of this service allows businesses to streamline their business operation by integrating with automated solutions.
  • In October 2019,Insperity, one of the market leaders in the PEO Solution providers, launched Insperity People Analytics Solution. This new solution allows the HR professional to have better data insights that are required to be well-informed and assist clients in making data-driven decisions based on workforce metrics.

Frequently Asked Questions (FAQs)

Solution Segment is expected to be leading segment in Professional Employer Organization (PEO) Market during the forecast period.
The global Professional Employer Organization (PEO) Market is valued at USD 48.69 million expected to grow at a CAGR of 11.4% during the forecast period, 2019–2029.
North America is expected to hold the highest market share in Professional Employer Organization (PEO) Market.
Automatic Data Processing (ADP), Insperity, TriNet Group, Paychex Total Leasing Company, CoAdvantage, Ahead GMS, Alcott HR, Total HR Solutions, FrankCrum, Premier Employer Services, XcelHR, Abel HR, OneSource Business Solutions, Pinnacle PEO, Synergy HR, Acadia HR, Emplicity, Fortune Industries, Resource Management Inc, Justworks are the top players in Professional Employer Organization (PEO) Market.
Basically choose Pay by Purchase Order when you are checking out. We will connect with you via email to set up your order.
Call us, email us, or chat with us! We encourage your questions and feedback. We have a research concierge team available at all times, and included in every purchase.
We will send you an email with login credentials to access the report. You will also be able to download the pdf.