Middle East and Africa Professional Employer Organization (PEO) Market

Market Overview

The Middle East and Africa professional employer organization (PEO) market was valued at USD 8,151 million in 2021 and is projected to reach USD 20,345 million by 2030, registering a CAGR of 10.7% during the forecast period (2022-2030).

Professional employer organization (PEO), also known as human resource outsourcing, is an outsourcing organization that provides small and medium-sized enterprises with a cost-effective management and high-performance solutions for human resource (HR) services. It leases personnel to an employer, permitting the PEO to share and control many of the employer's employee-related responsibilities and liabilities. PEO provides businesses with essential administrative and management services, such as payroll, finance & taxation, employee recruitment, talent search management, and risk mitigation.

The region of the Middle East is growing in popularity among enterprises and organizations. It is anticipated that the Professional Employer Organization (PEO) market will experience significant growth shortly as companies struggle to find employees who meet their business needs. These PEOs benefit businesses and organizations in the Middle East by resolving issues relating to staff recruitment, healthcare insurance coverage, workers' compensation, workers' expenses, and much more about any international workforce they may employ.

On the African continent, there is a demand for PEO services. Numerous African nations have high unemployment rates, indicating that talent acquisition and retention are significant issues. Predictions suggest that search costs will increase as more people enter the labor market, and more businesses will turn to PEO services to meet their hiring requirements.

Highlights

• Full-Service PEO dominates the market by type. 
• The large businesses segment dominates the market by end-use.

Market Dynamics

The Middle East and Africa Professional Employer Organization (PEO) Market Drivers

Increasing Problems Concerning Employee Turnover

The need for businesses to comply with labor laws, which has increased over the past few years, is the primary factor influencing the expansion of the PEO market. Numerous significant organizations have a high employee turnover rate, resulting in additional expenses—for instance, training new employees.

A professional employer organization (PEO) is a business that offers a variety of services to its clients, including payroll and employee benefits. Employers who purchase these services from a PEO can reduce the cost of administering their employees' benefits while granting employees greater control over their benefits, resulting in increased employee retention and lower turnover rates.

Rapid Growth in Small and Medium-Sized Businesses

The market for professional employer organizations (PEO) is anticipated to grow swiftly due to the constant development and expansion of small and medium-sized businesses (SMEs).

According to the Organization for Economic Co-operation and Development, "Small and medium-sized enterprises (SMEs) account for more than 95% of firms and 60%–70% of employment in OECD economies, and generate a significant proportion of new jobs."

In addition, according to the globe Bank, "600 million jobs will be required by 2030 to absorb the growing global workforce," making the development of SMEs a top priority for many governments around the globe. Small and medium-sized enterprises (SMEs) are seeking to enter the market for PEOs with a rapid growth rate. However, they frequently need more resources to address issues that could contribute to their success, such as streamlining operations and completing administrative duties.

The Middle East and Africa Professional Employer Organization (PEO) Market Restraints

Lost Command of Important Processes

As organizations transition to a more flexible staffing model, they lose control of relevant processes, such as payroll administration, tax processing, and human resource management. In addition, they become more reliant on vendors for these essential business functions, which causes significant delays in time-sensitive operations (like payroll). Control is one of the critical aspects of decision-making, and this is particularly true in the relationship between an employer and an employee. When a business utilizes a professional employer organization, it relinquishes total control over its workforce in exchange for a service it values.

The Middle East and Africa Professional Employer Organization (PEO) Market Opportunities

Increasing Demand for Automated Human Resource Management Technology

Companies must monitor, measure, and evaluate data to ensure the efficient operation of the organization in the current business environment. Technology advancements, the incorporation of automation and robotics, and the emergence of a sophisticated and highly competitive environment have increased the demand for highly sophisticated and automated human resource management technology solutions.

One of the most significant trends in the PEO industry is the rising demand for technological systems that automate payroll administration. When attaining a competitive advantage is of the utmost importance, many businesses seek out Professional Employer Organizations (PEOs) that offer sophisticated, automated, and integrated platforms to assist companies in managing their human capital, thereby maximizing business value. Increasing demand for highly sophisticated automation solutions to manage employee benefits, payroll processing, and hiring drives this market's continued expansion.

Segmental Analysis

The professional employer organization market is segmented based on type and end-use.

Based on type, the Professional Employer Organization (PEO) market is segmented into Full-Service PEO and ASO.

The Full-Service PEO segment dominates the market and is expected to register a CAGR of 10.8% over the forecast period.

Based on end-user, the Professional Employer Organization (PEO) market is segmented into Small, Medium, and Large Businesses.

The large businesses segment dominates the market and is anticipated to grow at a CAGR of 9.9% over the forecast period.

Regional Analysis

The Middle East and Africa region is a significant revenue contributor globally and is expected to grow at a CAGR of 10.7% during the forecast period. The Middle East is becoming increasingly attractive to businesses and other institutions. As businesses battle to fill open positions with qualified candidates, the demand for PEO services is expected to expand rapidly in the near future. Many African countries have high jobless rates, highlighting the continent-wide difficulty in attracting and retaining skilled workers. More individuals entering the workforce is expected to drive up search costs, leading more companies to utilize PEOs to fill open positions.

Global PEO Services enables companies to rapidly hire employees without establishing legal entities in foreign jurisdictions or incurring the costs of doing so. The business offers professional employer organization (PEO) and employer of record (EOR) solutions, including security entities or managing talent acquisition, human resources, payroll, benefits, tax, and compliance issues. The company's primary objective is to provide business proprietors with the most effective business solutions for streamlining their operations at every stage and locating effective and efficient financing services.