This IDC study discusses comprehensive HR outsourcing services for small businesses with a focus on the professional employer organization (PEO) market. The PEO model predates HR business process outsourcing (BPO) by many years and is likely a precursor to HR BPO in overall concept, even though the size of the client to which services are offered differs. This study includes the results of a comprehensive survey of the PEO industry. The research concludes with a current and historical sizing of the PEO market based on censuses taken in 2000, 2003, and October 2006 by PEO Network Inc.
There are an increasing number of options for comprehensive HR outsourcing services for the small market; the oldest of these is the professional employer organization (PEO) model, which actually is a precursor to and grandparent of HR BPO. This study discusses these options with an emphasis on the PEO market with results of a recent survey and census of United States-based PEOs. Key results of this study reveal:
The small market opportunity is strong in the United States, given its size and growth. Employment among small employers increased at a compound annual growth rate of 8.4% from 1999 to 2004 according to the U.S. Department of Labor's Bureau of Labor Statistics. Half of all workers in the U.S. private sector are employed by a small company.
The estimated value of the total addressable market for comprehensive HR outsourcing to the small market is a staggering $44 billion per year in potential recurring revenue in the United States, based on 2004 employment figures.
The number of PEOs in the United States declined in 2003 over 2000 but made a dramatic rebound in the 2006 census. This is due in part to an increase in the number of small businesses in the United States according to the U.S. Small Business Administration's 2006 study of the small business economy.
"As the U.S. economy goes, so goes the PEO market, with contraction and expansion that mirrors the ebbs and flows of the employment outlook," said Lisa Rowan, program manager for HR and talent management services for IDC. "The opportunity is strong for HR services to the small market in 2006. This analysis discusses the opportunities and challenges facing firms that are in the race to win new business."
|
0 items
