This IDC study examines the competitive landscape and provides a five-year forecast for the U.S. market for payroll services. Spending on payroll outsourcing services grew moderately in 2007 over 2006 and was higher than we'd seen in previous years. The market for payroll services continues to be dominated by a few large market leaders that together hold over 44% market share. The balance of the market consists primarily of many smaller players that largely operate at the local level. The market remained stable as little consolidation took place in 2007.

"There are several actions suppliers should consider to compete successfully in this market," said Lisa Rowan, program director for HR and Talent Management Services at IDC. "These strategies include adopting industry standards for service levels and pricing, supplying the buyer choice in terms of service delivery, and pursuing a strategy to go after markets hardest hit by the economy where the outsourcing message may resonate loudest."