This IDC study examines the competitive landscape and provides a five-year forecast for the mature and robust U.S. payroll services market. The U.S. payroll services market is dominated by several clear leaders in terms of market share, but the balance of the market, with a large group of smaller and regional providers, is fragmented. The impact of HR BPO is being felt at the high end of the market as payroll processing is often one of the first areas assumed by the provider. Best-of-breed providers of payroll services will need to examine and plan for how they will fit into the newer BPO market. Key findings include:

"The U.S. market for payroll services rebounded in 2003 from the doldrums of 2002 and is experiencing moderate growth, although the market has seen some consolidation," said Lisa Rowan, program manager for HR Management and Staffing Services at IDC. "Payroll service providers have an opportunity to grow their businesses through the pursuit of several strategies, including offering a broader array of services and convincing their clients to adopt their newer technology platforms. They also should look to the possibility of offshoring transaction processing to lower their costs."