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Professional Employer Organization (PEO) Market Size [2031]

Professional Employer Organization (PEO) Market

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Segments - by Types (ASO and Full-Service PEO), Applications (Human Capital Management, Payroll Services, Regulatory Compliance, Risk Management, Withholding & Taxation, Insurance Services, and Others), End-users (Small & Medium Businesses and Large Businesses), and Regions (Asia Pacific, North America, Latin America, Europe, and Middle East & Africa) - Global Industry Analysis, Growth, Share, Size, Trends, and Forecast 2023 – 2031

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Report Description

The global professional employer organization (PEO) market size was valued at USD 62.66 billion in 2022 and is expected to surpass USD 158.99 billion by 2031, expanding at a CAGR of 10.9% during the forecast period, 2023–2031. The growth of the market is attributed to the rising need for cost-optimizing administrative and management services as well as the increasing growth of numerous small & medium businesses.

Professional employer organization (PEO), also known as human resource outsourcing, is an outsourcing organization that offers cost-effective management and high-performance solutions for human resource (HR) services, especially to small & medium businesses. PEO provides a range of key administrative and management services to businesses including payroll, finance & taxation, employee recruitment, talent search management, and risk mitigation.

As per the report published by the National Association of Professional Employer Organizations (NAPEO), PEO services were available to nearly 173,000 small and mid-sized businesses, employing 4 million people that were worth USD 216 billion in 2020. The report further stated that the rate of PEO clients increased at a CAGR of more than 5.6% and its revenue gain was 13.5% from 2018 to 2019.

One key aspect of the wide adoption of PEO services by businesses is the rising expense of having permanent management teams, especially in small & medium enterprises (SMEs). As per global reports, SMEs constitute around 95% of the overall organizational structures worldwide and generate more than 60% of job opportunities for people.

The PEO service provides businesses with easy management for insurance taxes and legal input regarding better options for workers' compensation coverage. In general, the end-users or client companies normally enter into a contractual co-employment agreement with PEO service providers to ensure the continuity of the services. By using the service, clients are able to minimize the expense of management services, which may reduce the overall expenses of their business operations.

The COVID-19 pandemic had opened up several opportunities for market expansion due to the rising adoption of outsourcing administrative services by businesses across industries to save the overall operational cost. The pandemic shattered the global economy and heavily affected the financial positions of various companies due to the sudden shutdown of the manufacturing units and the delay in their production.

The rising financial crunch forced businesses to adopt several strategies for cost optimization of their various operations, and access to PEO services was considered to be the best option or at least a key strategy to fulfill their targeted purpose.

Market Trends, Drivers, Restraints, and Opportunities

Wide adoption of PEO services among businesses for lesser workers’ compensation insurance coverage rate and easy risk management of operations is a key factor driving the market.
Rising adoption of PEO services by small & medium businesses as well as the wide availability of cost-effective administrative services present another key driver of the market.
Easy processes for regulation compliance and regular management of current taxation using PEO services regarding the overall business operations are expected to boost the market in the coming years.
Security issues regarding the handling of confidential documents of companies as well as diminishing the role and value of internal HR departments act as major challenges to the market.
Lack of authority and control of companies over service providers is another key restraining factor of the market.
Availability of cost-effective PEO services and the rapid introduction of innovative outsourced administrative services by key players are projected to create lucrative opportunities for the market in the near future.

Professional Employer Organization (PEO) Market Scope

The report on the global professional employer organization (PEO) market includes an assessment of the market, trends, segments, and regional markets. Overview and dynamics have also been included in the report.

Attributes	Details
Report Title	Professional Employer Organization (PEO) Market - Global Industry Analysis, Growth, Share, Size, Trends, and Forecast
Base Year	2022
Historic Data	2016–2021
Forecast Period	2023–2031
Segmentation	Types (ASO and Full-Service PEO), Applications (Human Capital Management, Payroll Services, Regulatory Compliance, Risk Management, Withholding & Taxation, Insurance Services, and Others), and End-users (Small & Medium Businesses and Large Businesses)
Regional Scope	Asia Pacific, North America, Latin America, Europe, and Middle East & Africa
Report Coverage	Company Share, Market Analysis and Size, Competitive Landscape, Growth Factors, and Trends, and Revenue Forecast
Key Players Covered in the Report	ADP LLC; Paychex Inc.; Insperity Inc.; TriNet Group Inc.; TEL Staffing & HR; Global PEO Services; Infostride; Alcott HR; Co Advantage; Group Management Services; Total HR; FrankCrum; Oasis Outsourcing; and Ahead Human Resources

Professional Employer Organization (PEO) Market Segment Insights

Long-term service plan for businesses boosts the full-service PEO segment

Based on types, the global professional employer organization (PEO) market is bifurcated into ASO and full-service PEO. The full-service segment accounted for a major market share in 2021 and is expected to expand at a robust growth rate during the forecast period owing to rising companies’ preference for PEO service for long-term plans to ensure effective management and administrative activities.

On the other hand, the ASO segment is anticipated to register a CAGR of 13.2% during the forecast period owing to the wide availability of temporary or contractual services provided by ASO platforms. Accessing ASO service requires no co-employment agreement with the end-user organizations in providing administrative support to the businesses.

Human capital management segment to hold a key market share

In terms of applications, the market is segmented into human capital management, payroll services, regulatory compliance, risk management, withholding & taxation, insurance services, and others.

The human capital management market was worth USD 22.1 billion in 2021 and is expected to reach USD 40.2 billion by 2030, expanding at a CAGR of 7.5% during the forecast period. The segment growth is attributed to the increasing need for effective HR tasks in human capital management including employee recruitment, training, performance management, payroll, and compensation.

Large businesses segment to register a considerable CAGR

On the basis of end-users, the global professional employer organization (PEO) market is bifurcated into small & medium businesses and large businesses. The large businesses segment held a key market share in 2021 and is projected to register a considerable CAGR during the forecast period owing to rising needs for cost optimization in the administrative service of large enterprises.

On the other hand, the small & medium businesses segment is anticipated to expand at a CAGR of 12.9% during the forecast period owing to the rising use of outsourced management and administrative services for better operation management at an affordable cost. Moreover, the wide availability of PEO services for small & medium business organizations further boosts the segment.

North America to dominate the market

In terms of regions, the market is classified as Asia Pacific, North America, Latin America, Europe, and Middle East & Africa. North America held a dominant market share in 2021 and the trend is expected to continue during the projected period due to the wide acceptance of outsourced HR services and the rapid expansion of small-scale industries in the region.

The rising growth of several large business organizations and expensive HR services are key factors that companies adopt PEO services for cost-effective management of their administrative services. On the other hand, the market in Asia Pacific is anticipated to expand at a steady growth rate during the forecast period owing to the wide expanse of the PEO services base in the region due to the low cost of hiring an HR team, and the availability of a large pool of highly skilled professionals.

Segments

The global professional employer organization (PEO) market has been segmented on the basis of

Types

ASO
Full-Service PEO

Applications

Human Capital Management
Payroll Services
Regulatory Compliance
Risk Management
Withholding & Taxation
Insurance Services
Others

End-users

Small & Medium Businesses
Large Businesses

Regions

Asia Pacific
North America
Latin America
Europe
Middle East & Africa

Key Players

ADP LLC
Insperity Inc.
Paychex Inc.
TriNet Group Inc.
TEL Staffing & HR
Global PEO Services
Infostride
Alcott HR
Co Advantage
Group Management Services
Total HR
FrankCrum
Oasis Outsourcing
Ahead Human Resources

Competitive Landscape

Key players competing in the global professional employer organization (PEO) market are ADP LLC; Paychex Inc.; Insperity Inc.; TriNet Group Inc.; TEL Staffing & HR; Global PEO Services; Infostride; Alcott HR; Co Advantage; Group Management Services; Total HR; FrankCrum; Oasis Outsourcing; and Ahead Human Resources.

Some of these players have adopted a series of business development strategies including merger and acquisition, entering into partnerships and collaboration, product launches, and developing cost-effective PEO services to expand their consumer base and enhance their market share globally.
For instance,

In January 2022, a US-based human resource service provider, Paychex Inc. announced that it entered into a partnership with HireRight to provide COVID-19 rapid test kits, allowing instant testing for employees of several businesses.
In February 2021, a US-based administrative services provider to small and medium-sized businesses, Insperity Inc. announced a strategic collaboration with a cloud-based software giant, Salesforce. The strategy was aimed at enhancing their services for better customer retention, robust marketing campaigns, and maximizing businesses’ productivity.

Table Of Content

1. Executive Summary
2. Assumptions and Acronyms Used
3. Research Methodology
4. Professional Employer Organization Market Overview
  4.1. Introduction
     4.1.1. Market Taxonomy
     4.1.2. Market Definition
  4.2. Macro-Economic Factors
     4.2.1. Industry Outlook
  4.3. Professional Employer Organization Market Dynamics
     4.3.1. Market Drivers
     4.3.2. Market Restraints
     4.3.3. Opportunity
     4.3.4. Market Trends
  4.4. Professional Employer Organization Market - Supply Chain
  4.5. Global Professional Employer Organization Market Forecast
     4.5.1. Professional Employer Organization Market Size (US$ Mn) and Y-o-Y Growth
     4.5.2. Professional Employer Organization Market Size (000â€™ Units) and Y-o-Y Growth
     4.5.3. Professional Employer Organization Market Absolute $ Opportunity
5. Global Professional Employer Organization Market Analysis and Forecast by Types
  5.1. Market Trends
  5.2. Introduction
     5.2.1. Basis Point Share (BPS) Analysis by Types
     5.2.2. Y-o-Y Growth Projections by Types
  5.3. Professional Employer Organization Market Size and Volume Forecast by Types
     5.3.1. ASO
     5.3.2. Full-Service PEO
  5.4. Absolute $ Opportunity Assessment by Types
  5.5. Market Attractiveness/Growth Potential Analysis by Types
6. Global Professional Employer Organization Market Analysis and Forecast by Applications
  6.1. Market Trends
  6.2. Introduction
     6.2.1. Basis Point Share (BPS) Analysis by Applications
     6.2.2. Y-o-Y Growth Projections by Applications
  6.3. Professional Employer Organization Market Size and Volume Forecast by Applications
     6.3.1. Human Capital Management
     6.3.2. Payroll Services
     6.3.3. Regulatory Compliance
     6.3.4. Risk Management
     6.3.5. Withholding & Taxation
     6.3.6. Insurance Services
     6.3.7. Others
  6.4. Absolute $ Opportunity Assessment by Applications
  6.5. Market Attractiveness/Growth Potential Analysis by Applications
7. Global Professional Employer Organization Market Analysis and Forecast by Region
  7.1. Market Trends
  7.2. Introduction
     7.2.1. Basis Point Share (BPS) Analysis by Region
     7.2.2. Y-o-Y Growth Projections by Region
  7.3. Professional Employer Organization Market Size and Volume Forecast by Region
     7.3.1. North America
     7.3.2. Latin America
     7.3.3. Europe
     7.3.4. Asia Pacific
     7.3.5. Middle East and Africa (MEA)
  7.4. Absolute $ Opportunity Assessment by Region
  7.5. Market Attractiveness/Growth Potential Analysis by Region
  7.6. Global Professional Employer Organization Demand Share Forecast, 2019-2026
8. North America Professional Employer Organization Market Analysis and Forecast
  8.1. Introduction
     8.1.1. Basis Point Share (BPS) Analysis by Country
     8.1.2. Y-o-Y Growth Projections by Country
  8.2. North America Professional Employer Organization Market Size and Volume Forecast by Country
     8.2.1. U.S.
     8.2.2. Canada
  8.3. Absolute $ Opportunity Assessment by Country
  8.4. North America Professional Employer Organization Market Size and Volume Forecast by Types
     8.4.1. ASO
     8.4.2. Full-Service PEO
  8.5. Basis Point Share (BPS) Analysis by Types
  8.6. Y-o-Y Growth Projections by Types
  8.7. North America Professional Employer Organization Market Size and Volume Forecast by Applications
     8.7.1. Human Capital Management
     8.7.2. Payroll Services
     8.7.3. Regulatory Compliance
     8.7.4. Risk Management
     8.7.5. Withholding & Taxation
     8.7.6. Insurance Services
     8.7.7. Others
  8.8. Basis Point Share (BPS) Analysis by Applications
  8.9. Y-o-Y Growth Projections by Applications
  8.10. Market Attractiveness/Growth Potential Analysis
     8.10.1. By Country
     8.10.2. By Product Type
     8.10.3. By Application
  8.11. North America Professional Employer Organization Demand Share Forecast, 2019-2026
9. Latin America Professional Employer Organization Market Analysis and Forecast
  9.1. Introduction
     9.1.1. Basis Point Share (BPS) Analysis by Country
     9.1.2. Y-o-Y Growth Projections by Country
     9.1.3. Latin America Average Pricing Analysis
  9.2. Latin America Professional Employer Organization Market Size and Volume Forecast by Country
      9.2.1. Brazil
      9.2.2. Mexico
      9.2.3. Rest of Latin America
   9.3. Absolute $ Opportunity Assessment by Country
  9.4. Latin America Professional Employer Organization Market Size and Volume Forecast by Types
     9.4.1. ASO
     9.4.2. Full-Service PEO
  9.5. Basis Point Share (BPS) Analysis by Types
  9.6. Y-o-Y Growth Projections by Types
  9.7. Latin America Professional Employer Organization Market Size and Volume Forecast by Applications
     9.7.1. Human Capital Management
     9.7.2. Payroll Services
     9.7.3. Regulatory Compliance
     9.7.4. Risk Management
     9.7.5. Withholding & Taxation
     9.7.6. Insurance Services
     9.7.7. Others
  9.8. Basis Point Share (BPS) Analysis by Applications
  9.9. Y-o-Y Growth Projections by Applications
  9.10. Market Attractiveness/Growth Potential Analysis
     9.10.1. By Country
     9.10.2. By Product Type
     9.10.3. By Application
  9.11. Latin America Professional Employer Organization Demand Share Forecast, 2019-2026
10. Europe Professional Employer Organization Market Analysis and Forecast
  10.1. Introduction
     10.1.1. Basis Point Share (BPS) Analysis by Country
     10.1.2. Y-o-Y Growth Projections by Country
     10.1.3. Europe Average Pricing Analysis
  10.2. Europe Professional Employer Organization Market Size and Volume Forecast by Country
     10.2.1. Germany
     10.2.2. France
     10.2.3. Italy
     10.2.4. U.K.
     10.2.5. Spain
     10.2.6. Russia
     10.2.7. Rest of Europe
  10.3. Absolute $ Opportunity Assessment by Country
  10.4. Europe Professional Employer Organization Market Size and Volume Forecast by Types
     10.4.1. ASO
     10.4.2. Full-Service PEO
  10.5. Basis Point Share (BPS) Analysis by Types
  10.6. Y-o-Y Growth Projections by Types
  10.7. Europe Professional Employer Organization Market Size and Volume Forecast by Applications
     10.7.1. Human Capital Management
     10.7.2. Payroll Services
     10.7.3. Regulatory Compliance
     10.7.4. Risk Management
     10.7.5. Withholding & Taxation
     10.7.6. Insurance Services
     10.7.7. Others
  10.8. Basis Point Share (BPS) Analysis by Applications
  10.9. Y-o-Y Growth Projections by Applications
  10.10. Market Attractiveness/Growth Potential Analysis
     10.10.1. By Country
     10.10.2. By Product Type
     10.10.3. By Application
  10.11. Europe Professional Employer Organization Demand Share Forecast, 2019-2026
11. Asia Pacific Professional Employer Organization Market Analysis and Forecast
  11.1. Introduction
     11.1.1. Basis Point Share (BPS) Analysis by Country
     11.1.2. Y-o-Y Growth Projections by Country
     11.1.3. Asia Pacific Average Pricing Analysis
  11.2. Asia Pacific Professional Employer Organization Market Size and Volume Forecast by Country
     11.2.1. China
     11.2.2. Japan
     11.2.3. South Korea
     11.2.4. India
     11.2.5. Australia
     11.2.6. Rest of Asia Pacific (APAC)
  11.3. Absolute $ Opportunity Assessment by Country
  11.4. Asia Pacific Professional Employer Organization Market Size and Volume Forecast by Types
     11.4.1. ASO
     11.4.2. Full-Service PEO
  11.5. Basis Point Share (BPS) Analysis by Types
  11.6. Y-o-Y Growth Projections by Types
  11.7. Asia Pacific Professional Employer Organization Market Size and Volume Forecast by Applications
     11.7.1. Human Capital Management
     11.7.2. Payroll Services
     11.7.3. Regulatory Compliance
     11.7.4. Risk Management
     11.7.5. Withholding & Taxation
     11.7.6. Insurance Services
     11.7.7. Others
  11.8. Basis Point Share (BPS) Analysis by Applications
  11.9. Y-o-Y Growth Projections by Applications
  11.10. Market Attractiveness/Growth Potential Analysis
     11.10.1. By Country
     11.10.2. By Product Type
     11.10.3. By Application
  11.11. Asia Pacific Professional Employer Organization Demand Share Forecast, 2019-2026
12. Middle East & Africa Professional Employer Organization Market Analysis and Forecast
  12.1. Introduction
     12.1.1. Basis Point Share (BPS) Analysis by Country
     12.1.2. Y-o-Y Growth Projections by Country
     12.1.3. Middle East & Africa Average Pricing Analysis
  12.2. Middle East & Africa Professional Employer Organization Market Size and Volume Forecast by Country
     12.2.1. Saudi Arabia
     12.2.2. South Africa
     12.2.3. UAE
     12.2.4. Rest of Middle East & Africa (MEA)
  12.3. Absolute $ Opportunity Assessment by Country
  12.4. Middle East & Africa Professional Employer Organization Market Size and Volume Forecast by Types
     12.4.1. ASO
     12.4.2. Full-Service PEO
  12.5. Basis Point Share (BPS) Analysis by Types
  12.6. Y-o-Y Growth Projections by Types
  12.7. Middle East & Africa Professional Employer Organization Market Size and Volume Forecast by Applications
     12.7.1. Human Capital Management
     12.7.2. Payroll Services
     12.7.3. Regulatory Compliance
     12.7.4. Risk Management
     12.7.5. Withholding & Taxation
     12.7.6. Insurance Services
     12.7.7. Others
  12.8. Basis Point Share (BPS) Analysis by Applications
  12.9. Y-o-Y Growth Projections by Applications
  12.10. Market Attractiveness/Growth Potential Analysis
     12.10.1. By Country
     12.10.2. By Product Type
     12.10.3. By Application
  12.11. Middle East & Africa Professional Employer Organization Demand Share Forecast, 2019-2026
13. Competition Landscape
  13.1. Global Professional Employer Organization Market: Market Share Analysis
  13.2. Professional Employer Organization Distributors and Customers
  13.3. Professional Employer Organization Market: Competitive Dashboard
  13.4. Company Profiles (Details: Overview, Financials, Developments, Strategy)
     13.4.1. ADP LLC
     13.4.2. Paychex Inc.
     13.4.3. Insperity Inc.
     13.4.4. TriNet Group Inc.
     13.4.5. TEL Staffing & HR
     13.4.6. Global PEO Services
     13.4.7. Infostride
     13.4.8. Alcott HR

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FAQ Section

Some frequently asked questions about this report!

1. How much is the global professional employer organization (PEO) market worth?

The global professional employer organization (PEO) market size was valued at USD 56.5 billion in 2021 and is expected to surpass USD 139.7 billion by 2030.

2. What are the key drivers of the global professional employer organization (PEO) market?

The key drivers of the market include the rising needs for cost optimizing administrative and management services as well as increasing growth of numerous small & medium businesses.

3. What is the expected CAGR of the ASO segment during the forecast period?

The ASO segment is anticipated to register a CAGR of 13.2% during the forecast period owing to the wide availability of temporary or contractual services provided by ASO platforms.

4. What was the human capital management market worth in 2021?

The human capital management market was worth USD 22.1 billion in 2021 and is expected to reach USD 40.2 billion by 2030.

5. Which region is likely to dominate the global professional employer organization (PEO) market during the forecast period?

North America held a dominant market share in 2021 and the trend is expected to continue during the projected period.

6. Who are the key players competing in the global professional employer organization (PEO) market?

The key players of the market are ADP LLC; Paychex Inc.; Insperity Inc.; TriNet Group Inc.; TEL Staffing & HR; Global PEO Services; Infostride; Alcott HR; Co Advantage; Group Management Services; Total HR; FrankCrum; Oasis Outsourcing; and Ahead Human Resources.