Human resources leaders have a lot on their plates. Between payroll, benefits, compliance, and employee relations issues, HR tasks can become overwhelming. This is why many companies are turning to Professional Employer Organizations (PEOs) for help. The PEO industry has seen rapid growth, with the global market predicted to increase at a CAGR of 11.10% from 2017 to 2030.1 And if you follow PEO companies, you’ve likely noticed significant PEO consolidation trends over the past couple of years.
As an HR leader, you may be wondering how PEO industry trends will impact your company in 2024. Here’s what you need to know:
Increased Demand for Co-Employment Agreements
More and more, PEOs are utilizing co-employment agreements. Under these agreements, the PEO becomes a co-employer and shares employer responsibilities and liabilities.1 This includes handling payroll, taxes, benefits, and more. With a co-employment agreement, you get expertise and reduced risk.
Growing Demand from SMBs
Small and medium-sized businesses (SMBs) make up 95% of businesses globally and generate 60-70% of job opportunities contributing to overall economic growth.1 Many are outsourcing HR and payroll to PEOs so they can concentrate on core operations. As an HR leader, this trend means more potential clients for your department’s services.
Technology Advancements Add Efficiency
PEOs are increasingly utilizing automated systems to improve efficiency for tasks like payroll.1 For HR leaders, this means streamlined and accurate processing, which helps alleviate significant costs for factors such as high turnover rates among employees.
What PEO Consolidation Means for You
The PEO industry trends point to a new approach for how companies handle HR and payroll. More are choosing to outsource these functions to PEOs.1 Co-employment agreements also reveal a shift in the employer-employee relationship, with shared responsibilities between companies and PEOs.2
The bottom line? As an HR leader, industry consolidation provides you with a solution for all those challenging HR tasks. With an experienced PEO as your partner, you free up time and resources while reducing risk.
References
- Professional Employer Organization Market to Reach USD – GlobeNewswire
- 2023 Market Size, Forecast, & Professional Employer Organizations (PEO) – AnythingResearch
