Professional Employer Organizations in the US - Market Research Report (2014-2029)
New York, United States
Last Updated: April 2024
NAICS 56133Revenue
$319.5bn
Past 5-Year Growth
Profit
$XX.Xbn
Employees
4m
Businesses
6,311
Wages
$XXX.Xbn
Professional Employer Organizations in the US industry analysis
Revenue growth for professional employer organizations (PEOs) has been solid during the current period despite significant volatility. The impact of COVID-19 severely disrupted the labor market, causing the national unemployment rate to more than double in 2020. This dragged down revenue for PEOs, but the economy's strong recovery led to a heightened need for the industry's services and brought on a skyrocketing year-over-year jump in revenue in both 2021 and 2022. Despite these conditions, high-interest rates have reduced demand from the construction sector and constrained corporate profit, causing revenue growth to slow recently. Increased regulation has also made it more difficult for small companies to enter the industry, raising consolidation. Overall, revenue for PEOs is anticipated to surge at a CAGR of 6.7% during the current period, reaching $319.5 billion in 2023, including a 2.9% increase in that year.
Trends and Insights
- Revenue volatility has been high during the current period. COVID-19 more than doubled the national unemployment rate, but rising production during the pandemic recovery has brought huge jumps in revenue.
- Comprehensive PEO services are the largest revenue stream for this industry. External competition for individual services is much higher, so PEOs tend to secure lucrative contracts that make them essential to businesses' success.
- PEOs' interest in certain states is partly explained by a favorable tax climate. Since Florida and Texas have very low taxes, PEOs more profitable in these states.
- External competitors can replace the industry. Internal HR departments, providers of certain HR services and insurance brokers are the most significant competitors for professional employer organizations.
Industry Overview
Market size and recent performance (2014-2029)
Industry revenue has grown at a CAGR of 6.7 % over the past five years, to reach an estimated $319.5bn in 2024.
Trends and Insights
The labor market has made revenue volatile
- On a macro level, improvements in the labor market imply lower unemployment, a higher labor force participation rate (LFPR) and strong population growth, boosting demand for professional employer organizations (PEOs).
- Additional trends and insights available with purchase
Source: IBISWorld
Industry outlook (2024-2029)
Market size is projected to grow over the next five years.
Trends and Insights
The economic recovery will buoy demand from businesses
- Despite concerns related to high inflation, rising interest rates and recessionary fears, the US economy will grow at a modest pace during the outlook period.
Biggest companies in the Professional Employer Organizations in the US
| Company | Market Share (%)
2023 | Revenue ($m)
2023 | Profit ($m)
2023 | Profit Margin (%)
2023 |
|---|---|---|---|---|
Automatic Data Processing, Inc. | 6,095.2 | 1,405.4 | 23.1 | |
Insperity, Inc. | 5,950.9 | 212.0 | 3.6 | |
Trinet Group, Inc. | 5,496.9 | 606.1 | 11.0 |
To view the market share and analysis for all 4 top companies in this industry, view purchase options.
Products & Services Segmentation
Source: IBISWorld
Industry revenue is measured across several distinct product and services lines, including Companies with less than 50 employees, Companies with 50 to 249 employees and Companies with 250 or more employees. Companies with less than 50 employees is the largest segment of the Professional Employer Organizations in the US.
Trends and Insights
PEOs serve various different businesses
- This industry provides different types of products, such as comprehensive professional employer organization (PEO) services, payroll and HR-only PEO services, staff training and performance management.
- More insights available in the full report
Widen you competitive advantage with related industries
Competitors
- Employment & Recruiting Agencies in the US
- Office Staffing & Temp Agencies in the US
Complementors
- Payroll & Bookkeeping Services in the US
- Human Resources & Benefits Administration in the US
International industries
- Global HR & Recruitment Services
- Payroll & Bookkeeping Services in Canada
- Professional Employer Organizations in Mexico
Table of Contents
About this industry
Industry definition
Companies in this industry provide human relations management and administration services through a co-employment relationship. Corporations pay Professional employer organizations (PEOs) to administer their employee benefits. These include functions such as payroll, benefits, workers' compensation and training.
What's included in this industry?
Payroll and HR-only PEO servicesStaff trainingPerformance managementComprehensive HR management servicesCompanies
Automatic Data Processing, Inc.Insperity, Inc.Trinet Group, Inc.Purchase this report to view all 4 major companies in this industry.
Related Terms
CO-EMPLOYMENTEMPLOYEE BENEFITSEMPLOYEE LEASINGPROFESSIONAL EMPLOYER ORGANIZATION (PEO)OUTSOURCEWORKSITE EMPLOYEE (WSE)Industry Code
NAICS 56133 - Professional Employer Organizations in the US
Performance
Get an indication of the industry's health through historical, current and forward-looking trends in the performance indicators that make or break businesses.
Analyst insights
Revenue volatility has been high during the current period. COVID-19 more than doubled the national unemployment rate, but rising production during the pandemic recovery has ...
In this chapter (4)
- Current Performance
- Outlook
- Volatility
- Life Cycle
Key metrics
- Annual Revenue, Recent Growth, Forecast, Revenue Volatility
- Number of Employees, Recent Growth, Forecast, Employees per Business, Revenue per Employee
- Number of Businesses, Recent Growth, Forecast, Employees per Business, Revenue per Business
- Total Profit, Profit Margin, Profit per Business
Charts
- Revenue, including historical (2014-2023) and forecast (2024-2029)
- Employees, including historical (2014-2023) and forecast (2024-2029)
- Businesses, including historical (2014-2023) and forecast (2024-2029)
- Profit, including historical (2014-2024)
- Industry Volatility vs. Revenue Growth
- Industry Life Cycle
Detailed analysis
- Trends in supply, demand and current events that are driving current industry performance
- Expected trends, economic factors and ongoing events that drive the industry's outlook
- Key success factors for businesses to overcome volatility
- How contribution to GDP, industry saturation, innovation, consolidation, and technology and systems influence the industry's life cycle phase.
Products and Markets
Learn about an industry's products and services, markets and trends in international trade.
Analyst insight
Comprehensive PEO services are the largest revenue stream for this industry. External competition for individual services is much higher, so PEOs tend to secure lucrative con...
In this chapter
- Products & Services
- Major Markets
Key metrics
- Largest market segment and value in 2024
- Product innovation level
Charts
- Products & services segmentation in 2024
- Major market segmentation in 2024
Detailed analysis
- Trends impacting the recent performance of the industry's various segments
- Innovations in the industry's product or service offering, specialization or delivery method
- Key factors that successful businesses consider in their offerings
- Buying segments and key trends influencing demand for industry products and services
Geographic Breakdown
Discover where business activity is most concentrated in an industry and the factors driving these trends to find opportunities and conduct regional benchmarking.
Analyst insights
PEOs' interest in certain states is partly explained by a favorable tax climate. Since Florida and Texas have very low taxes, PEOs more profitable in these states.
In this chapter (1)
- Business Locations
Charts
- Share of revenue, establishment, wages and employment in each state
- Share of population compared to establishments in each region in 2024
Tables
- Number and share of establishments in each state in 2024
- Number and share of revenue each state accounts for in 2024
- Number and share of wages each state accounts for in 2024
- Number and share of employees in each state in 2024
Detailed analysis
- Geographic spread of the industry across North America, and trends associated with changes in the business landscape
- Key success factors for businesses to use location to their advantage
Competitive Forces
Get data and insights on what's driving competition in an industry and the challenges industry operators and new entrants may face, with analysis built around Porter's Five Forces framework.
Analyst insights
External competitors can replace the industry. Internal HR departments, providers of certain HR services and insurance brokers are the most significant competitors for profes...
In this chapter (4)
- Concentration
- Barriers to Entry
- Substitutes
- Buyer & Supplier Analysis
Key metrics
- Industry concentration level
- Industry competition level and trend
- Barriers to entry level and trend
- Substitutes level and trend
- Buyer power level and trend
- Supplier power level and trend
Charts
- Market share concentration among the top 4 suppliers from 2019-2024
- Supply chain including upstream supplying industries and downstream buying industries, flow chart
Detailed analysis
- Factors impacting the industry’s level of concentration, such as business distribution, new entrants, or merger and acquisition activity.
- Key success factors for businesses to manage the competitive environment of the industry.
- Challenges that potential industry entrants face such as legal, start-up costs, differentiation, labor/capital intensity and capital expenses.
- Key success factors for potential entrants to overcome barriers to entry.
- Competitive threats from potential substitutes for the industry’s own products and services.
- Key success factors for how successful businesses can compete with substitutes.
- Advantages that buyers have to keep favorable purchasing conditions.
- Advantages that suppliers have to maintain favorable selling conditions.
- Key success factors for how businesses can navigate buyer and supplier power.
Companies
Learn about the performance of the top companies in the industry.
Analyst insights
Companies in this industry must be able to provide the highest level of data protection. Information collected by professional employer organizations contains highly sensitiv...
In this chapter
- Market Share Concentration
- Companies
- Company Spotlights
Charts
- Industry market share by company in 2020 through 2024
- Major companies in the industry, including market share, revenue, profit and profit margin in 2024
- Overview of Automatic Data Processing, Inc.'s performance by revenue, market share and profit margin from 2018 through 2024
- Overview of Insperity, Inc.'s performance by revenue, market share and profit margin from 2018 through 2024
- Overview of Trinet Group, Inc.'s performance by revenue, market share and profit margin from 2018 through 2024
- Overview of revenue, market share and profit margin trend for one additional company
Detailed analysis
- Description and key data for Automatic Data Processing, Inc., and factors influencing its performance in the industry
- Description and key data for Insperity, Inc., and factors influencing its performance in the industry
- Description and key data for Trinet Group, Inc., and factors influencing its performance in the industry
- Description, key data and performance trends for one additional company
External Environment
Understand the demographic, economic and regulatory factors that shape how businesses in an industry perform.
Analyst insights
Government stimulus has helped labor. Economic stimulus packages issued by the federal government in response to COVID-19 have protected many industries' workforces, aiding P...
In this chapter
- External Drivers
- Regulation & Policy
- Assistance
Key metrics
- Regulation & policy level and trend
- Assistance level and trend
Charts
- Regulation & Policy historical data and forecast (2014-2029)
- Assistance historical data and forecast (2014-2029)
Detailed analysis
- Demographic and macroeconomic factors influencing the industry, including Regulation & Policy and Assistance
- Major types of regulations, regulatory bodies, industry standards or specific regulations impacting requirements for industry operators
- Key governmental and non-governmental groups or policies that may provide some relief for industry operators.
Financial Benchmarks
View average costs for industry operators and compare financial data against an industry's financial benchmarks over time.
Analyst insights
Wages consistently account for the vast majority of revenue, which includes both PEO employees' wages and worksite employees' wages. Compensation's revenue share has crept do...
In this chapter
- Cost Structure
- Financial Ratios
- Key Ratios
Key metrics
- Profit margin, and how it compares to the sector-wide margin
- Average wages, and how it compares to the sector-wide average wage
- Largest cost component as a percentage of revenue
- Industry average ratios for days' receivables, industry coverage and debt-to-net-worth ratio
Charts
- Average industry operating costs as a share of revenue, including purchases, wages, depreciation, utilities, rent, other costs and profit in 2024
- Average sector operating costs as a share of revenue, including purchases, wages, depreciation, utilities, rent, other costs and profit in 2024
- Investment vs. share of economy
Data tables
- Industry Multiples (2017-2022)
- Industry Tax Structure (2017-2022)
- Income Statement (2017-2022)
- Balance Sheet (2017-2022)
- Liquidity Ratios (2017-2022)
- Coverage Ratios (2017-2022)
- Leverage Ratios (2017-2022)
- Operating Ratios (2017-2022)
- Cash Flow & Debt Service Ratios (2014-2029)
- Revenue per Employee (2014-2029)
- Revenue per Enterprise (2014-2029)
- Employees per Establishment (2014-2029)
- Employees per Enterprise (2014-2029)
- Average Wage (2014-2029)
- Wages/Revenue (2014-2029)
- Establishments per Enterprise (2014-2029)
- IVA/Revenue (2014-2029)
- Imports/Demand (2014-2029)
- Exports/Revenue (2014-2029)
Detailed analysis
- Trends in the cost component for industry operators and their impact on industry costs and profitability
Key Statistics
Industry Data
Data Tables
Including values and annual change:
- Revenue (2014-2029)
- IVA (2014-2029)
- Establishments (2014-2029)
- Enterprises (2014-2029)
- Employment (2014-2029)
- Exports (2014-2029)
- Imports (2014-2029)
- Wages (2014-2029)
Methodology
How are IBISWorld reports created?
IBISWorld has been a leading provider of trusted industry research for over 50 years to the most successful companies worldwide. With offices in Australia, the United States, the United Kingdom, Germany and China, we are proud to have local teams of analysts that conduct research, data analysis and forecasting to produce data-driven industry reports.
Our analysts start with official, verified and publicly available sources of data to build the most accurate picture of each industry. Analysts then leverage their expertise and knowledge of the local markets to synthesize trends into digestible content for IBISWorld readers. Finally, each report is reviewed by one of IBISWorld’s editors, who provide quality assurance to ensure accuracy and readability.
IBISWorld relies on human-verified data and human-written analysis to compile each standard industry report. We do not use generative AI tools to write insights, although members can choose to leverage AI-based tools within the platform to generate additional analysis formats.
What data sources do IBISWorld analysts use?
Each industry report incorporates data and research from government databases, industry-specific sources, industry contacts, and our own proprietary database of statistics and analysis to provide balanced, independent and accurate insights.
Key data sources in the US include:
- US Census Bureau
- US Bureau of Labor Statistics
- US International Trade Commission
Analysts also use industry specific sources to complement catch-all sources, although their perspective may focus on a particular organization or representative body, rather than a clear overview of all industry operations. However, when balanced against other perspectives, industry-specific sources provide insights into industry trends.
These sources include:
- Industry and trade associations
- Industry federations or regulators
- Major industry players annual or quarterly filings
Finally, IBISWorld’s global data scientists maintain a proprietary database of macroeconomic and demand drivers, which our analysts use to help inform industry data and trends. They also maintain a database of statistics and analysis on thousands of industries, which has been built over our more than 50-year history and offers comprehensive insights into long-term trends.
How does IBISWorld forecast its data?
IBISWorld’s analysts and data scientists use the sources above to create forecasts for our proprietary datasets and industry statistics. Depending on the dataset, they may use regression analysis, multivariate analysis, time-series analysis or exponential smoothing techniques to project future data for the industry or driver. Additionally, analysts will leverage their local knowledge of industry operating and regulatory conditions to impart their best judgment on the forecast model.
IBISWorld prides itself on being a trusted, independent source of data, with over 50 years of experience building and maintaining rich datasets and forecasting tools. We are proud to be the keystone source of industry information for thousands of companies across the world.
Learn more about our methodology and data sourcing on the Help Center.
Frequently Asked Questions
Unlock comprehensive answers and precise data upon purchase. View purchase options.
What is the market size of the Professional Employer Organizations in the US industry in United States in 2024?
The market size of the Professional Employer Organizations in the US industry in United States is $319.5bn in 2024.
How many businesses are there in the Professional Employer Organizations in the US industry in 2024?
There are 6,311 businesses in the Professional Employer Organizations in the US industry in United States, which has grown at a CAGR of 2.4 % between 2019 and 2024.
Has the Professional Employer Organizations in the US industry in United States grown or declined over the past 5 years?
The market size of the Professional Employer Organizations in the US industry in United States has been growing at a CAGR of 6.7 % between 2019 and 2024.
What is the forecast growth of the Professional Employer Organizations in the US industry in United States over the next 5 years?
Over the next five years, the Professional Employer Organizations in the US industry in United States is expected to grow.
What are the biggest companies in the Professional Employer Organizations in the US market in United States?
The biggest companies operating in the Professional Employer Organizations market in United States are Automatic Data Processing, Inc., Insperity, Inc. and Trinet Group, Inc.
What does the Professional Employer Organizations in the US in United States include?
Payroll and HR-only PEO services and Staff training are part of the Professional Employer Organizations in the US industry.
Which companies have the highest market share in the Professional Employer Organizations in the US in United States?
The company holding the most market share in United States is Automatic Data Processing, Inc..
How competitive is the Professional Employer Organizations in the US industry in United States?
The level of competition is high and increasing in the Professional Employer Organizations in the US industry in United States.
