Procurement Market Intelligence Report
Professional Employer Organization Services
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Professional Employer Organization Services Global Overview
Definition
Summary
Professional employer organization (PEO) services help cut management costs and reduce the complexity of providing support services to employees. Many types of companies use PEOs to outsource employee management responsibilities, including manufacturers, wholesale trade operators, finance and insurance firms, and construction companies. Key buyers include construction sectors, manufacturers, wholesale trade operators, and finance and insurance firms.
This Report Includes:
- Payroll
- Workers' Compensation
- Employee Benefits
- Human Resources
Not in this Report:
- Expense Management Services
- Recruitment Services
Classification:
- Management Consulting Services
- Human Resources Consulting
- Permanent Personnel Recruitment
- Contingent Workforce Management Services
- Executive Search Services
- Compensation & Benefits Planning Services
- Employee Performance Management Software
- Risk Management Consulting Services
- Legal Management Software
- Professional Employer Organization Services
Global Professional Employer Organization Services Procurement Trends
Discover the top international trends affecting procurement in the global Professional Employer Organization Services market.
Warning Trends
United States announces additional tariffs on China
- In February 2025, the United States announced 10.0% tariffs on imports from China. The tariffs took effect on February 4, 2025.
- The tariff plan applies to all merchandise imported for consumption and applies in addition to other duties and fees that are in place, with limited exceptions.
- In response, China announced a 15.0% tariff on products such as coal and natural gas, as well as a 10.0% tariff on crude oil, agricultural machinery, pickup trucks, and large cars. The tariff executive orders indicate retaliatory tariffs could lead to further escalation in rates.
- Providers in this market rely on inputs often sourced from China. As such, ProcurementIQ will continue to monitor developments in this space and update analysis accordingly.
United States postpones plans for sweeping tariffs on Canada and Mexico
- In February 2025, the United States announced 25.0% tariffs on imports from Canada and Mexico.
- Though initially set to take effect on February 4, 2025, the implementation of tariffs on Canada and Mexico has been postponed 30 days to allow for further negotiation.
- The tariff plan initially proposed by the US applies to all merchandise imported for consumption and applies in addition to other duties or fees that are in place, with limited exceptions.
- Providers in this market rely on input costs often sourced from an affected country. As such, ProcurementIQ will continue to monitor developments in this space and update analysis accordingly.
Neutral
Labor markets tighten slightly following interest rate cuts
- In recent months, the unemployment rate has remained stable at 4.1%, a still relatively low mark, though higher than it was in prior years. This trend indicates sustained competitiveness in the overall labor market, though certain industries have experienced waning labor demand.
- The latest jobs report indicates that major industries, such as construction, retail, leisure & hospitality, and transportation & warehousing, no longer face hiring shortfalls.
- However, worker shortages persist in the manufacturing and healthcare sectors, as 29.9% and 50.0% of job openings in each sector remained unfilled in August, respectively.
- In blue-collar fields, 33.9%, 70.1%, and 49.9% of job openings for information, finance, and professional service roles remained unfilled in September, though unfilled positions in these occupations can also be partially attributed to the longer average hiring times in these industries.
Global Professional Employer Organization Services Market - Suppliers by Region
| Country/Region | Number of Suppliers |
|---|---|
| #1China | 4,080 |
| #2Europe | 3,780 |
| #3United States | 2,900 |
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Geography Drilldown - US
Average Cost of Professional Employer Organization Services
United States
2025 Market Pricing$2.00 to $X.XX
% of gross payrollAverage Price
Prices in the Professional Employer Organization Services market range from $2.00 to $X.XX, depending on Scope of Services, Location and Client Industry. For example, lower prices are associated with Limited scope of services (e.g., only payroll) (2.00 to 5.00% of gross payroll), whereas higher prices are associated with Comprehensive services (e.g., payroll, workers compensation, benefits, and human resources) (4.20 to 8.00% of gross payroll).
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Between our Europe and Canada collections, we provide price data for 350 markets so you can instantly compare prices across borders. Or, use our custom research services for intel on prices in any region across the globe.
Professional Employer Organization Services Category Price Trends
Pricing trends are indicated by the compound annual growth rate (CAGR) during a set period of time. For the Professional Employer Organization Services market, prices in the US have grown 0.1% from 2022 to 2025. Subscribers can access price trend forecasts, price driver projections and forward-looking cost structure data. Learn more
United States (2022-2025)
0.1%
Compound Annual Growth RateUnited States (2025-2028)
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Price trend forecasts are available to subscribers, along with price driver projections and forward-looking cost structure data.
Cost Analysis - Total Cost of Ownership for Professional Employer Organization Services
Total cost of ownership is Low in the Professional Employer Organization Services market. The average cost of ownership differs depending on the contract but generally includes costs negotiated before the contract begins, costs billed during the contract period and unforeseen costs. For example, unforeseen costs in the form of Cancellations may raise the total cost of ownership unexpectedly.
Negotiated Before
Pre-evaluation
Billed During
Labor
Unforeseen
Cancellations
Buyer Power in Procurement Negotiations
In 2025, buyer power amounts to 1.8 in the United States. Buyer power is most positively impacted by Recent Developments. It is most negatively impacted by Availability of Substitutes. Subscribers can access details on eight other factors that impact buyer power. Learn more
United States
Buyer power forecasts: your glimpse into the future
Develop strategies for the upcoming year and identify unforeseen opportunities for buying now
- Actionable "Buy Now" and "Buy Later" insights
- Near-real-time updates to current and forecast Buyer Power Scores
- Methodology and weightings for Buyer Power Score Components
Supply Chain Risk
The average level of supply chain risk is assessed as Low, which has a positive impact on buyer power. The level of supply chain risk is affected by industry volatility, barriers to entry, competition, import penetration, regulation and industry financial risk. Buyers in this market can mitigate procurement and supply chain management risks by monitoring risk levels for individual first and second tier suppliers:
1st
Tier Suppliers
- IT Providers
- Insurance Brokers & Agencies
- Computer & Software Wholesalers
2nd
Tier Suppliers
- Software Publishers
- Insurance Carriers
- Computer Manufacturers
Biggest Professional Employer Organization Services Suppliers in the US by Revenue
The largest Professional Employer Organization Services vendors by revenue in the US are Barrett Business Services Inc., Automatic Data Processing, Inc. and SouthEast Personnel Leasing Inc. Subscribers can sort and filter by market share concentration, profit level and other factors. Learn more
| Supplier | Operational Size | Headquarters | Number of Employees | Market Share (%) | Market Share Performance (3yr trend) | Total Revenue ($ million) | Profit Level (%) | Risk Level |
|---|---|---|---|---|---|---|---|---|
| Trinet Group, Inc. | National | DUBLIN, CA | 1,001-10,000 | 10-15 | ||||
| Automatic Data Processing, Inc. | Global | ROSELAND, NJ | >10,000 | 15-20 | ||||
| Paychex, Inc. | International | ROCHESTER, NY | >10,000 | 25+ | ||||
| Insperity, Inc. | National | KINGWOOD, TX | 1,001-10,000 | < 5 | ||||
| Barrett Business Services Inc. | National | VANCOUVER, WA | >10,000 | < 5 | ||||
| SouthEast Personnel Leasing Inc | National | Holiday, FL | 101-250 | < 5 | ||||
| People Inc | National | Tampa, FL | 101-250 | < 5 | ||||
| Engage Technologies Corporation | International | Brooklyn Park, MN | 51-100 | < 5 | ||||
| AlphaStaff Inc. | Regional | Sunrise, FL | 51-100 | < 5 | ||||
Looking for a list of suppliers by country?
Subscribers can access vendor information on Canadian and European suppliers, too. We also offer custom research services to help with vendor sourcing anywhere in the world.
Profit Analysis
The average profit margin across vendors in the Professional Employer Organization Services market is 0.7% and steady. Profit levels shift depending on suppliers' spend on wages, purchases and overhead. The highest cost component for vendors is Overhead. The cost trend for this component is rising, when considering movement between 2024 and 2025. To understand cost forecasts for 2026 and uncover the implications on profit, start your subscription. Learn more
Vendor & Supply Chain Analysis
Demand for PEO services is expected to grow steadily, which will help boost suppliers’ financial stability. All types of businesses use these services, ensuring that suppliers have a steady stream of demand and a low level of financial risk.
Market share concentration is low for PEO services. Despite the presence of a few large players that generate high revenue, the market is highly fragmented and primarily composed of small and midsize firms, which bolsters buyer power because it provides buyers with a greater selection of suppliers and a better opportunity to negotiate lower prices for services.
Supply chain risk is low for PEO service providers, as suppliers rely on few critical inputs that can disturb the delivery of services. Low supply chain risk is favorable for buyers because it helps ensure that PEOs are stable and can consistently deliver their services.
The United States is a net importer of computers, as it imports more computers than it exports. This adds significant risk to buyers, as trade policies and currency exchange rates can add price volatility to the market.
Supplier Information
Trinet Group, Inc.
Trinet Group, Inc. is a public company operating nationally in the information and administration, business support and waste management services sectors. The company's offerings include expense management software, spend analytics software and professional employer organization services. Founded in 1988,... Subscribe to learn more
Automatic Data Processing, Inc.
Automatic Data Processing, Inc. is a public company operating globally in the information, professional, scientific and technical services and administration, business support and waste management services sectors. The company's offerings include recruitment software, human resources software, aca compliance... Subscribe to learn more
Paychex, Inc.
Paychex, Inc. is a public company operating internationally in the information, finance and insurance, professional, scientific and technical services and administration, business support and waste management services sectors. The company's offerings include recruitment software, flexible spending account... Subscribe to learn more
AlphaStaff Inc.
AlphaStaff Inc. is a private company operating regionally in the administration, business support and waste management services sector. The company's offerings include professional employer organization services. Founded in 1997, the company is currently headquartered in Sunrise, Florida, United States of... Subscribe to learn more
Engage Technologies Corporation
Engage Technologies Corporation is a private company operating internationally in the administration, business support and waste management services sector. The company's offerings include shrink wrap machines and professional employer organization services. Founded in 1991, the company is currently headquartered... Subscribe to learn more
People Inc
People Inc is a private company operating nationally in the administration, business support and waste management services sector. The company's offerings include professional employer organization services. Founded in 2017, the company is currently headquartered in Tampa, Florida, United States of America... Subscribe to learn more
SouthEast Personnel Leasing Inc
SouthEast Personnel Leasing Inc. is a private company operating nationally in the professional, scientific and technical services and administration, business support and waste management services sectors. The company's offerings include professional employer organization services and payroll services. Founded... Subscribe to learn more
Barrett Business Services Inc.
Barrett Business Services Inc. is a public company operating nationally in the administration, business support and waste management services sector. The company's offerings include professional employer organization services. Founded in 1972, the company is currently headquartered in Vancouver, Washington,... Subscribe to learn more
Insperity, Inc.
Insperity, Inc. is a public company operating nationally in the information, professional, scientific and technical services and administration, business support and waste management services sectors. The company's offerings include expense management software, spend analytics software, professional employer... Subscribe to learn more
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Procurement Management KPIs for the Professional Employer Organization Services Market
Managing vendor performance throughout the contract period is easier when tracking specific key performance indicators (KPIs). For example, buyers should monitor Customer Retention Rate and Employee Retention Rate. Buyers may experience better performance throughout their contracts if they establish service level agreements (SLAs) based on Payroll and other factors.
| KPI | Level of Importance (1-5) | Measurements | Key Considerations |
|---|---|---|---|
| Customer Retention Rate | Number of customers at start of period Number of customers at end of period Number of customers added within period | The customer retention rate represents the number of customers a PEO service is able to retain over a set time frame. The customer retention rate can be used to determine the extent to which a PEO service’s customer base fluctuates over time. | |
| Employee Retention Rate | Number of employees at start of period Number of employees at end of period | The employee retention rate represents the share of employees a PEO service is able to retain over a set time frame. The employee retention rate can be used to determine a PEO service’s likelihood of retaining quality employees and performing quality work. | |
Questions to Ask During Procurement Negotiations
How can I gain leverage during negotiations?
Workforce
How quickly can you hire or fire employees?
If we decide to hire or fire employees, what additional paperwork is required?
Insurance
What companies are your main insurance providers?
How quickly can your company address insurance claims?
Legal Concerns
Do you provide payroll or payment stubs for our employees?
How do you prepare audited financial statements?
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Professional Employer Organization Services RFP Guidelines
What should my RFP include?
Organizational Overview
Buyers should give an overview of their organization, including number of employees and organizational structure.
Buyers should explain why they are seeking professional employer organization services.
Statement Of Need
Buyers should specify the type(s) of PEO services they require.
Buyers should specify their expectations regarding the level of communication.
Project Budget
If one exists, buyers should specify their budget for PEO services and related products and services.
Buyers can reference the Pricing Environment section of this report for assistance in creating a budget.
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- Supply chain and vendors
- Global supplier breakdown
- Market share concentration
- Regulation and business requirements
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