New York, NY (PRWEB) December 30, 2013
The Payroll and Bookkeeping Services industry provides payroll and bookkeeping services on an outsourced basis. According to IBISWorld Industry Analyst Jeremy Edwards, "The industry has grown in the past five years as clients have increasingly subcontracted back-office administrative activities in order to focus efforts on core business functions." By outsourcing payroll and bookkeeping, small businesses can save time and money, freeing up resources for higher-priority pursuits. Additionally, the rising complexity of payroll and benefits payments and deductions has led businesses to outsource these functions to ensure compliance.
Unfortunately for industry operators, rising unemployment decreased demand for payroll services during 2009 and 2010. The recession also caused revenue to fall, as rising unemployment led to shrinking client payrolls and more client bankruptcies. As a result, many businesses brought its payroll and bookkeeping processes in-house to cut costs. However, the national unemployment rate began to decline in 2011 as businesses started to expand. In addition, the number of businesses in the United States expanded in 2012, fueling industry growth. As a result, the industry has grown by an average annual rate of only 0.9% to $38.7 billion over the five years through 2013. Conditions for the industry are expected to improve in 2013, as unemployment falls and more businesses enter the US economy. Consequently, industry revenue is expected to expand 5.2% during the year.
During the recession, profit margins suffered as companies reduced fees to retain clients. This decline in demand was especially hard on small businesses, which represent the majority of industry operators. Falling demand adversely affected these companies because they typically focus on the small business market, which was especially hurt by the recession. "As the economy continues to recover, the improving labor market will boost demand for payroll and bookkeeping services," says Edwards. In the five years to 2018, revenue is forecast to increase. Companies in the industry are expected to increase their reliance on new computer systems, in order to improve profitability and employee efficiency. Industry operators are also expected to experience greater competition as human resource service providers look to provide more payroll and bookkeeping services.
The Payroll and Bookkeeping industry is characterized by a low level of market share concentration. There are a large number of small companies in the industry that provide payroll and bookkeeping services for small firms. This includes a large number of nonemploying businesses that operate as sole proprietors or partnerships. Automatic Data Processing Inc. (ADP) is by far the largest player in the industry. ADP has enjoyed considerable success over the past five years because of its large market position, which has been consolidated over the past five years through a number of acquisitions.
For more information, visit IBISWorld’s Payroll and Bookkeeping Services in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in the Payroll and Bookkeeping Services industry provide outsourced payroll services for clients' employees and basic bookkeeping services are also included. However, this industry does not include tax preparation companies or certified public accountants.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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