Strong growth in corporate profit will bolster industry revenue in the next five years
Los Angeles, CA (PRWEB) April 25, 2013
The Payroll and Bookkeeping Services industry is still recovering from the recession. “In the past five years, the industry's revenue declined at an average annual rate of 0.6% to $5.9 billion in 2013 due to a 10.4% drop in revenue in 2009,” says IBISWorld industry analyst Andrew Krabeepetcharat. Sharp declines in corporate profit and a steep hike in the national unemployment rate were the largest factors contributing to hardship in the industry.
In 2009, the national unemployment rate increased 36.1% during the year, reducing the number of employed people for which companies needed industry services. According to Krabeepetcharat, “During the same year, corporate profit declined 27.9%, reducing the ability of businesses to allocate resources for the expertise of industry firms.” Corporate profit quickly rebounded in 2010 and onwards, but the national unemployment rate improved at a slower rate. Since the 2009 dip in revenue, employment and corporate profit have increased, slowly pulling the industry up, but revenue is still below its prerecession level. Continued recovery will cause revenue to grow a slow 1.0% during 2013.
IBISWorld estimates that in 2013, the industry's three largest players will account for 12.7% of industry revenue. This indicates a low level of concentration, further supported by the vast majority of enterprises employing less than five staff. According to IBISWorld research, about 93.4% of industry firms employ less than five staff, of which about 68.9% are considered nonemployers. The industry's low level of concentration is primarily due to its low barriers to entry. With many businesses outsourcing payroll and bookkeeping services, it is easy and inexpensive for an accountant or person with in-house payroll and bookkeeping experience to capitalize on the trend. Furthermore, many small to medium-size businesses prefer to focus on their core product or service, thereby palming off non-core activities to other business professionals.
Over the next five years, industry revenue is projected to recover and grow. Corporate profit is forecast to grow at an average annual rate of 5.1%, providing small and mid-sized firms the ability to outsource administrative tasks and focus on primary business functions. At the same time, the unemployment rate is also projected to decline at an average annual rate of 2.6% during the next five years, increasing the potential number of employees that will require payroll and bookkeeping services. As the overall Canadian economy improves, more industry profit will increase slowly as revenue increases and industry firms will increase sales of services.
For more information, visit IBISWorld’s Payroll & Bookkeeping Services in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry provides outsourced payroll services for clients' employees. Basic bookkeeping services are also covered in this report. This industry does not include tax preparation firms and certified public accountants (CPAs).
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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