Professional Employer Organization Services Procurement Category Market Research Report from IBISWorld has Been Updated
Los Angeles, California (PRWEB) February 18, 2015 -- Professional employer organization (PEO) services have a buyer power score of 3.8 out of 5, reflecting a moderately high amount of buyer negotiating power. According to IBISWorld market research analyst, Michelle Hovanetz, "The PEO market is characterized by rising prices, a high availability of substitutes and low supply chain and vendor financial risk."
In the three years to 2014, PEO service prices have been rising moderately in response to growing demand. "As businesses have boosted hiring efforts since the recession, PEOs have increasingly gained popularity as a means of managing human resources (HR) functions," says Hovanetz. Wages, the main input cost for PEOs, have been stable, contributing to a stable price trend that benefits buyers by allowing them to accurately budget for purchases. PEO rates are expected to accelerate in the three years to 2017 as the implementation of the Affordable Care Act (ACA) increases the complexity and cost of providing employees with insurance. As a result, many businesses will turn to providers of professional employer organization services to manage their HR operations.
Rising prices will harm buyer power somewhat; however, buyers will gain some leverage in negotiations as a result of low market share concentration and a wide availability of substitutes. Market fragmentation provides buyers with many suppliers to choose from, which spurs aggressive price competition. Major vendors in the market include ADP, Paychex and Insperity. In addition to many supplier choices, buyers can perform employee management tasks in-house by creating a HR department. Buyers can also use administrative services outsourcing, which allows companies to outsource HR functions while remaining the legal employer of their workers. The existence of these substitutes is favorable because they enable buyers to negotiate lower prices on a case-by-case basis by comparing the price of professional employer organization services with the prices of substitutes.
Growing demand has bolstered profit growth, thereby reducing suppliers' risk of bankruptcy. Supply chain risks are also fairly low because providers do not depend on many critical inputs that can disrupt the delivery of PEO services. Low financial risk in the PEO services market provides security for buyers expecting to form long-term relationships with PEO service providers. For more information, visit IBISWorld’s Professional Employer Organization Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to help buyers of professional employer organization (PEO) services. Companies use PEOs to outsource employee management responsibilities, which helps cut management costs and the complexity of providing services to employees. PEOs form a coemployment relationship with their clients where the PEO becomes the legal employer of the client’s employees and assumes various functions for the company. PEOs manage and administer four main functions: payroll, workers compensation, employee benefits and human resources.
Executive Summary
Pricing Environment
Price Fundamentals
Benchmark Price
Pricing Model
Price Drivers
Recent Price Trend
Price Forecast
Product Characteristics
Product Life Cycle
Total Cost of Ownership
Product Specialization
Substitute Goods
Regulation
Quality Control
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Imports
Competitive Environment
Market Share Concentration
Market Profitability
Switching Costs
Purchasing Process
Buying Basics
Buying Lead Time
Selection Process
Key RFP Elements
Negotiation Questions
Buyer Power Factors
Key Statistics
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.
Gavin Smith, IBISWorld Inc., +1 (310) 866-5042, [email protected]
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