The competitive landscape for Professional Employer Organizations (PEOs), which provide outsourced human resources to companies across the nation, may be starting to tilt in favor of the largest PEOs, according to a new report by Staffing Industry Analysts, the premier provider of market intelligence about the contingent workforce.
The largest PEOs are gaining a competitive advantage because they are lowering costs due to increased economies of scale, are developing a well-diversified risk pool of employees who receive benefits, and are continuing to invest in technology. Some larger PEOs also are enjoying a sales advantage over smaller companies because they can market PEO services to established customers that outsource their payroll.
Additionally, the report found that investment capital continues to flow to the strongest PEOs, thus enhancing their ability to dominate what has been a fragmented market. In the past four years, about 10 smaller PEOs were acquired by larger competitors. Three acquisitions were done with
investments from private equity firms.
Helios HR, LLC, a leading provider of outsourced human resource services and consulting, has acquired Talent Advantage (HR Advantage, LLC). The transaction adds expanded technology and recruiting capabilities to Helios HR’s existing portfolio of services.
The combined organization will be one of the largest HR outsourcing and consulting firms in the Washington metropolitan region. All clients will benefit from enhanced service offerings that these two market experts mutually deliver.
"The synergies that we share as a combined organization strengthen our position as the preferred HR consulting services provider for small to mid-size businesses," said Kathy Albarado, president of Helios HR. "The acquisition not only results in expanded services and delivery execution to our clients but also enhances their ability to create a culture that attracts, retains, and engages an exceptional workforce, enabling them to achieve their business goals."
As recently as two years ago, all new HRO trends came from the U.S. But fast-forward to November 2006, that will forever mark the date when the big HR transformation trends started on the east side of the Atlantic. Here are the four trends that made headlines from this year’s HRO World Europe Conference.
When we started HRO World Europe in November 2004, we felt just a slight bit imperialistic. Sure, we featured the big HRO deals from Great Britain—BP and BT. And we had our local partners, our friends from SharedXpertise in Brussels. But all the big trends, topics, and to-do’s were American.
One mid-market provider offers up his observations about the needs of the mid-market buyers, whose ranks is experiencing explosive growth this year. With a different set of needs and expectations than enterprise practitioners, mid-market buyers are increasingly embracing HRO.
Since our inception more than eight years ago, HR XCEL’s target market has been mid-market companies between 1,000 and 10,000 employees. Back then, there was virtually no competition in that space because other HRO providers didn’t think they could profitably provide a service with lower-cost service delivery and a higher level of expertise better than a full-time staffer could provide to companies of that size.
The Fifth annual largest and most authoritative listing of HR service providers.
In today’s HRO market, there are lots of vendors to choose from, and the HRO Today 2007 Resource Guide is solid proof of this. With more than 1,000 providers serving 18 categories, HR professionals have a variety of solutions that meet their functional, cost, and geographical needs. The selection process can be overwhelming indeed.
To make outsourcing truly effective for ideal image, the hair-removal services company needed a razor-sharp provider that can accommodate its rapid growth.
Tampa, FL-based Ideal Image, founded in 2001, is a national laser hair removal clinic that has expanded to more than 50 sites across the U.S., with additional international locations. When I joined Ideal Image as CEO in 2004, I knew our growth potential was significant.
Why and how PEOs might win the race for the mid-market despite the resources and established presence of enterprise-wide HRO providers.
It should be obvious why PEOs ought to expand their service lines and reach outside the boundaries of the co-employer model: the market for the BPO model is gargantuan.
ROSELAND, New Jersey – August 17, 2006 -The Employer Services Division of Automatic Data Processing, Inc. (NYSE:ADP), today announced it has entered into an agreement to acquire Employease, Inc. a leading provider of web-based solutions and outsourcing options for HR and benefits professionals. The agreement follows a successful partnership between Employease and ADP Major Accounts Services, part of ADP Employer Services. The acquisition is expected to further expand ADP’s presence within the mid-market to fulfill a growing demand for Software-as-a-Service (SaaS) solutions.
In October 2004, ADP Major Accounts Services and Employease entered into a strategic partnership to provide medium-sized businesses with an integrated suite of web-based, hosted payroll, human resources, and benefit administration service solutions. Since then, ADP has sold, implemented and serviced Employease Network solutions under the brand name, ADP HR/Benefits Solutions.
"This acquisition will build on our combined strengths and business momentum," said Vince Coppola, President, ADP Major Accounts Services. "Combining Employease’s top-rated web-based business solutions with ADP’s industry leading payroll, HR, and benefit services enables our clients to address many of today’s most critical business issues, such as rising benefits costs, compliance and employee retention. We are excited to welcome Employease into the ADP family, and proactively meet the rapidly growing demand for hosted, on-demand services."
Four waves of industry evolution, the coming era of consolidation, and implications for your business. A look at the dynamic PEO marketplace.
More than a few heads turned in the week following Valentine’s Day this year, and it wasn’t just from the roses. On February 21, Nautic Partners announced that it had acquired Oasis Outsourcing, the largest privately-held professional employer organization (PEO) in the country. This announcement put into the forefront the quiet but growing consolidation wave beginning to sweep PEOs and the HRO sector.
Thousands gather annually in New York in the spring to get more than an academic discussion of outsourcing at NY HR Week. They get down and dirty with buyers, providers, and other industry thought leaders in an all-out, two-day HRO festival.
How do you capture and keep the attention of some 4,000 high-level HR professionals for two days? Try sending them to HRO World as this year’s NY HR Week, which encompasses HRO World, drew a record number of attendees and exhibitors.
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