If you use Xenium’s Integrated services, you know that you are saving quite a bit by allowing us to turnkey all of your company’s human resources needs and functions. Turns out that you are part of a very fast-growing approach to human resources management across the country. According to our friends at the National Association of Professional Employer Organizations, gross revenues for the PEO industry increased in 2007 to $61 billion, a 15 percent jump from 2006.
“A lot of small businesses owners have seen that outsourcing human resources chores and employee benefits is more efficient than trying to do it themselves,” says Milan P. Yager, executive vice president of the National Association of Professional Employer Organizations, the trade association. “But there are still lots of small businesses struggling with payrolls and workplace regulations that could be spending the time on making a profit and growing the business.”
- The industry is only about 20 years old, which means there are still hundreds of thousands of small businesses that haven’t yet hired a PEO — and plenty of room for this boom to continue.
- Small businesses outsource cumbersome and time-consuming human resources chores to PEOs, such as administering payroll or making workers comp payments. PEOs generally charge a percentage of the client’s payroll for these services.
- The average NAPEO member’s client has 19 employees, but increasingly, larger companies are signing up, ranging from accounting firms and high-tech companies to manufacturers and government.
- The trade association estimates gross revenues rose from $53 billion to $61 billion this year. (It defines gross revenues as total receipts, which can include billings for payroll and employment related taxes and insurance.)
- PEOs cover around 2 million workers, NAPEO estimates. The trade association has 400 PEO members operating in all 50 states, accounting for an astounding 90 percent of the industry’s revenues, Yager said.
- In this slowing economy, PEOs are a bargain; they can help companies hang on to valued employees, for instance, by helping owners achieve better benefits.
“The numbers make it very clear that PEOs have come into their own,” says Greg Slamowitz, co-chief executive officer of Ambrose Employer Group, a New York City PEO. “There’s no end in sight to the growth, because we offer the services that more and more small businesses can’t live without.”