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PEO Companies

PEO Companies

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Executive summary

The Professional Employer Organizations industry comprises organizations that specialize in providing human resource (HR) management and administrative services through a co-employment relationship. Industry participants are responsible for all aspects of employee management, including hiring, payroll and benefits administration. Over the five years to 2022, industry revenue has increased at an annualized rate of 7.0% to $ 283.6 billion, including an expected increase of 8.5% in 2022 alone. Strong growth in industry revenue is largely explained by a growing interest in PEO services. During the past five years, more businesses have used PEO services to reduce internal HR costs. Meanwhile, industry operators have continued to consolidate to achieve greater economies of scale, which enable PEOs to provide more competitive benefits packages and larger automation.
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Each report includes:

industry revenue;

industry profit;

industry margin;

industry employment;

industry major players;

industry key external drivers;

industry product & structure segmentation;

industry key trends;

industry Life Cycle;

industry Geographic Breakdown;

industry Key Success Factors;

industry Key statistics for previous years;

forecast of industry Key statistics for the next 5 years;

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Reference Wordlist

High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for new companies to enter an industry.

Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor. IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than $0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of capital for every $1 of labor.

The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e. year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving only the "real" growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using the US Bureau of Economic Analysis’ implicit GDP price deflator.

Spending on industry goods and services within the United States, regardless of their country of origin. It is derived by adding imports to industry revenue, and then subtracting exports.

Colloquial Terminology

An employment relationship where two or more companies share employer responsibilities with a common employee.

A form of compensation that may be mandated by law (e.g. social security or unemployment insurance) or voluntary (e.g. life insurance or retirement).

A term that is often used interchangeably to refer to PEO companies.

To procure goods or services under contract with an outside supplier.

An organization that provides integrated services to business owners by outsourcing workers for human resources, employee benefits, payroll, workers' compensation and other services.

A term that refers to employees who work for industry operators’ clients and are managed by professional employer organizations.


While industry revenue has expanded rapidly during the current period, the COVID-19 (coronavirus) pandemic decelerated revenue growth. Amid high unemployment and low corporate profit, revenue declined 1.2% in 2020. At the same time, the pandemic has presented industry operators with an opportunity to prove the value of PEO services. A high number of new pandemic-related regulations introduced in 2020 and 2021 has enabled PEOs to navigate their clients through the pandemic more smoothly. According to the National Association of Professional Employer Organizations (NAPEO), the percentage of PEO clients who permanently closed in 2020 was only 1.1%. In contrast, this share for similar businesses that did not use PEO services and closed permanently was 2.6%.

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