Are PEOs turning out to be a virtually recession-proof business model? A prominent association of Professional Employer Organizations credits the soundness of its $68 billion industry to an economy that is forcing more small businesses to outsource services, in order to save money.
“The most essential thing for businesses to drive revenue is for the owner to get back into the core of how his business makes money,” said Milan P. Yager, executive vice president of the National Association of Professional Employer Organizations. “To do that the business is outsourcing its back office functions to PEOs.”
PEOs are taking on more clients who are outsourcing human resources, payroll, employee benefits and workers’ compensation.
However, Yager says the PEO industry is not growing as quickly because many clients have fewer employees.
“A lot of PEOs have reported an increase in sales, but the industry is not growing nearly as fast because the sales that we’re having have fewer employees,” Yager said.
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