93% of PEOs Anticipate Worksite Employee Growth

Jun 24, 2019
| Jan Kaupas
PEOs Expect WSE Growth

A trend that has continued over the last decade, but especially within the last few years, has been the growth of professional employer organizations (PEO).

Various studies and reports back up what many in the industry have seen. Just this past September, the National Association of Professional Employer Organizations (NAPEO) revealed that there were 3.7 million worksite employees (WSEs) employed by PEOs in the United States.

Additionally, the number of WSEs employed by PEOs grew at a compounded annual rate of 8.3%. This percentage growth in the PEO industry is 14 times higher than that of employment in the United States economy as a whole.

Now, NAPEO has released their first quarterly Pulse Survey of 2019, providing another look into the current state of the industry.
 

NAPEO 2019 Q1 Pulse Survey

The Q1 Quarterly Pulse Survey was just recently released by NAPEO. Taken by 30 PEOs, it provides insights into several important metrics.

First, the survey showed that the average PEO client has 22 worksite employees. This is on par with numbers that were reported throughout 2018.

Additionally, typical PEOs have 7 clients per full-time employee and 163 worksite employees per full-time employees. Both full-time employee counts do not include sales team members of the PEO.

Next, the survey compared several key metrics to how they fared in Q1 of 2018. 50% of PEOs said their revenue increased somewhat, while 16.7% increased significantly. In total, 66.7% of PEOs saw revenue increases over the last year. Meanwhile, just 6.7% said their revenue decreased somewhat.
 

PEO Data Q1 2019 Compared to Q1 2018

Revenue wasn’t the only data point researched for the Quarterly Pulse Survey. The results show that 46.4% of PEOs said their average annual wage per WSE increased somewhat, while 46.4% said that this number stayed the same in Q1 2019 compared to Q1 2018.

For average number of WSEs per client company, 50% said this metric stayed the same. 36.7% said it increased somewhat, while only 6.7% saw a slight decrease.

53.3% of PEOs said their gross profit increased from Q1 2019 compared to Q1 2018, with only 10% saying this decreased.

For operating income, 62.1% of PEOs said this number increased – 41.4% said somewhat while 20.7% said it increased significantly.

Next, the survey asked PEOs about the number of internal employees including salespeople. 46.7% said this number stayed the same, 30% said it increased, and 23.3% said it somewhat decreased.

43.3% of PEOs said their number of clients increased somewhat and 36.7% said that it stayed about the same.

Last, when asked about worksite employee projections, 93.1% of PEOs anticipate the number of WSEs to increase over the next 12 months.
 

PEO Growth Doesn’t Appear to be Slowing Down

Reports conducted and published by NAPEO continue to show that the PEO industry is showing no signs of slowing down.

Whether it’s the increased awareness, the business benefits that come from working with a PEO, or the fact that many common PEO myths have been debunked, it appears there is even further growth on the horizon.

As PEOs have grown in demand by business owners, so too have the number of myths that exist about them. But are they true? Our latest eBook explores 12 of the most common PEO myths and explains why they have been busted!

12 Common PEO Myths
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