NAPEO — isolved®, the most-trusted human capital management (HCM) partner, announced the findings from its second-annual survey of administrative service organization (ASO), professional employer organization (PEO) and payroll service provider (PSP) firms. The findings provide a comprehensive snapshot of how service bureaus are managing client relationships, leveraging HR technology and addressing workforce dynamics.
The report, Pendulum of Opportunity: A Research Study on ASO, PEO and PSP Expansion and Evolution Amid Dramatic Employer-Employee Dynamics, revealed that 80% of ASOs, PEOs, and PSPs are refraining from offering new solutions their HCM vendor provides, despite clear client demand. While 54% of ASOs, PEOs and PSPs offer standard human resource (HR) analytics, for example, only 32% provide predictive analytics and benchmark insights.
Investing in broader analytics capabilities provides incredible opportunity for service bureaus as HR analytics is the number-one area of investment for HR leaders this year. Service bureaus, however, have their reasonings for holding back including, in order: (1) lack of confidence in early-stage product releases, (2) lack of client demand and (3) complexity of implementation. When looking at the difference between ASO and PEO responses, 90% of ASOs are holding back on new offerings their HCM vendor releases while only 67% of PEOs are doing the same.
“We are in a volatile world of work, and PEOs, ASOs and PSPs must evolve rapidly to stay relevant,” said Pragya Gupta, chief product and technology officer at isolved. “Our research shows a growing disconnect between employers and employees. HR needs support to stabilize dramatic changes and find middle ground. They are looking to create employee experiences that matter for both the employer and the employee and ASO, PEO and PSP firms are uniquely positioned to help them with that. Like HR, benefits and payroll professionals need access to the solution set that will best help them, ASO, PEO and PSP companies need a partner that’s going to inspire confidence in their offerings.”
In addition to holding back on new products, a majority of respondents also said they have no plans to add new managed or professional services this year — creating another potential competitive advantage for ASOs, PEOs and PSPs that are willing to expand their offerings. The majority, however, are willing to partner with their HCM vendor for services. Trust is critical and lacking in many partnerships. Only 14% of respondents are very confident in the level of support their primary HCM technology vendor offers.
Gupta added, “The top business concern of all service bureaus surveyed is acquiring new clients. To seize the opportunity, partnering with a vendor that provides top-notch support, extensive sales, marketing and implementation resources, along with a supportive community of peers, will be key. This collaboration will enable them to expand their capabilities, stay competitive, and drive mutual growth in the ever-changing workplace.”
Key findings include:
- The top-three technology offerings service bureaus are most interested in adding for their clients are, in order: (1) safety, risk and compliance tools, (2) AI-based virtual assistants and (3) nothing (i.e., “I don’t believe any of these offerings are of interest to my clients).
- The top-three factors that are driving service bureaus’ decisions to maintain their current HCM technology partner are, in order: (1) No pressing need to switch, (2) vendor relationship and (3) the risk of disruption to operations.
- The top way bureaus help address the hesitation to change business models and adopt new HR technology for clients is by gradually introducing changes to minimize disruption, followed by providing comprehensive training and support.
- Only 30% of service bureau stakeholders surveyed expressed they were very confident in their primary HCM technology partner’s ability to prevent security breaches and safeguard sensitive employee and client data.
