{"id":344,"date":"2006-03-17T01:00:42","date_gmt":"2006-03-17T09:00:42","guid":{"rendered":"https:\/\/systematichr.com\/?p=344"},"modified":"2006-03-17T23:27:37","modified_gmt":"2006-03-18T07:27:37","slug":"peo-vs-hro-again","status":"publish","type":"post","link":"https:\/\/systematichr.com\/?p=344","title":{"rendered":"PEO vs. HRO again."},"content":{"rendered":"<p><span style=\"font-size: 10pt; font-family: Arial\">I got an e-mail from a reader about PEO v HRO:<\/span><\/p>\n<blockquote><p><span style=\"font-size: 10pt; font-family: Arial\">What is your advice to a company (100-1000) on what TYPE of outsourcing would be best for their company? Basically, PEO VS BPO. Pretty broad but there are all kinds of companies trying to figure out the breaking point.<\/span><\/p><\/blockquote>\n<p><span id=\"q_1099ab503de9ae2c_1\" \/><span class=\"q\" \/><span style=\"font-size: 10pt; font-family: Arial\">Rather than talking about BPO, I&#8217;m going to talk about HRO. The reason for this is that BPO exists &#8220;down market&#8221; but I don&#8217;t really believe true HRO exists below the 5000 employee space. ADP, Ceridian and now Accenture are all chasing the mid-market HRO space with ADP in the clear lead (in my opinion). I think ADP calls their offering Comprehensive Outsourcing Services (or <\/span><span class=\"q\" \/><span style=\"font-size: 10pt; font-family: Arial\">COS<\/span><span class=\"q\" \/><span style=\"font-size: 10pt; font-family: Arial\">) and has sold more HRO deals than anyone else save Hewitt Associates. If I&#8217;m right, ADP&#8217;s COS sweet spot is in the 5-10K employee market.<\/span><span style=\"font-size: 10pt; font-family: Arial\" \/><\/p>\n<p><span style=\"font-size: 10pt; font-family: Arial\"><script>  D([\"mb\",\"\\n\n\\nAccenture is now in the mid market space and will be a real threat to ADP, but\\nthere are more than enough clients to go around.\n\\n\n\\nDifferences between a PEO and HRO?  According to PEO.com, here\\'s what a\\nPEO is:  <a href\\u003d\\\"http:\/\/www.peo.com\/new_peo\/understanding_peos.asp\\\" target\\u003d\\\"_blank\\\" onclick\\u003d\\\"return top.js.OpenExtLink(window,event,this)\\\">http:\/\/www.peo.com\/new_peo<wbr>\/understanding_peos.asp<\/wbr><\/a>\n\\n\n\\nAlternatively, an HRO provides much more extensive services.  For example,\\nnot only are we talking HR, payroll, benefit, compliance services, but we\\'re\\ntalking about systems, process and call center of a totally different\\nscale.  HRO will provide best of breed applications for case management\\nand telephony, talent acquisition, talent management, HRMS, payroll, learning,\\nbusiness analytics, etc...  Just to give you an idea of a single\\ncomponent, recruiting alone generally will cost $1M to implement.  That\\ndoes not include license fees or any service.  Recruiting outsourcing (RPO\\nis a component of HRO) can easily run into the $M\\'s each year just to have your\\noutsourcer recruit for you.\n\\n\n\\nThere is a HUGE gap between what HRO is versus PEO.  However, mid-market\\nHRO is getting a bit more reasonable.  ADP\\'s offerings will come in\\nsomewhere between $10-100M over a 5 year contract, unlike $100M to $1B for\\nlarge market contracts from Accenture, Convergys and Hewitt.  But ADP\\'s\\nmid-market HRO offering is only for payroll, benefits and HRMS because ADP\\ndoesn\\'t have the breadth for the entire talent management suite.\n\\n\n\\nSo yes - I believe the gap between HRO and PEO is getting steadily smaller, but\\nfor now, I doubt many 1000 employee companies have the type of cash to get the\\nhigher levels of service and applications associated with HRO.  Perhaps\\nPEO is also getting more sophisticated, but honestly I haven\\'t really watched\\nthe PEO market.\n\\n\n\\nJust my opinion.  Thanks for asking and thanks for reading.  Feel\\nfree to respond if you think I\\'m off track.  I definitely welcome the\\ndebate.\n\\n\n\",1] );  \/\/--> <\/script>Ceridian obviously plays in the same space, but Ceridian never seems to execute complex deals as well as ADP. Accenture is now in the mid market space and will be a real threat to ADP, but there are more than enough clients to go around.<\/span><\/p>\n<p><span style=\"font-size: 10pt; font-family: Arial\">An HRO provides much more extensive services. For example, not only are we talking HR, payroll, benefit, compliance services, but we&#8217;re talking about systems, process and call center of a totally different scale. HRO will provide best of breed applications for case management and telephony, talent acquisition, talent management, HRMS, payroll, learning, business analytics, etc&#8230; Just to give you an idea of a single component, recruiting alone generally will cost $1M to implement. That does not include license fees or any service. Recruiting outsourcing (RPO is a component of HRO) can easily run into the $M&#8217;s each year just to have your outsourcer recruit for you.<\/span><\/p>\n<p><span id=\"q_1099ab503de9ae2c_1\" \/><span class=\"q\" \/><span style=\"font-size: 10pt; font-family: Arial\">What&#8217;s PEO? according to PEO.com<\/span><span style=\"font-size: 10pt; font-family: Arial\" \/><\/p>\n<blockquote><p><span style=\"font-size: 10pt; font-family: Arial; color: black\">A Professional Employer Organization, or PEO, becomes your co-employer to relieve you of many Employee Administration duties. Depending on the PEO you choose, the PEO can take on the responsibility of handling everything from payroll and tax filings, to workers compensation, labor compliance, risk management, employee files, benefit administration and more. Basically your PEO takes care of the administrative side of employment and allows you to focus on the day-to-day tasks involved in maintaining and growing your business.<\/span> ((<span style=\"font-size: 10pt; font-family: Arial; color: black\">Retrieved from http:\/\/www.peo.com on February 24, 2006.<\/span>))<span id=\"q_1099ab503de9ae2c_1\" \/><span style=\"font-size: 10pt; font-family: Arial\" \/><\/p><\/blockquote>\n<p><span style=\"font-size: 10pt; font-family: Arial\">What&#8217;s the functional gap? A PEO is basically a way to lease employees to another entity&#8217;s FEIN. This allows the employer to cost share with other small organizations. For example, it would be advantageous to have a larger group when negotiating benefit plan costs. However, there is a HUGE cost gap between what HRO is versus PEO. However, mid-market HRO is getting a bit more reasonable. ADP&#8217;s offerings will come in somewhere between $10-100M over a 5 year contract, unlike $100M to $1B for large market contracts from Accenture, Convergys and Hewitt. These higher costs are partly due to larger organizational (and headcount) sizes, but also because of the much better technology HRO clients get.<\/span><\/p>\n<p><span style=\"font-size: 10pt; font-family: Arial\">I believe the gap between HRO and PEO is getting steadily smaller, but for now, I doubt many 1000 employee companies have the type of cash to get the higher levels of service and applications associated with HRO. Perhaps PEO is also getting more sophisticated, but honestly I haven&#8217;t really watched the PEO market.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>I got an e-mail from a reader about PEO v HRO: What is your advice to a company (100-1000) on what TYPE of outsourcing would be best for their company? Basically, PEO VS BPO. Pretty broad but there are all&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","footnotes":""},"categories":[2,17,31],"tags":[],"class_list":["post-344","post","type-post","status-publish","format-standard","hentry","category-hr-technology","category-hro","category-outsourcing"],"_links":{"self":[{"href":"https:\/\/systematichr.com\/index.php?rest_route=\/wp\/v2\/posts\/344","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/systematichr.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/systematichr.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/systematichr.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/systematichr.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=344"}],"version-history":[{"count":0,"href":"https:\/\/systematichr.com\/index.php?rest_route=\/wp\/v2\/posts\/344\/revisions"}],"wp:attachment":[{"href":"https:\/\/systematichr.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=344"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/systematichr.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=344"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/systematichr.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=344"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}