India professional employer organizations (PEOs) market to register promising growth: Expected to Reach USD 2,710.5 million in 2027

Published | 15 July 2021

A study recently conducted by the strategic consulting and market research firm BlueWeave Consulting, revealed that the India professional employer organizations (PEOs) market reached USD 1,232.8 million in 2020 and is further projected to reach USD 2,710.5 million by 2027, growing at a CAGR of 12.4% during 2021-2027 (forecast period). The India professional employer organizations (PEOs) market has witnessed significant growth due to rising rural to urban migration, rapid urbanization rates, rising investments in the digital infrastructure, and rising FDI inflows from major companies around the globe. Many multi-national companies have started leveraging India professional employer organizations (PEOs) services for reducing the pressure arising from overwhelming response on applications posted online. Additionally, professional employer organizations keep track of changing rules, regulations, and labor laws across various industries, which could prove time-consuming for larger firms, These are the factors driving the growth of the India professional employer organizations (PEOs) market.

Increasing demand for PEOs software due to work-from-home environment is augmenting the growth of the India professional employer organizations (PEOs) market

The COVID-19 had disrupted the working model of almost all companies around the world. The Covid-19 outbreak forced a large number of companies to embrace the trend of working from home to prevent the work environment from getting exacerbated and impacted severely. Additionally, this also shifted the recruitment process from in-office interviews to online interviews and assessments. It had, however, put greater pressure on firms, which lacked proper infrastructure for assessing a candidate's performance. These companies took advantage of the prolonged lockdown when they made the switch to PEOs to reduce their workload. Many large corporations have already moved their operations online permanently, indicating that the present situation may persist for a long time. Consequently, it is driving the growth of the India professional employer organizations (PEOs) market since these organizations are better able to manage employees, their benefits, pay, and other HR-related works, which has allowed rising growth potential for the Indian professional employer organizations (PEOs) market.

The rising demand for enhancing cost savings is driving the growth of the India professional employer organizations (PEOs) market

The declining growth of India's economy over the past few years prompted many small and medium-sized enterprises (SMEs) to cut costs through PEOs, which aided in employee handling, employee compensation, HR services, and in many other ways. SMEs have not only benefited from it, but they have also saved more than expected. Professional employer organizations (PEOs) manage multiple tasks on behalf of employers in addition to saving both time and money, thus contributing to the growth of the Indian market for PEOs. Furthermore, PEOs have proven beneficial for small employers who lack the expertise or digital resources to manage their employment functions and are in need of efficient and time-saving solutions for tasks like payroll, HR Information Systems (HRIS) and human resources management. All of these factors together have proven pivotal for the growth of the India professional employer organizations (PEOs) market.

Major growth in demand arising from the cloud-based type sub-segment in the India professional employer organizations (PEOs) market

Based on types, the India professional employer organizations (PEOs) market is segmented into on-premises and cloud-based. The cloud-based segment held the largest share in the India professional employer organizations (PEOs) market in 2020. The online segment leverages software-based management programs, wherein the PEOs and their client organizations maintain records for job candidates. Additionally, by leveraging the on-premises or web-based channel, PEOs perform hiring and administrative activities besides offering employee benefits and compensation and various other services. In contrast to this, the cloud-based segment offers the same advantages while taking into account the rising number of applications received every day. Additionally, the cloud-based solutions provided by PEOs help increase the platform's scalability, allowing it to process a greater number of applications than on-premises based apps. This benefits the growth of the India professional employer organizations (PEOs) market.

SMEs application segment is augmenting the growth prospects for the India professional employer organizations (PEOs) market

Among applications, the India professional employer organizations (PEOs) market is grouped into SME’s (Small and medium enterprises) and large enterprises. The SMEs segment accounted for the largest share in the India professional employer organizations (PEOs) market in 2020. Additionally, the large enterprises segment is projected to record a healthy CAGR over the upcoming years. Because of the existence of substantial corporate offices and rising digital infrastructure across the Northern parts of India, many people have been able to apply for more jobs with the world's leading firms.

Corporate giants are struggling to handle the incessant number of applications received every day, which proves to be time-consuming and increases the need for more resources to find the right candidate for the role, which may increase the operational costs of the organization. This has enabled PEOs to take advantage of the increasing market potential for employee management services, and this has greatly assisted them in reducing the burden on their human resource departments. Thus, many large corporations are now turning to PEOs for identifying the filtered pool of candidates eligible for the role offered by an organization. It is thereby positively impacting the growth of the India professional employer organizations (PEOs) market.

India Professional Employer Organizations (PEOs) Market: Regional Insights

Based on regions, the India professional employer organizations (PEOs) market is divided into North India, East India, West India, and South India. While the South Indian region acquired the largest share in the market in 2020, the Northern region of India is anticipated to showcase the fastest CAGR during the forecast period (2021-2027). As per the NCP report for 2019, the Northern region of India has the most residents of all regions in India, totaling over 421.9 million residents, which indicates that the majority of citizens are either looking for work or already working in one of those regions. The region's population estimates have contributed to an increase in ineligible candidate applications, which is severely impacting the management of applications for human resources of an organization. Furthermore, the presence of international companies and the development of infrastructure for corporate spaces in the region are expected to drive the demand for employment in the future, resulting in positive impacts on the demand for PEOs in the region. Consequently, this has been generating a demand for PEOs, driving up the growth of the professional employer organizations (PEOs) market in India.

India Professional Employer Organizations (PEOs) Market - COVID-19 Impact Analysis

The COVID-19 pandemic had little to no impact on the growth of the India professional employer organizations (PEOs) market as the market remained steady owing to the dynamic shifts in the working culture of various organizations. Companies and SMEs, who employed PEO services were able to effectively minimize the effects of the uncertainty caused by the pandemic. The companies who opted for such services were able to outperform the companies, who do not employ PEO services. PEOs helped companies handle the situation efficiently without laying off employees and pay employees' compensation from the savings registered by the employment of PEO services.

As industries and offices started reopening towards the end of 2020, the India PEO market started recovering from the effects of the pandemic, however, the second wave of the COVID-19 halted the recovery of the market in 2021. The forecast of the third wave of the COVID-19 towards the end of 2021 is further expected to affect the recovery of the market. With companies and start-ups opting for work from home strategies and other companies realizing the benefits of employing PEO services, the India professional employer organizations (PEOs) market is expected to show significant recovery in 2022 and upcoming years.

The leading players in the India professional employer organizations (PEOs) market include NewHorizons Global Partners, Global PEO services LLC, Sky Executive, ADP TotalSource, Papaya Global, Velocity Global, Paychex, Synergy HR, OneSource Business Solutions, INS Global, and Husys Ltd, and other prominent players. These companies have constantly been looking to grow their presence in the India professional employer organizations (PEOs) market by helping employers outsource their human resource functions, such as employee benefits, compensation and payroll administration, workers' compensation, and employment taxes.

In April 2021, Velocity Global announced its acquisition of iWorkGlobal, a wholly owned subsidiary of Gary D. Nelson and Associates, and a USD 100 million growth investment from private equity firm FFL Partners. The combined company, under the Velocity Global name, creates the largest U.S. domestic and global Employer of Record (EoR) and accelerates the future of remote work for companies around the globe.

In March 2021, Papaya Global, a start-up that provides cloud-based payroll and hiring, on boarding and compliance services across 140 countries for organizations that employ full-time, part-time and contract workers outside of their home country, picked up USD 100 million in funding and has confirmed that its valuation is now over USD 1 billion.

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The in-depth analysis of the report provides information about growth potential, upcoming trends, and statistics of India professional employer organizations (PEOs) market size & forecast. The report promises to provide recent technology trends of the India professional employer organizations (PEOs) market and industry insights to help decision-makers make sound strategic decisions. Furthermore, the report also analyses the growth drivers, challenges and competitive dynamics of the India professional employer organizations (PEOs) market.

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