PEO Consultants

Stats & Facts on Why Outsourcing HR to a PEO Benefits Your Bottom Line

By Chris PetersonFirst published Updated

The short answer

Industry studies find PEO clients grow faster, keep employees longer and are less likely to fail. In NAPEO's 2024 study, PEO clients grew 4.3% a year against about 1.9% for similar companies, had 12% lower turnover and were 50% less likely to go out of business; NAPEO, the PEO industry association, sponsored the research.

Running a business is hard. Competition is fierce, regulation can be stifling, and hiring and keeping good people is a constant challenge. Most owners are always looking for an edge, and co-employment with a professional employer organization (PEO) is one many small businesses use for time and cost savings.

What do the studies say about PEO clients?

Here are the main findings from studies NAPEO commissioned from economists Laurie Bassi and Dan McMurrer of McBassi & Company:

  • PEO clients grew 4.3% a year, against about 1.9% for a comparison group, more than twice as fast (NAPEO, 2024; data from January 2023 to January 2024).
  • Employee turnover was 12% lower: 50.4% a year for PEO clients against 57.6% (NAPEO, 2024).
  • PEO clients were 50% less likely to go out of business (NAPEO, 2024).
  • Cost savings alone returned 27.2% a year on what clients paid the PEO (NAPEO, 2019, using 2018 data).
  • Average savings were $1,775 per employee a year against an average PEO cost of $1,395, with 54% of the savings coming from internal HR staff time and 37% from health benefits (NAPEO, 2019, using 2018 data).

These studies were sponsored by NAPEO, the PEO industry's trade association. Averages hide a wide range: by the study's own math, half of clients fall below the average savings.

Who uses PEOs?

  • 502 PEOs served about 233,000 businesses and 5.4 million worksite employees at the end of 2025 (NAPEO, 2026).
  • About one in seven U.S. businesses with 20 to 499 employees uses a PEO (NAPEO, 2026).
  • More than a third of PEO clients have fewer than 10 employees (NAPEO, 2026).

What do employees get?

Through a PEO, employees of small companies can get benefits typically offered by large employers: 401(k) plans, health, dental and life insurance, and dependent care.

A PEO isn't right for every company. But co-employment gives many small businesses advantages that show up in growth, retention and the owner's time, which is why so many look.