As an insurance broker, CPA, or trusted advisor, you've probably seen the warning signs: a client overwhelmed by payroll, frustrated with benefits costs, or struggling to keep employees. The challenge is knowing when to recommend additional support, and whether a PEO belongs in that conversation.
The latest PEO statistics offer useful benchmarks for making those decisions. We'll explore:
First, let's see how much traction the PEO model has gained.
If you're considering recommending PEO services to your clients, industry adoption statistics offer a useful starting point. And the numbers suggest that PEOs are anything but a fringe HR experiment.
According to the 2026 PEO Industry Footprint report from the National Association of Professional Employer Organizations (NAPEO), approximately 233,000 U.S. businesses used PEOs at the end of 2025, covering 5.4 million worksite employees. That's a substantial footprint for an industry built largely around smaller employers.
NAPEO estimates that 14% of U.S. businesses with 20 to 499 employees use a PEO. And with an average client size of approximately 23 employees, PEO services clearly aren't reserved for companies with sprawling HR departments.
From 2008 through 2025, PEO worksite employment grew at a compound annual rate of 7.2%, compared with 0.7% for total U.S. employment. That gap signals sustained adoption, though it doesn't tell us whether a particular business will benefit.
The takeaway for brokers and advisors? PEOs are already an established option for smaller employers. The next question is whether the financial benefits make sense for your clients.
When a client asks whether a PEO is worth the money, a single ROI percentage won't tell the whole story. But industry research can give you a useful starting point for discussing the financial tradeoffs.
A 2019 NAPEO-commissioned study estimated an average 27.2% annual return on investment from HR-related cost savings. In the researchers' model, every $1,000 in PEO fees corresponded to approximately $1,272 in savings, or $272 in net savings.
That's an estimated return relative to PEO costs, not a 27.2% reduction in a company's entire budget.
The researchers examined five expense categories:
Internal HR personnel costs and health benefits accounted for the largest estimated savings. But the figures are not a promise: the study is several years old, relied on a relatively small sample, and can't predict any individual business's results.
Start by helping clients identify what they already spend on payroll providers, benefits administration, HR consultants, and internal administrative time. Compare those expenses against a PEO proposal, paying attention to included services and responsibilities that remain in-house.
Of course, the financial case isn't the whole story. What about the impact on business growth and employee retention?
Cost savings aren't the only reason to consider recommending a PEO. Research also suggests that businesses using PEOs experience stronger growth and better employee retention, two outcomes that can have a significant impact on your clients' long-term success.
In a 2024 NAPEO study, PEO clients experienced 4.3% employment growth between January 2023 and January 2024, compared with 1.9% for U.S. businesses weighted to match their size distribution. That's more than twice the growth rate, although the measure is employee headcount, not sales or profit.
The same study found that PEO clients had an annualized turnover rate of 50.4%, versus 57.6% for an adjusted comparison group. That's a 12% lower turnover rate in relative terms.
For a small business, even a modest improvement in retention can mean fewer recruiting scrambles, less time spent training replacements, and more experienced employees sticking around. Strategies like structured employee development can also help businesses work toward better retention.
The research also found average annual business failure rates of 4.98% for PEO clients and 7.50% for matched non-clients from 2020 through 2023.
These findings don't guarantee better outcomes for your clients, but they offer useful context when evaluating their workforce challenges. The key is recognizing when additional HR support might be worth exploring.
PEO statistics make a compelling case for considering the model, but they can't tell you which clients need one. That's where your knowledge of their business comes in.
Watch for recurring challenges that stretch an SMB's resources:
These are reasons to explore a PEO partnership, not proof that one will solve every problem.
Before recommending a provider, consider:
Ultimately, the goal isn't simply to introduce another vendor. It's to connect your clients with the right expertise while reinforcing your own value as a trusted advisor.
PEO statistics point to growing adoption, potential cost savings, and encouraging workforce outcomes. For brokers, CPAs, and trusted advisors, understanding these trends means being better equipped to recognize opportunities, answer client questions, and recommend valuable solutions.
With more than 8,200 PEO clients nationwide, BBSI brings extensive experience supporting businesses with HR, payroll, benefits, and risk management. Its referral partner program helps advisors connect clients with additional workforce expertise while strengthening their own client relationships.
Ready to turn industry insights into opportunities for your clients? Contact your local BBSI representative to explore how you can deliver more value together.
The latest PEO statistics reveal how small businesses are using professional employer organizations to manage HR costs, support employee retention, and pursue long-term growth. Explore industry adoption trends, research-backed ROI estimates, and the key factors business owners should consider when choosing a PEO partner.