With the market poised to record a CAGR of approximately 6% by 2020, HR benefits and administration services are in demand across the globe. With the Americas leading the pack, the growth of the HR benefits and administration services market is largely driven by reforms and complexities in the healthcare sector. These services essentially involve the formulation, maintenance and management of employee benefits. Employee vacation and sick leave, individual retirement accounts, pension plans, medical insurance and maternity leave are some of the main features of HR benefits and administration services.
Organizations, regardless of their business vertical or size, are focusing on retaining and attracting talent. A survey conducted in India in 2015 revealed that the major focus of more than 50% of companies is on employee retention. Better employee retention is achieved through the use of technology in order to improve benefit strategies and increase competitiveness in the job market. Today, many sectors are experiencing a severe lack of a skilled workforce, and those who are eligible for skilled work often seek a combination of an attractive salary package and good employee benefits. This in turn is fueling the growth of the HR benefits and administration services industry.
Through analysis of the growth of this industry in the Americas and APAC, it is clear that the key driving force is the establishment of various healthcare reforms, which require revamping of the entire employee benefits structure. For example: the implementation of the Cadillac tax plan in the US has imposed an annual 40% excise tax on employer-sponsored annual premium plans. These reforms have driven employers to comply with various legislative requirements, control costs, engage employees by providing inclusive communication platforms, and provide affordable and quality healthcare plans. This has in turn prompted HR benefits and administration service providers to create solutions that help reduce the complexity involved in planning and communication programs. They achieve this by focusing on providing employees with user-friendly interfaces such as web portals and mobile applications to meet their needs.
Global HR benefits and administration services industry category spend by geography 2015 (US$6.68 billion)
Source: Technavio
Service providers are also adopting various methods such as employee communication services, data analytics, HR service centers, and total absence management to differentiate themselves. Moreover, HR benefits and administration service providers are focusing on understanding the business requirements of employees through a well-documented service level agreement.
Technological innovations such as mobile HR solutions, single web-based applications, decision support tools and data privacy and protection are other factors that have had a major influence on global HR benefits and administration services. All of these developments are evidence that these services play a vital role in improving the overall function of an organization in terms of retention and attracting new employees.
Looking for more data and analysis on the HR benefits and administration services market?
You might also like to read:
The 2016 Procurement Market Intelligence Report on HR Health Administration Services in the US
