29 August, 2019
RALEIGH, North Carolina, August 29, 2019 - The global employee benefits management market is currently growing at a CAGR of 5 - 6 percent, according to Beroe Inc., a procurement intelligence firm. The global BAO (benefits administration outsourcing) market has increased by 6.1 percent mainly due to the scalability of the suppliers who have been able to adapt to the changing business needs.
The majority of the buyers in APAC and the Middle East have started spending about 5 - 7 percent of the total capital spent on technology. This is done to gain higher employee engagement and higher enrollment further leading to increased cost savings.
Beroe, which is based in North Carolina, further stated that procurement experts can access this report on its recently launched market intelligence platform Beroe LiVE: live.beroeinc.com
Major growth drivers in the North American BAO market include the introduction of the Healthcare Reform Act by the Obama Administration and the rising cost of drugs. Some of the growth drivers with a medium impact include web-based decision-making analytics tools and the emergence of healthcare exchange offered by mature BAO providers.
Global benefits service providers are focusing on entering emerging markets such as APAC and Eastern Europe by partnering with regional and local service providers. Moreover, as an initiative to consolidate spend on employee benefits, Fortune 500 companies are entering into multi-country BAO engagements with global service providers.
The major cost factors involving a global BAO model is the outsourcing cost and compliance cost per employee, which contributes to nearly 55 percent of the total cost. The cost model will also add profit margins of around 10 - 15 percent of the total cost of the contract. The usual areas of negotiation are the overhead and profit margins component, which account for approximately 2 - 3 percent.
The research methodology adopted for the report included:
One major constraint in the employee benefits management industry is the act of subcontracting. It is a common practice in the benefits management industry wherein the buyer is indirectly affected. Since subcontractors impose a margin to the service provider, the buyer is eventually passed on with the debt. This margin-on-margin increases the spend of the buyer and is essentially a trade-off for exploiting local players at a tactical level.
The report also includes:
Beroe is the world's leading provider of procurement intelligence and supplier compliance solutions. We provide critical market information and analysis that enables companies to make smart sourcing decisions—leading to lower costs, greater profits and reduced risk. Beroe has been providing these services for more than 13 years and currently works with more than 10,000 companies worldwide, including 400 of the Fortune 500 companies.
To learn more about Beroe Inc., please visit: http://www.beroeinc.com