Employee Benefits Management Market Currently Estimated at $37 billion, says Beroe Inc
Source: PR Newswire
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.
- Regions such as Europe and North America and some parts of APAC such as Australia, Japan, Hong Kong, and Singapore have high market maturity. South Africa, India, Brazil, and China are expected to be the future growth driving markets for benefits management services.
- The industry in developed markets such as North America and Western Europe has a high threat of substitutes as far as implementation and the structuring of BAO services is concerned.
- In emerging markets, performance-based pricing will also increase buyer power as they can decide on the sub-contractors involved and make profit payment conditional on the compliance of critical performance indicators.
- Among top 50 benefit brokerage firms, Sequoia Benefits is the only firm whose annual revenue growth concerning the employee health and welfare services increased more than 100 percent.
- Customization helps to increase the integrity of services and brings a high level of expertise. Further, suppliers are providing bundled BAO services through technology platforms by partnering with different companies.
The research methodology adopted for the report included:
- Experts with twenty years of domain experience
- Interaction with buyers
- Inputs from supply chain partners
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:
- Market Maturity & Trends
- Drivers and Constraints
- Regional Market Outlook
- Porters Analysis
- 2017 Top 50 Benefit Brokerage Firms
- Supply Outlook
- Key Global Suppliers
- Key Regional Suppliers
- Supplier Profiling
- Supplier News and Innovation
Cost & Pricing Analysis:
- Cost Structure Analysis
- Expected Savings
- Total Cost of Ownership
- Pricing Analysis
Procurement Best Practices:
- Sourcing Models
- Delivery Models
- Outsourcing Models
- Industry Sourcing Adoption
- SLA & KPI
- Best Practice
About Beroe Inc.:
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