Benefits Administration Outsourcing (BAO) is one of the largest and most mature markets in HRO. It grew at a steady rate of ~5% to reach US$7.3 billion in annualized revenue. The Health & Welfare (H&W) administration outsourcing market grew at a faster pace of ~7% in 2015 largely due to the Affordable Care Act (ACA) requirements. The mid-market also registered sound growth, outpacing the other buyer size segments, particularly in H&W administration space. Rise of consumerism was another major highlight. The rise in demand for consumer-driven health plans, voluntary benefits schemes, self-service benefits portals, and private health insurance exchanges (HIX) are a testament to this fact. Wellness programs are also finding increasing acceptance with employers, owing to multiple demand-side drivers (such as reduced resultant healthcare costs, improved workforce productivity, better talent attraction and branding) combined with the supply-side enablers (such as availability of health- and fitness-related smartphone apps, ease of integration with wearables, and usage of analytics in creating effective programs).

Buyers too are becoming increasingly aware of the important role of benefits in helping reinforce their brand to attract and retain top talent. With the looming ACA reporting and Cadillac tax, operational efficiency, cost-effectiveness, and legislative compliance become even more important for buyers across the board.

In this research, we analyze the BAO market across various dimensions:

• BAO market overview
• Buyer adoption trends
• Solution and transaction trends
• Service provider landscape

Scope of analyses

• Deals with at least one of the following core-benefits areas is included – Health and Welfare (H&W), Defined Benefits (DB), and Defined Contribution (DC), as a stand-alone outsourcing service
• All buyer sizes, geographies, and industries

Content

This research report provides a comprehensive coverage of the 2015 BAO market and analyzes it across various dimensions such as market overview, buyer adoption trends, solution and transaction trends, and service provider landscape. Some of the findings in this report are:

• The Benefits Administration Outsourcing (BAO) market grew at a steady pace of ~5% to reach US$7.3 billion in annualized revenue in 2015
• Although, the pensions market makes up the bulk of the BAO market, the H&W market continues to grow at a faster pace, largely due to the ACA requirements
• Mid-market is the fastest growing segment in the BAO space, particularly in the H&W space. Overall, the small- and mid-sized markets are the largest adaptors of benefits administration outsourcing
• North America continues to be the largest BAO market; the Europe, Middle East, & Africa region is slowly gaining market share
• H&W continues to soar, as it is the most outsourced process. DB plans are on the decline as buyers slowly switch to more pocket-friendly and lower-risk DC plans
• The demand for consumerism is increasing at a rapid pace. Employers and employees are increasingly favoring voluntary benefits in the form of Consumer-Driven Health Plans (CDHPs) combined with spending accounts
• Service providers are narrowing their portfolio of offerings, focusing on their strengths, leading to mergers/acquisitions and/or realignment of strategies

Membership(s)

Human Resources Outsourcing