Payroll Services Industry Overview

Excerpt from Payroll Services Report

Companies in this industry generate paychecks, payroll reports, and tax filings for clients. Major companies include ADP, Ceridian, Insperity, and Paychex.

Competitive Landscape

Demand for payroll services is driven by employment. The profitability of individual companies depends on efficient use of information technology and effective marketing. Large companies can serve larger numbers of clients and can better compete for business from customers who operate from multiple locations. Small companies can compete by serving local or regional markets. The US industry is highly concentrated: the 50 largest companies account for about 75 percent of industry revenue; the four largest companies account for about 50 percent.

Products, Operations & Technology

Payroll services companies collect employee information, such as wages, hours worked, deductions, and other compensation-related data, then process it to generate employee paychecks and reports on behalf of employers. These services generally include deposits and filings related to federal, state, and local taxes. The payroll services industry doesn't include offices of CPAs, which may provide payroll services in addition to their other offerings.