Introduction

Benefits Administration Outsourcing (BAO), one of the largest and most mature markets in HRO, witnessed a healthy growth of 13% to reach US$ 6.1 billion in annualized spend. The recent healthcare reform in the United States and the shift from DB to DC has forced buyers to take a relook at their benefits strategy. With consumerization emerging in the benefits space, health insurance exchanges, consumer-driven health plans, consulting & participant advisory services, technology enhancements, decision support tools, and improved communication services will play a pivotal role in redefining this market. Service providers continue to reinvent and expand their offerings to cater to the changing employer and employee requirements. Hence, buyers need to look at provider’s offering spectrum in its entirety to drive maximum advantage for their employees while also reducing their overall benefits cost.

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

• Market overview
• BAO market – regional trends
• Buyer adoption and solution trends
• Service provider landscape
• Outlook for 2013

Scope of analysis

• 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
  
• The buyer employee size is over 3,000 employees
  
• All geographies and industries

Content

This research report provides a comprehensive coverage of the BAO market and analyzes it across various dimensions such as market overview, regional trends in North America & Europe, buyer adoption & solution trends, and service provider landscape. Additionally, it includes predictions for the 2013 BAO market. Some of the findings in this report are:

• The BAO market grew at a healthy pace of 13% to reach US$6.1 billion in annualized revenue in 2012. We expect the market to accelerate further in the 2013-2014 period
• New triggers, such as the U.S. healthcare reforms (PPACA) and the shift from DB to DC, are adding on to and accentuating traditional drivers (cost reduction and non-compliance cost avoidance)
• Buyers at the upper-end of the mid- (5,000 to 15,000 employees) and large market (over 15,000 employees) were big adopters of H&W outsourcing, with smaller buyers soon expected to join the bandwagon
• After a steady decline in the last few years, prices are now stabilizing
• The BAO market is witnessing a continuous wave of tuck-in acquisitions since the last two years
  
• The service provider landscape is segmented as very few players have capabilities across the H&W, DB, and DC spaces