Introduction

The US$6.3 billion BAO market is a consolidated space dominated by a handful of players. However, the recent healthcare reform and the recent focus on Health Insurance Exchanges (HIX) have created increased outsourcing opportunities for the service providers. Quite a few interesting trends have emerged over the past year in the BAO market. Service Providers have shown interest towards private Health Insurance Exchanges (HIX). Currently, only a handful of providers offer a private HIX, but further consolidation is expected through M&A activity / new providers coming up with new platforms. Service providers are also evolving their service offerings through innovative solutions to help buyers setup their Consumer Driven Health Plans (CDHP), Employee Assistance Programs (EAP), and wellness initiatives. There is a clear focus on Decision Support Systems (DSS) and a move towards unified solutions traditional benefits administration platform with decision support tools, along with private health exchanges. Service providers are making conscious efforts to enhance their offshore footprint, resulting in a balanced offshore/onshore FTE mix.

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

• BAO market overview
• BAO PEAK Matrix 2014
• Key insights into PEAK Matrix dimensions
• Emerging trends in the BAO landscape

Scope

• At least one of the following core-benefits areas – Health & Welfare (H&W), DB, and DC
• Deal length that is at least two years in duration
• The buyer employee size is 3,000 or more
• All industries and geographies

Content

This report examines the dynamics of the global BAO service provider landscape and its impact on the BAO market. It gives an overview of the market and analyzes how the service providers differentiate themselves. Based on the comprehensive Everest Group PEAK Matrix, each of the 10 BAO service providers are segmented into Leaders, Major Contenders, and Emerging Players. Additionally, it provides key insights into the individual PEAK Matrix dimensions, along with emerging trends in the BAO landscape. Some of the findings in this report are:

• The BAO market grew at a steady rate of over 6% to reach US$6.3 billion in annualized revenue in 2013
• However, the H&W market grew at a faster pace of ~10%, contributing one-third to the overall BAO market. Several first-generation buyers from the upper end of the mid-market segment (5,000 to 10,000 employees) in North America signed BAO deals in 2013
• Everest Group classifies 10 BAO service providers on Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix into three categories of Leaders, Major Contenders, and Emerging Players
• Everest Group also identifies a few providers as Star Performers based on their year-on-year movement on the PEAK Matrix
• The BAO landscape is witnessing changes such as:
• Growing maturity in the Private HIX landscape
• Increasing focus on value-added services
• Evolving competition in the mid-market segment
• Increasing movement of service providers toward a balanced offshore/onshore delivery model