NAPEO’s 2025 Annual Tracking Survey: Key Findings for Brokers

Quick look: Good news is here for brokers. The National Association of Professional Employer Organizations (NAPEO) 2025 Annual Tracking Survey reveals SMBs are growing consistently, outsourcing is widely accepted, and interest in PEO services is at an all-time high. This means the time is now to align with the right PEO partner who will keep you poised to stand out in a competitive and expanding market.

NAPEO’s 2025 Annual Tracking Survey is here, and it paints a promising picture for brokers.

Surveying 500 decision-makers at U.S.-based SMBs across a range of industries, the study shows businesses are entering 2026 with cautious optimism, even in the face of cost pressures, economic uncertainty, and workforce challenges.

Read on to review the key takeaways of the study and the opportunities they create for benefits and PEO brokers.

Business confidence remains strong, and PEO clients continue to outperform

Many SMBs are charging ahead with strong momentum. The data shows a clear performance gap between companies that partner with a PEO and those that do not:

• 80% of PEO users reported growth in 2025, compared to 67% of non-users
• 83% of PEO users expect growth in 2026, versus 75% of non-users

That confidence signals expansion in hiring, investment, and scaling operations. It also signals complexity; as companies scale, so do their compliance risks, human resources (HR) demands, and employee benefits expectations.

This is another opportunity for brokers to further strengthen their roles as trusted advisors and help leaders strategically design their infrastructures for ongoing success.

Cost pressures are driving decision-making

Economic uncertainty (76%) and healthcare costs (68%) ranked among the top concerns for SMB leaders.

While stressful, these worries create an opening for brokers to introduce solutions that enhance cost-efficiency and long-term stability. PEOs for example, leverage group purchasing power for benefits and help businesses mitigate compliance risks that may result in penalties. Some PEOs, like ExtensisHR, also provide complimentary recruiting services, enabling SMBs to attract talent while reducing expenses associated with traditional staffing agencies.

Recruiting and retention remain primary challenges

Hiring (67%) and retention (62%) continue to weigh heavily on SMB leaders.

Employers who offer comprehensive benefits and positive employee experiences continue to stand out in the talent market. This trend is an opportunity to stretch the conversation beyond premiums and into total rewards strategy, employee engagement, and workforce competitiveness, capabilities that PEOs are well-positioned to support.

Outsourcing is mainstream

The survey confirms that businesses are already comfortable outsourcing key HR functions:

• 61% outsource health insurance
• 56% outsource payroll
• 50% outsource retirement benefits

The top drivers for outsourcing these services include:

• To save time and focus on other aspects of the business (55%)
• To minimize risks and costly mistakes (40%)
• To manage the complexities associated with business growth (39%)

For clients, the most important factors when it comes to working with a PEO are access to experienced HR and employment experts (41%), time savings and administrative relief (39%), and the cost associated with PEO services (38%). Notably, cost is no longer the leading factor, signaling that SMBs increasingly value expertise, efficiency, and partnership alongside price considerations.

PEO interest is high

Perhaps the most encouraging survey finding for brokers is that a significant majority of non-PEO users expressed interest in learning more about PEO services. Notably, 87% of non-PEO users reported being interested in using a PEO in the future, up from 67% since tracking began in 2018. For many SMBs, the conversation has shifted from “Why outsource?” to “Which PEO makes the most sense for me?”

Unaided awareness of PEO clocked in at 68% and continues to grow steadily, up 10% in five years. However, only about 25% of SMB leaders are knowledgeable about lesser-known PEO services, highlighting an opportunity for brokers to educate clients on the full value of a PEO partnership.

Additionally, for the first time ever, more decision-makers report learning about PEOs through articles (45%) or by discovering them online (43%) than hearing about them from a friend or colleague (39%).

Differentiate with the right PEO partnership

The 2025 NAPEO survey data tells a clear story: SMBs are optimistic, but are still navigating the complexities of growing, containing costs, staying compliant, and meeting evolving workforce expectations.

And in an increasingly competitive broker landscape, alignment with the right PEO can be a true differentiator.

Partnering with a PEO like ExtensisHR allows you to deliver a personalized, strategic solution while staying in control of your client relationships. Here’s how:

• Boutique customer service: While many PEOs scale through standardization, a boutique service model provides individualized attention, responsive support, and relationship continuity. This reflects directly on your brand; when clients receive white-glove service, your value proposition and their trust in you strengthens.
• Customizable solutions: Customizable HR and benefits solutions allow you to align offerings with client size, industry, workforce demographics, and growth trajectory, avoiding any “one-size-fits-all” limitations that can stall deals.
• Complimentary recruiting support: With hiring ranking among top employer concerns, integrated recruiting assistance adds tangible business value, especially when it’s at no additional cost.
• Broker-friendly operations: We protect broker-client alignments, act transparently, and support long-term collaboration, ensuring you remain central to the advisory relationship.

As PEO-backed companies continue to succeed, more SMBs are exploring their options. Partnering with ExtensisHR helps you capture that opportunity. Our personalized service, flexible solutions, built-in recruiting help, and broker-friendly mindset have what it takes to make you indispensable to your clients in 2026 and beyond.

Discover how the ExtensisHR team can help you achieve your goals. Contact us today to start a conversation.