Small businesses are turning rapidly to outsourcing to manage Human Resources (HR), including the complexities of regulatory compliance, says a report by IDC. Professional Employer Organizations (PEOs) are increasingly making a comeback as the HR outsourcing service model of choice for some smaller organizations, buoyed by the improving small business economy.

According to the findings of IDC’s study HR BPO and PEO Outsourcing Options for the Small Market, the majority of PEOs are small businesses themselves with fewer than 3,000 WSEs in five states or less. Despite the size of the average PEO, five percent of U.S. small businesses with 50 or fewer employees utilize a PEO for managing their HR administration.