Office Administrative Services
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 33,000 office administrative services companies provide a wide range of services that support the internal operation of a workplace. Firms reduce administrative burdens by providing contract talent resources and tools that enable clients to better control personnel costs by using services as needed. Service categories include bookkeeping and compilation, accounting, payroll, tax preparation, billing and record keeping, document processing and editing, copying and reproduction, strategic management consulting and implementation, information technology and network management, project management, human resources, and bundled services.
Labor-Intensive
The office administrative services industry is highly dependent on skilled workers, including accountants, bookkeepers, and experienced payroll professionals.
Increased M&A Activity in Business Process Outsourcing
US businesses are increasingly outsourcing front- and back-office functions to reduce overhead costs, generating business process outsourcing (BPO) growth that has produced strong valuations and a rise in mergers and acquisitions.
Industry size & Structure
The average office administrative services provider operates out of a single location, employs about 19 workers, and generates about $2-3 million annually.
- The office administrative services industry consists of about 33,000 firms that employ over 630,000 workers and generate about $80 billion annually.
- The industry is fragmented with the top 50 companies accounting for about 10% of industry revenue.
- Firms that generate less than $1 million annually account for over 50% of companies and 9% of industry revenue. Firms that generate $5 million or more annually account for 8% of companies and almost 65% of industry revenue.
- Large firms, such as ADP and Robert Half, may have international operations.
Industry Forecast
Office Administrative Services Industry Growth
Recent Developments
Sep 4, 2024 - 90% of CFOs Outsource Accounting Functions
- A talent shortage in the finance and accounting industry is prompting many CFOs to outsource some accounting functions, according to a recent survey by accounting outsourcing firm Personiv and reporting by CFO.com. About 90% of CFOs surveyed said they already rely on outsourcing to complete all their accounting and finance tasks. Accounts payable is the most commonly outsourced accounting function, with 65% of finance leaders saying they outsource in that area, followed by accounts receivable (48%), and cash application (31%). More than two-thirds of CFOs said they are currently attempting to hire staff accountants, 43% are trying to fill senior accounting positions, and 24% need to fill tax accountant roles.
- In a review of public company audits by the Big Four accounting firms, the Public Company Accounting Oversight Board (PCAOB) found the level of shortfalls unacceptable, according to The Wall Street Journal. The PCAOB recently reported on its review of 230 Big Four audits of public companies’ 2022 financial statements and found an overall deficiency rate of 26%. A deficiency indicates instances where the auditor’s opinions are not sufficiently supported by evidence. EY had a deficiency rate of 37%, down from 46% from the previous year, but it still had the highest rate among its Big Four peers. KPMG’s deficiency rate was 26% compared to 30% a year earlier. PwC had a deficiency rate of 18% compared to 9% the prior year, and Deloitte’s rose from 17% to 21% over the same period. The PCAOB’s Chair said that while there were some indications of improvement, the deficiency levels were unacceptable and that more improvement was necessary.
- US average shift work volume decreased by 1.8% in July compared to the prior month, according to data compiled by HR solutions firm UKG. July marked the second consecutive monthly decline in shift work, suggesting the US labor market is nearing full employment. All major industry sectors tracked by UKG saw shift work either remain flat or decline in July. Healthcare, and services and distribution were tied for the biggest drops in July shift work with declines of 2.6%, followed by retail, foodservice and hospitality (-1.9%), and manufacturing (0.0%).
- Accountants and finance professionals are increasingly leaving their jobs or leaving the profession altogether, exacerbating the accountant shortage, according to a recent global survey by The Institute of Management Accountants. About 29% of survey respondents said they had left a company in the last two years, and 30% reported that they expect to leave their current employer in the next year. About 11% of US-based respondents said they planned to leave the accounting and finance profession. However, industry observers note that positions in accounting and finance are in high demand, surpassed only by those in data science and artificial intelligence. Companies may be forced to outsource more accounting functions, which bodes well for office administrative services firms.
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