In our latest whitepaper entitled Marketing and Selling in the Human Resource Marketplace: Winning Strategies and Tactics, we estimate the size of the human resource market to be over one trillion dollars annually. Several of our readers were surprised by the enormity of this number.
But if you take a look at one of the more popular sections of our whitepaper – the HR Pillars appendix where we list the various types of HR products and services, from job boards to compliance resources, being sold to the human resource department – you might be shocked by the number and diversity of companies selling stuff to HR. Believe it or not, you'd be hard pressed to find any other department of an organization that has as many vendors calling on them – not even IT or finance.
We define the HR marketplace as the sum of the markets served by HR software and service providers as well as by employee benefit providers. Our research shows there are over 50,000 vendors courting the HR dollar. This is a pretty accurate number – we know because this is the space we sell to. The enormity of the space can be appreciated by the fact that you can work in one “HR pillar” your entire career (recruitment and staffing for example) and never hear of or know the major HR service providers in another pillar (benefits, training and development, etc.).
So, if there are tens of thousands of HR suppliers, how many buyers are there?
In the whitepaper, we state: "There are literally hundreds of thousands of potential HR buyers, from large companies searching for better results in streamlining their internal HR services to smaller companies building out the basic human resource capabilities in-house or through outsourced providers.
According to recent census data (Table 1), there were over 1.2 million dollar private-sector firms in the USA employing at least 10 employees. These firms employed a combined 102 million workers. Considering that most firms with 10 or more employees purchase at least one HR product or service, opportunities exist for a wide variety of suppliers."
And those numbers don't even account for the largest employer – the public sector!
To bring perspective to these numbers, consider a popular employee benefit, Employee Assistance Programs (EAPs) – a product I sold years ago when I entered the HR industry. Now keep in mind that EAPs are just one example of hundreds of employee benefits, and employee benefits are just one pillar within the vast HR space. Research shows that 90% of large employers offer an EAP to employees. EAPs, like most employee benefits, are priced on a per-employee-per-year (PEPY) rate. Ninety percent of large employers (5,000 employees +) offer an EAP, and the average annual price for an EAP is $15 PEPY, this equates to a market size of a half of billion dollars. When you factor in all other employers and the government, you realize the EAP space (tiny by comparison to other HR services) is easily a $1 billion market – and that's why there are over 1,000 profitable EAP vendors throughout the USA. I bet a lot of readers haven't even heard of an EAP.
Yes, the size of the HR space is huge, so don't feel too bad when that HR person doesn't return your call the first time!