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Workday partnership pushes vendor into new area: PEO

Workday partners with Insperity to offer professional employer organization services to SMBs, aiming to expand its platform's reach to smaller, high-growth companies

Workday is entering a new area via a partnership that bundles its platform with an HR service provider. The partnership is aimed at SMBs, and Workday hopes it will broaden the reach of its platform.

The partnership with Insperity, a Houston-based firm that recently reported an annual revenue of $6.5 billion last year, is a new type of offering for Workday that couples HR professional employer organization (PEO) services with its platform.

Insperity will have a client instance of Workday on its server. Customer onboarding will be onto Insperity's Workday instance, partitioned to protect a customer's data and privacy, according to Tom Gearty, senior vice president of corporate development at Insperity.

On a recent earnings call with analysts, Workday CEO Carl Eschenbach said that the Insperity-Workday partnership is "opening up a new market opportunity for us." Last month, Workday reported a total revenue of $7.3 billion for fiscal 2024, which ended Jan. 31.

In HR, a PEO is an outsourced organization that provides HR administration services, payroll, benefits, talent management and other functions mostly to SMBs. PEO services can be used by businesses of any size and any HR platform.

It's not clear when Insperity's Workday offering will be available. Insperity is still in the planning and configuration stage and isn't committing to a launch date, but it's possible it could go into next year.

Workday partnership aimed at SMBs

Workday said that 75% of its customers have headcounts of fewer than 3,500 employees, but this agreement may extend its reach to companies as small as 100 employees. Customers of this new offering will use the same Workday platform that Insperity's customers use, but Gearty said it will be configured with "our experience serving small and medium-sized clients."

For a customer, this may provide more services. So ultimately, if it works out, it could provide some amount of new revenue to Workday.
Josh BersinHR analyst and founder, Josh Bersin Company

Josh Bersin, an HR analyst and founder of the Josh Bersin Company, said the agreement means, "Insperity has found a way to segment Workday into small instances for smaller companies."

But its success "depends on how much Insperity pushes this, since it's a new offering for them," Bersin said. "For a customer, this may provide more services. So ultimately, if it works out, it could provide some amount of new revenue to Workday," he said.

Workday sees the agreement as broadening its "reach to smaller, high-growth businesses," a Workday spokesperson said in an email to TechTarget Editorial. "This will enable them to realize the power and value of the Workday platform earlier in their growth journeys, better setting them up for long-term success."

Patrick Thibodeau is an editor at large for TechTarget Editorial who covers HCM and ERP technologies. He's worked for more than two decades as an enterprise IT reporter.

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