What HR Leaders Need Most From Service Bureaus

Human resources (HR) teams are stepping into another year where expectations are rising faster than budgets. New technology, more artificial intelligence (AI) in daily workflows and ever-changing employee needs are redefining the future of work and pushing HR leaders to take a closer look at the partners and platforms they rely on.

Service bureaus, whether administrative services organizations (ASOs), professional employer organizations (PEOs) or payroll providers, continue to play a critical role in helping businesses stay compliant and support their people. But as the workplace evolves, clients are re-evaluating what “good support” really means.

To understand how expectations are shifting, isolved surveyed more than 2,000 HR leaders for the fifth annual HR Leaders report.¹ Their insights point to clear opportunities for service providers to strengthen client relationships and win new ones.

Client Loyalty Is Shifting Fast

One of the strongest signals from the research is that switching behavior is accelerating.

Sixty-seven percent of HR leaders say they’re considering switching their human capital management (HCM) solution in the next year, nearly double the 37% reported in 2024.

One major driver is the number of systems organizations rely on. More than half (58%) of HR leaders use four or more HR systems, and 17% use 10 or more. Managing multiple tools slows down HR tasks, increases the risk of errors and makes it harder to create a seamless employee experience. Many organizations are responding by consolidating multiple HR systems into a single unified platform.

When asked why they’re exploring new options, HR professionals said they want:

1. A better user experience

2. A platform that can grow with their business

3. Better reporting and data visibility

4. Vendors that are investing in AI

5. Lower costs

Together, these priorities point to a need for solutions that simplify HR operations and the entire employee lifecycle, from onboarding and talent management to workforce planning.

Why Clients Switch Service Bureaus

Motivations vary depending on whether clients work with an ASO, PEO or payroll provider:

• ASOs: Fifty-six percent of ASO clients are considering switching. Their top concern is the need for stronger integration and consolidation across HR systems. Disconnected workflows slow teams down and make it harder to manage daily tasks efficiently.

• PEOs: Forty-nine percent of PEO clients are considering switching and say they want access to broader, more modern technology. Features like predictive analytics and self-service tools are becoming expected, not optional.

• Payroll providers: Forty-two percent of payroll clients are thinking about switching due to cost, especially when providers offer payroll alone without additional guidance or value-added services.

Across all groups, clients want partners who can deliver technology and support that work together to strengthen the entire employee experience.

What HR Leaders Expect From Their Partners

When asked what they expect from HCM vendors today, HR leaders identified their top priorities as:

1. Support for organizational growth

2. Responsive support

3. Strong data security

4. Ongoing innovation

5. Advisory guidance on HR best practices

Looking ahead three years, HR leaders anticipate needing even more from their partners:

• Advanced HCM tools supported by expert services

• AI-driven recommendations that help them make decisions in real time

• Easier self-service features for employees

They also shared that their top trategy for preparing for constant change is having strong software and service partners. That speaks directly to the value service bureaus can offer: long-term guidance, not just transactional support.

Where Service Bureaus Can Add the Most Value

HR leaders also identified their biggest opportunities to improve HR operations this year as:

1. Enhancing employee engagement and experience

2. Improving talent acquisition and the hiring process

3. Supporting employee development and personalized learning

4. Streamlining core HR functions

5. Consolidating multiple HR systems

These areas highlight where service bureaus can help clients remove friction, automate repetitive tasks and better support employee satisfaction and overall workforce needs.

Top HR Tech Investment Priorities

Planned investments reflect these same opportunity areas. HR departments are prioritizing analytics, well-being tools and employee engagement platforms, alongside core HCM and performance management tools. Their five investment areas include:

1. HR analytics

2. Employee wellness tools

3. HCM platform modernization

4. Benefits enrollment solutions

5. Performance management tools

Service bureaus that offer integrated technology, paired with personalized guidance and AI-powered insights, will be better positioned to support these investment areas.

How AI Is Shaping Client Expectations

AI adoption continues to rise, with 69% of HR leaders saying their teams use it today, most often in payroll and recruitment processes. Still, many leaders have concerns. They worry more about the impact of AI tools on their job than about staffing shortages or missing data for decision-making.

Their top personal concerns include:

1. The impact of AI on my job

2. Not having the staff I need to make an impact

3. Missing data needed to make decisions

4. Continuing my career development

5. Lacking enough time to be strategic

Clients may be using AI capabilities quickly, but many HR teams want guidance on using it responsibly and in ways that support data-driven decision-making. Service bureaus can play a key role by:

• Using AI to reduce routine tasks so clients can focus on strategic initiatives

• Showing how AI-driven insights are created so clients trust recommendations

• Bringing AI into existing HR processes instead of adding another system

• Pairing AI tools with guidance so clients feel confident using the data

Strategies to Win New Clients and Strengthen Retention

Clients are rethinking the technology they use and the partners they trust. That creates a strong path for ASOs, PEOs and payroll providers who show up with the right mix of technology and service to help clients optimize their workflows.

Based on what HR leaders shared, these strategies matter most:

• Simplify fragmented HR systems so clients can work from one platform

• Offer scalable tools that grow with clients’ needs

• Improve reporting and metrics to help clients make better decisions

• Help clients use AI tools effectively by explaining insights in clear terms

• Offer ongoing guidance as workplace expectations and technology evolve

Service bureaus that act as true partners by offering connected technology and expert support will be better positioned to strengthen loyalty and stand out in a competitive market.

Ready to Learn More?

Download the Service Bureau Insights Report to explore the full findings and stay ahead of evolving client expectations.

_{1 Elevating HR in the Age of AI, isolved, 2025}