The global benefits administration outsourcing market is growing at a rate of 12.5 percent in 2011 and has reached the $5 billion mark, according to an Everest Group market report.

The report reveals that buyers are outsourcing both health and welfare services at four times the level they are outsourcing pension services. Everest Group believes the global BAO market is approximately $5.4 billion in annual contract value, with the untapped BAO market hitting at $20-22 billion.

"While cost reduction, compliance and improving employee engagement continue to be drivers of BAO adoption, the theme for 2010-2011 was health care reform in the United States, which brought increased enrollment, introduction of insurance exchanges along with increased regulation of insured and self-insured insurance plans," says Rajesh Ranjan, research director. "Although these reforms will take a number of years to come into effect, there are several provisions impacting employer benefit plans this year.

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