Local vs National PEO: Which Provider Type is Right for Your Business?

Businesses leveraging a professional employer organization (PEO) to manage their US employees enjoy a competitive edge.

According to the National Association of Professional Employer Organizations (NAPEO), businesses using a PEO grow twice as fast, have 12% lower employee turnover, and are 50% less likely to go out of business. The return on investment when a business uses a PEO, in cost savings alone, is 27%.

With more than 500 PEO providers in the market, finding the right fit can be overwhelming. A great first step is determining what size PEO best aligns with your business needs.

Deciding between a national and regional PEO comes down to several factors: the size and geographic distribution of your US workforce, the level of support, expertise, and resources you expect, and the type of healthcare benefits you want to offer employees. Each option offers distinct advantages depending on your business needs.

What are the characteristics of a national PEO provider?

A national PEO operates in all 50 US states (or most states) and is best suited for companies with employees across multiple states, or those that plan to expand into new jurisdictions.

Multi-state compliance expertise

Larger PEOs are better equipped to handle the complexities of multi-state and federal labor law, ensuring compliance with diverse tax laws and regulations. With wage laws, termination rules, and employment law varying by state, a national PEO delivers expertise and guidance wherever your business has US employees.

Access to better benefits plans and rates

With a larger number of worksite/client employees, national PEOs have stronger purchasing power with insurance carriers and can negotiate more affordable benefit costs for health plans. National PEOs typically offer various benefits plans based on different regions or states for greater choice.

Powerful technology and data

National PEO providers typically deliver more comprehensive capabilities across compliance, HR management, data and reporting, payroll and tax administration, benefits administration, and third-party integrations.

One of their key strengths is the ability to support growing, multi-state organizations through a single, centralized platform, making them ideal for businesses that need scalability and consistency.

What are the characteristics of a local PEO provider?

A local (or regional) PEO focuses on a specific region of the US, such as the Southeast, or just a few states. With a more limited geographic focus, regional PEOs offer specialized expertise in employment law and compliance for specific states or regions, rather than nationwide coverage.

A key advantage of working with a smaller PEO is the personalized service and greater flexibility it provides.

• Local compliance expertise: Regional PEOs operate in fewer states and are knowledgeable about the employment laws and regulations in those areas

• On-site presence: A local PEO is more likely to provide in-person support and face-to-face communications, meetings, or training

• Flexibility and customization: Compared to national PEO providers, a regional PEO may offer more flexible contract terms, service agreements, or pricing models

Drawbacks of working with a local PEO

Challenges with multi-state compliance

Regional PEOs often struggle to support businesses operating across multiple states. Without deep expertise in nationwide employment laws, they may fall short in navigating complex compliance requirements.

Unlike national PEOs, smaller providers typically lack the resources and personnel needed to manage regulatory challenges across diverse jurisdictions.

Higher cost of employee benefit plans

Because regional PEOs serve a smaller client base, they generally have less negotiating power with health insurance carriers. This can result in higher costs and fewer plan options for your employees.

In contrast, national PEOs are better positioned to secure more competitive rates and a broader selection of benefits.

Less advanced technology and reporting

With leaner infrastructure and smaller development teams, regional PEOs often offer fewer capabilities. Their systems may lack the advanced integrations, automation, and reporting features that national PEOs provide, potentially limiting your access to real-time insights and operational efficiency.

Local vs national PEO comparison

Deel PEO is a leading national PEO provider

Whether you’re hiring US employees for the first time or expanding to more US states, Deel’s PEO solution takes care of the employment work for you.

We’re your expert partner for HR, compliance, payroll, and benefits, so your internal team can focus on company growth and strategy. Deel PEO delivers full-service outsourcing across all 50 states, so there’s no need to have HR staff in the US.

Watch the video below to hear how Superfiliate uses Deel PEO to grow their team.

Most PEOs can’t support international companies with US employees. Deel’s different—we support your workforce globally, all in one platform.

Backed by Deel’s global platform and expert support, we take on the heavy administrative burden across all areas of workforce management.

• Compliance support and answers at the federal, state, and local levels

• Market-leading employee benefits, including exclusive access to Aetna international plans for globally mobile employees

• Payroll and tax administration done for you

• Global HRIS and payroll platform for one consistent and easy user experience

• Risk mitigation and coverage for employment liability insurance, workers’ comp, and employee termination support

• 24/7 employee and admin support, plus a dedicated HR Business Partner as your go-to strategic guide

Explore how Deel’s in-house PEO can help you offer better benefits and stay compliant from day one, or book a demo to see the platform in action.