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By Cameron Dixon, CEO and Founder of Tada AI
PEOs are highly skilled experts in compliance, benefits and payroll. Everyone knows that! However, the reality is this expertise is constantly diverted by time-consuming, administrative work.
With manual processes for implementation, employee updates, new hires, processing payroll and responding to basic benefit questions among other tasks, Professional Employer Organizations spend up to 40% of their workweek on basic, administrative work, which leaves little time for customer engagement and specialized service.
Not anymore; that’s where AI can make a huge difference.
Thanks to innovation, artificial intelligence will be a game-changer for PEOs—and their clients.
PEO teams spend up to 40% of their workweek on basic, administrative work leaving little time for customer engagement and specialized service.
Where the Time Goes—and Why It’s a Problem
There’s no shortage of administrative work that PEOs handle on a daily basis. Based on our research and conversations with our customers, we have found that the four biggest threats to PEO efficiency are:
| Four Operational Bottlenecks Holding PEOs Back | ||
| Action | Estimated Time Consumed | Operational Challenge |
| New Customer Implementation | 15 hours per new customer on average | Manually extracting information (employee information, direct deposit numbers and prior checks) via reports from the new customer’s previous provider, then rearranging the data into the right format to upload into PrismHR |
| Responses to Benefits-Related Questions | 3-8 hours per week | Finding information and drafting responses to customer-specific questions via email |
| Employee Updates & Onboarding | 25 minutes per new hire and 5-8 minutes per employee update on average | Repetitive data entry from new employee forms (I-9s, W-4s and direct deposit) and employee update requests sent via email |
| Payroll Processing | 20 minutes per payroll on average | Between 40% and 50% of clients send payroll via email in numerous formats (written text, Comma-Separated Value [CSV] files, PDFs, photos of handwritten payroll), etc., which specialists then need to enter manually into the PrismHR platform. |
How AI Can Help
Intelligent technology designed specifically for the PEO space can help automate tasks like new hire onboarding, employee updates, payroll processing and benefit management. By freeing up time in these areas, PEOs can do more with current resources.
But it’s important to note that not all AI is the same.
Generalized Large Language Models (LLMs) like ChatGPT and Gemini are remarkable tools but they are not built for the complexity of PEO operations. Our industry requires PEO-specific vertical AI that combines two core technologies:
- Intelligent Document Processing (IDP) and Machine Learning (ML): The AI layer is critical for converting the complex, unstructured inputs PEOs receive—including handwritten notes and legacy provider reports—into clean, structured data.
- Robotic Process Automation (RPA): AI that handles the routine, high-volume process flows, ensuring the cleaned data is uploaded seamlessly and consistently into clients’ existing HR outsourcer (HRO) systems.
Restoring Confidence Through Accuracy, Compliance and Control
There is a hidden cost when it comes to manual work. Manual data-entry over long periods inevitably leads to fatigue, increasing the likelihood of costly mistakes. By drastically reducing the incidence of errors in payroll, benefits enrollment and tax reporting, specialized AI significantly mitigates the PEO’s exposure to regulatory penalties, which can erode client trust or lead to customers switching providers.
Keep in mind that implementing AI doesn’t mean humans are left out of the loop. Even with specialized AI software, PEO teams must remain in control to manage and validate the process. This Human-in-the-Loop model ensures the AI is not replacing anyone; rather it serves as a copilot that manages the process.
The mechanism is simple:
- The specialized AI executes the automated task (i.e., extracting data).
- The system then presents the extracted information to the PEO specialist for review and confirmation before uploading it to the PrismHR platform.
This process ensures that PEOs’ highly compensated, compliance-aware specialists are liberated from data transcription, which helps to reduce burnout. It also allows specialists to focus their expertise on managing exceptions and performing strategic vetting.
The Transformation: From Administrative Work to Strategic Impact
By automating back-office transactional processes, PEO professionals can free up to 16 hours of their workweek from administrative tasks and truly become consultative, proactive partners for their customers.
Recent research indicates that businesses that excel in people management are four times more likely to outperform peer organizations financially. The newly freed capacity enabled by AI allows PEO teams to engage in higher-value services that elevate the client relationship.
This profound shift—from administrative processor to strategic co-development partner—increases client satisfaction, maximizes retention and unlocks opportunities for high-margin service upsells.
The Future PEO: Where Efficiency Amplifies Empathy
The most successful PEOs do not choose between speed and service—they deliver both. Specialized AI creates the capacity for PEO specialists to deliver the human touch and emotional intelligence that customers expect while continuing to support the day-to-day administrative work that customers require. Efficiency doesn’t replace the human touch—it makes it possible.
The partnership between specialized technology and human expertise is the new foundation for PEO excellence. AI helps unlock the full potential of your team and enables them to serve your customers better than ever before.
How Tada AI Helps
Tada AI integrates directly with PrismHR to streamline back-office operations for service providers. By intelligently extracting data from emails, PDFs, photos and spreadsheets, Tada AI automates tasks like new hire onboarding, employee updates, payroll processing and benefits management to help improve efficiency.
Learn more about Tada AI.
