California, where Kelly has an operations center and about 100 clients, says Mark Perlberg, president and CEO of Oasis. Terms of the acquisition were not disclosed.

Selling off its professional employer organization makes sense for Kelly Services because the company’s strength lies in staffing and not the other HR work associated with PEOs, he says.

Professional employer organizations, which traditionally cater to companies with fewer than 100 employees, enter into “co-employment agreements” with their employer clients. They then act as the employer of record and handle all human resources issues and processes.

A few companies got into the professional employer organization business because they equated staff leasing with being a PEO, but they really aren’t the same thing, says Lisa Rowan, an analyst at IDC.

“It’s not surprising to see a staffing-related company get out of the business,” she says.

Oasis has focused on growing organically but is looking at making strategic acquisitions, particularly in parts of the country where it doesn’t have a major presence, Perlberg says. He declined to elaborate.

But Oasis may have some competition as it looks to acquire other professional employer organizations, says Carrie Aaron, owner and president of PEO Network, a Raleigh, North Carolina-based consulting firm.

“There are a lot of buyers out there, particularly among the private equity firms,” she says.

Despite the interest among potential buyers, few professional employer organizations are willing to sell their business, Aaron says.

“A lot of the professional employer organizations that are left are stable and don’t seem interested in selling,” she says. “They aren’t going to sell until the valuations go up.”

—Jessica Marquez