Payroll Takes on Expanded Role With New Technologies

Providers are delivering AI innovations for strategic insights, higher efficiency, self-service employee experiences, ISG Provider Lens™ report says

Enterprises worldwide are reshaping their payroll service models with new capabilities and cost efficiencies from outsourcing providers, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2024 ISG Provider Lens™ global Payroll Solutions and Services report finds that payroll departments are strengthening their technology stacks to perform expanded roles. Many enterprises now expect payroll to provide strategic insights and expertise for more complex, dynamic workplaces.

“The payroll market is rapidly changing,” said Stacey Cadigan, partner, ISG Human Capital Management and Enterprise Transformation. “Providers and enterprises are embracing innovation and automation to meet evolving needs.”

AI and ML are central to many advances in payroll technology, introducing greater accuracy, efficiency and intelligence, the report says. The breakthroughs include the ability to verify payroll data as soon as it is entered, learn from historical data to flag anomalies and deliver personalized financial insights and recommendations to employees. Enterprises want to deploy AI in all business processes, including those that customers experience. Lacking enough in-house resources, they often rely on service providers.

Payroll laws are proliferating, so more companies are outsourcing for regulatory and compliance expertise, ISG says. Providers are using AI and ML to automatically update systems with the latest rules and introduce chatbots that use natural-language processing to guide enterprise users. By integrating their systems with government databases, providers can automatically adjust payroll calculations and deductions, thereby minimizing compliance risks. Comprehensive audit trails and custom reporting tools help clients demonstrate compliance.

Self-service platforms are giving employees easy access to their payroll information, especially through mobile apps, the report says. These platforms satisfy employees by letting them manage certain aspects themselves, such as checking their pay slips before payroll is closed, while AI-powered chatbots have begun to handle routine inquiries automatically.

More enterprises are using predictive analysis of historical and macroeconomic data to forecast trends such as the size, makeup and cost of their workforces, ISG says. Providers also offer internal analytics tools to improve metrics such as payroll cycle times and error rates.

“Data has the power to transform payroll,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Analytics already is optimizing performance and may soon create strategies to minimize risk and capture opportunities.”

The report also explores other global payroll technology trends, including slow uptake of on-demand pay features in many regions and the rise of enhanced compliance services for small enterprises.

For more insights into common global payroll challenges, such as balancing global standardization with local requirements and complying with regulations in the age of remote work across borders, plus ISG’s advice for addressing these issues, see the ISG Provider Lens™ Focal Points briefing here.

The 2024 ISG Provider Lens™ global Payroll Solutions and Services report evaluates the capabilities of 26 providers in one quadrant: Multicountry Managed Payroll Services.

The report names ADP, EY, IBM, Mercans, Neeyamo, Ramco Systems, SD Worx and Strada (formerly Alight) as Leaders in the quadrant.

In addition, UKG is named as a Rising Star — a company with a “promising portfolio” and “high future potential” by ISG’s definition — in the quadrant.

In the area of customer experience, EY is named the global ISG CX Star Performer for 2024 among payroll solutions and services providers. EY earned the highest customer satisfaction scores in ISG's Voice of the Customer survey, part of the ISG Star of Excellence™ program, the premier quality recognition for the technology and business services industry.

A customized version of the report is available from Mercans.

The 2024 ISG Provider Lens™ global Payroll Solutions and Services report is available to subscribers or for one-time purchase on this webpage.

About ISG Provider Lens™ Research

The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Canada, Mexico, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia and Singapore/Malaysia, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including AI and automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.

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