Payroll Automation Helps Firms Navigate Rapid Changes

Enterprises embrace provider offerings that cut costs, reduce manual effort and help companies to use data for strategic decisions, ISG Provider Lens™ report says

A growing number of enterprises are automating payroll systems to meet changing business requirements, often outsourcing digital transformation projects and ongoing operations to service providers as they seek to do more with less, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2023 ISG Provider Lens™ global Payroll Solutions and Services report finds many companies have implemented cloud-based data input, self-service employee portals, mobile apps and other innovations in pursuit of zero-touch payroll systems that can cut costs, speed up results and reduce human error. As macroeconomic challenges cloud the future of funding for in-house projects, enterprises are engaging with service providers that spread the cost of innovation across multiple customers.

“Automation has dramatically streamlined payroll processes, whether performed internally or by service providers,” said Stacey Cadigan, partner, ISG Human Capital Management and Enterprise Transformation. “This lets payroll departments shift into a more strategic role, focused on improving employee engagement and other high-level objectives.”

Managing payroll is a critical part of enterprises’ adaptation to recent and ongoing business disruptions, the report says. The rapid spread of remote work since the COVID-19 pandemic, along with the growing number of contingent and gig employees who traditionally were outside the scope of payroll, have increased the complexity of payroll operations and compliance. Leading service providers offer clients the expertise to navigate these changes.

Enterprises are embracing AI and ML tools that are at the core of many providers’ services, ISG says. They allow for ongoing, automated validation of data inputs, real-time visibility into potential errors and compliance monitoring for greater efficiency. Natural language processing (NLP) powers conversational virtual assistants that can field employee queries around the clock.

While some companies are looking to consolidate payroll vendors to streamline global reporting, regional service models may better serve local compliance and customization requirements, the report says. To find the right balance, some enterprises have adopted a hybrid approach in which they partner with two or three providers.

As automation spreads, payroll dashboards and AI algorithms offer the possibility of using data for actionable insights, predictive analytics and scenario modeling, ISG says. Companies can use these tools for tasks such as adjusting staffing levels and developing ideal compensation structures.

“With some new payroll systems, enterprises can extract a huge amount of value from data they have never used before,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Some providers even augment this with third-party data.”

The report also explores other global payroll trends, including the rise of payroll solutions to help employees assess their financial well-being and the growing popularity of on-demand pay with digital wallets.

For more insights into global payroll challenges and advice for addressing them, including how to set up the right service provider contract, see the ISG Provider Lens™ Focal Points briefing here.

The 2023 ISG Provider Lens™ global Payroll Solutions and Services report evaluates the capabilities of 25 providers in one quadrant: Global Managed Payroll Services (Multi-Country).

The report names ADP, Alight, IBM, Mercans, Ramco, SD Worx and TMF Group as Leaders in the quadrant. In addition, Immedis and Neeyamo are named as Rising Stars — companies with a “promising portfolio” and “high future potential” by ISG’s definition.

A customized version of the report is available from Paybix.

The 2023 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, 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.

A companion research series, the ISG Provider Lens Archetype reports, offer a first-of-its-kind evaluation of providers from the perspective of specific buyer types.

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 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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