Enterprises are increasingly integrating AI features into their payroll systems as cross-border employment and evolving workforce trends complicate traditional payroll processes, according to new research released by Information Services Group (ISG), a global technology research and advisory firm specializing in AI.
Payroll remains a business-critical function that demands fairness, accuracy, and flexibility. To achieve this, service providers must balance automation with human oversight.
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The 2025 ISG Provider Lens Global Payroll Managed Services Report highlights that organizations are actively investing in AI and adjusting to shifting workforce dynamics, transforming payroll technologies and services in the process. As these changes unfold, enterprises continue to prioritize service quality, responsiveness, and expertise when selecting payroll solutions. The corresponding U.S. report, also published, emphasizes that a surge in federal and state legislation over the past year has further complicated payroll compliance for American companies. Many are turning to advanced systems and service providers to navigate these regulations effectively.
“Payroll is still a business-critical process that needs to be fair, accurate and adaptable,” said Stacey Cadigan, partner, ISG Human Capital Management and Enterprise Transformation. “Service providers must strike the right balance between automation and human oversight.”
The report notes that AI systems in payroll are evolving beyond simple automation to provide a strategic intelligence layer that strengthens compliance, fraud detection, and data accuracy. While automation minimizes manual errors and speeds up processing, AI can also perform advanced functions such as forecasting, scenario planning, and hyper-personalization of payroll services. For example, AI tools can flag inflated overtime claims and deliver real-time alerts to prevent fraud.
As payroll software increasingly integrates with HR, finance, and time-tracking platforms, data quality becomes critical. AI now plays a central role in reducing data inconsistencies, while providers focus on ethical oversight to prevent unintentional reinforcement of pay inequalities.
The report also highlights the growing demand for personalized payroll services. Global workforces require compliance with diverse taxation, pension, and allowance regulations. In response, providers are deploying multicurrency solutions, automated tax residency tracking, and AI-driven classification tools. In the U.S., companies are adopting AI-driven earned wage access (EWA) features that allow employees to access earned wages before payday.
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Enterprises are favoring platform longevity and integration over bundled services, embracing standalone platforms supplemented with local expertise. “Companies are taking a more modular approach to payroll that emphasizes agility, interoperability and data ownership,” said Rachel Anderson, lead analyst, ISG Provider Lens Research, and lead author of the report. “Standalone platform providers aim for long-term client relationships that outlast changes in service partners or moves from in-house to outsourced models.”
The report also identifies emerging trends such as automated compliance checks to prevent employee or gig-worker misclassification and pilot EWA programs outside the U.S.
Globally, ISG names ADP, CloudPay, Dayforce, EY, Mercans, Neeyamo, Ramco Systems, SD Worx, Strada, and UKG as Leaders in multicountry managed payroll services, with Deel recognized as a Rising Star. In the U.S., ADP, Dayforce, isolved, Paychex, Paycom, Strada, and UKG lead the Managed Payroll Services quadrant, while Paylocity earns Rising Star status. Notably, isolved achieves the ISG CX Star Performer award for 2025, reflecting top customer satisfaction scores.
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