[India] Half of companies will roll out AI-powered payroll in next year

In India, new research has found that one in two companies plan to adopt AI-powered payroll systems over the next 12 months as employers increasingly turn to automation and predictive analytics to manage workforce costs, compliance and compensation decisions, Business Standard reports.

ADP’s Future of Pay 2026: India report did, however, find that companies are growing more cautious about the risks associated with using AI in payroll, particularly around the sensitive employee data that payroll holds.

In its report, ADP highlighted the implementation of the Digital Personal Data Protection (DPDP) Act, 2023, which will require organisations to strengthen data governance, cybersecurity safeguards and transparency around how AI-generated insights are used.  

It said, “Organisations must ensure AI systems comply with strict data protection norms such as purpose limitation, data minimisation and secure storage. This means that payroll systems will need tighter governance, transparent data usage policies, robust cybersecurity measures and addressing bias in automated decisions.” 

The report is based on a survey of 344 senior HR, finance and payroll executives. Its release comes at a time when companies are grappling with uneven labour markets, evolving regulations and the growing impact of AI on jobs and skills. 

More than 43 per cent of respondents identified workforce planning as a key challenge, showing the growing reliance on payroll data for hiring, retention and cost-management decisions. 

Compliance reportedly emerged as another major concern, with around 45 per cent of organisations citing payroll compliance across regions as a significant challenge, particularly amid changing labour regulations and preparations for the labour codes. 

Taxation, statutory benefits and wage regulations were identified as among the most difficult compliance areas.

The report said, “The new Code on Wages has made employers rethink the way they have been doing payroll for many years. There is a near-term need to rebalance employee salaries in such a way that they are compliant with regulations, maximise employee experience and optimise costs.”

Source: Business Standard

(Quotes via original reporting)

In India, new research has found that one in two companies plan to adopt AI-powered payroll systems over the next 12 months as employers increasingly turn to automation and predictive analytics to manage workforce costs, compliance and compensation decisions, Business Standard reports.

ADP’s Future of Pay 2026: India report did, however, find that companies are growing more cautious about the risks associated with using AI in payroll, particularly around the sensitive employee data that payroll holds.

In its report, ADP highlighted the implementation of the Digital Personal Data Protection (DPDP) Act, 2023, which will require organisations to strengthen data governance, cybersecurity safeguards and transparency around how AI-generated insights are used.  

It said, “Organisations must ensure AI systems comply with strict data protection norms such as purpose limitation, data minimisation and secure storage. This means that payroll systems will need tighter governance, transparent data usage policies, robust cybersecurity measures and addressing bias in automated decisions.” 

The report is based on a survey of 344 senior HR, finance and payroll executives. Its release comes at a time when companies are grappling with uneven labour markets, evolving regulations and the growing impact of AI on jobs and skills. 

More than 43 per cent of respondents identified workforce planning as a key challenge, showing the growing reliance on payroll data for hiring, retention and cost-management decisions. 

Compliance reportedly emerged as another major concern, with around 45 per cent of organisations citing payroll compliance across regions as a significant challenge, particularly amid changing labour regulations and preparations for the labour codes. 

Taxation, statutory benefits and wage regulations were identified as among the most difficult compliance areas.

The report said, “The new Code on Wages has made employers rethink the way they have been doing payroll for many years. There is a near-term need to rebalance employee salaries in such a way that they are compliant with regulations, maximise employee experience and optimise costs.”

Source: Business Standard

(Quotes via original reporting)