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AI, Data Management Drive Enterprise Payroll Innovation

via Business Wire

Service providers help companies strengthen compliance, improve accuracy, personalize employee experience, ISG Provider Lens® report says

Enterprises are adding AI features to their payroll systems as cross-border employment and other trends make payroll processes more complex, according to new research reports published today by Information Services Group (ISG) (Nasdaq: III), a global AI-centered technology research and advisory firm.

The 2025 ISG Provider Lens® global Payroll Managed Services report finds that payroll technologies and services are being transformed as organizations invest in AI and adapt to changing workforce dynamics. Amid these changes, enterprises continue to prioritize service quality, responsiveness and expertise when choosing payroll services. The 2025 ISG Provider Lens® Payroll Managed Services report for the U.S., also published today, finds that a surge of new federal and state laws over the past year has made payroll even more challenging for U.S. companies. Many are relying on advanced systems and service providers to keep them compliant.

“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.”

AI systems in payroll are evolving beyond automation to form a strategic intelligence layer that enhances compliance, fraud detection and data accuracy, the report says. While automation reduces manual errors and shortens processing times, AI can also carry out advanced tasks such as forecasting, scenario planning and hyperpersonalization of payroll services. To prevent fraud, AI tools can identify inflated overtime claims and send real-time alerts.

Data quality is increasingly important as enterprises integrate payroll software with HR, finance and time-tracking platforms, so AI is taking on a central role in reducing data issues, ISG says. Payroll managed service providers are increasingly aware of ethical considerations, including the possibility that algorithms could unintentionally reinforce pay inequalities, and are ensuring responsible oversight.

Many organizations have a growing need to personalize payroll services for employee preferences, the report says. Having workforces in multiple countries further complicates personalization, because employers need to comply with different rules on taxation, pensions and allowances. Providers are developing multicurrency solutions, automated tax residency tracking and AI-driven classification tools to address these challenges. In the U.S., companies are adopting AI tools to meet demand for more personalized earned wage access (EWA) features, which give employees access to their earned wages before payday.

Enterprises now favor payroll platform longevity and integration over the convenience of technology bundled with services, ISG says. They are embracing standalone platforms and adding services and local expertise from providers of their choice. By decoupling critical systems from service contracts, companies increase control over data and digital infrastructure.

“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 reports also explore other payroll technology and service trends, including automated compliance checks to prevent misclassification of employees or gig workers and pilot introductions of EWA outside the U.S.

For more insights into the payroll challenges facing enterprises both globally and in the U.S., plus ISG’s advice for addressing them, see the ISG Provider Lens® Focal Points briefing here.

The 2025 ISG Provider Lens® global Payroll Managed Services report evaluates the capabilities of 26 providers across one quadrant: Multicountry Managed Payroll Services.

The report names ADP, CloudPay, Dayforce, EY, Mercans, Neeyamo, Ramco Systems, SD Worx, Strada and UKG as Leaders in the quadrant.

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

The 2025 ISG Provider Lens® Payroll Managed Services report for the U.S. evaluates the capabilities of 19 providers across one quadrant: Managed Payroll Services: U.S.

The report names ADP, Dayforce, isolved, Paychex, Paycom, Strada and UKG as Leaders in the quadrant.

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

In the area of customer experience, isolved is named the ISG CX Star Performer for 2025 among payroll managed services providers in the U.S. It 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.

The 2025 ISG Provider Lens® global Payroll Managed Services report is available to subscribers or for one-time purchase on this webpage. The 2025 ISG Provider Lens® Payroll Managed Services report for the U.S. is available 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 (Nasdaq: III) is a global AI-centered technology research and advisory firm. A trusted partner to more than 900 clients, including 75 of the world’s top 100 enterprises, ISG is a long-time leader in technology and business services that is now at the forefront of leveraging AI to help organizations achieve operational excellence and faster growth. The firm, founded in 2006, is known for its proprietary market data, in-depth knowledge of provider ecosystems, and the expertise of its 1,600 professionals worldwide working together to help clients maximize the value of their technology investments.

Payroll is still a business-critical process that needs to be fair, accurate and adaptable. Service providers must strike the right balance between automation and human oversight.

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