U.S. Firms Seize Innovations to Tackle Payroll Complexity

Rhea-AI Summary

The 2024 ISG Provider Lens™ Payroll Solutions and Services report for the U.S. reveals that enterprises are rapidly adopting new payroll technologies and services to address complex challenges. Key findings include:

1. AI and ML are central to advances in payroll technology, improving accuracy, efficiency, and intelligence.

2. U.S. companies are prioritizing pay transparency due to equal pay legislation.

3. There's an increased focus on payroll data privacy, with providers enhancing security measures.

4. U.S. firms are quicker to adopt tools giving employees more visibility and control, such as on-demand pay and pay stub verification apps.

5. Predictive analytics and AI-powered personalized financial insights for employees are gaining importance.

The report evaluates 16 providers in the Managed Payroll Services: U.S. quadrant, naming ADP, isolved, Paychex, Paycom, Paycor, and Strada as Leaders.

Positive

• Rapid adoption of new payroll technologies and services by U.S. enterprises
• Implementation of AI and ML to improve accuracy, efficiency, and intelligence in payroll processes
• Increased focus on pay transparency and data privacy
• Quicker adoption of employee-centric tools like on-demand pay and pay stub verification apps
• Growing importance of predictive analytics and AI-powered financial insights for employees

Negative

• None.

Market Research Analyst

The adoption of innovative payroll technologies in the U.S. market signals a significant shift in enterprise priorities. This trend is likely to benefit payroll technology providers and create opportunities for companies offering AI-enabled solutions. The faster adoption rate in the U.S. compared to other regions could lead to a competitive advantage for U.S. firms in terms of operational efficiency and employee satisfaction.

The increased focus on pay transparency and data privacy could drive demand for more sophisticated payroll systems, potentially boosting sales for companies that offer these features. However, the slower-than-expected adoption of on-demand pay globally might indicate potential risks associated with rapid implementation of new payroll technologies. Investors should closely monitor how providers balance innovation with regulatory compliance and data security measures.

Tech Expert

The integration of AI and ML into payroll systems represents a significant technological advancement in the industry. These technologies are enhancing accuracy, efficiency and intelligence in payroll processes, which could lead to substantial cost savings and improved employee satisfaction for adopting companies.

The emphasis on data privacy and security features such as encryption, multi-factor authentication and role-based permissions indicates a maturing market that's responding to regulatory pressures. This trend could favor established providers with robust security infrastructure over newer entrants. The growing interest in employee-centric tools like pay stub verification apps and on-demand pay systems suggests a shift towards more flexible and transparent payroll solutions, potentially opening new revenue streams for innovative providers in the payroll technology space.

Financial Analyst

The strategic shift in payroll management presents both opportunities and challenges for the financial sector. The increased outsourcing of payroll functions could lead to revenue growth for specialized service providers. However, this trend might also result in reduced in-house payroll staff for many companies, potentially impacting employment in this sector.

The adoption of AI-driven payroll solutions could lead to significant cost savings for businesses in the long term, potentially improving profit margins. However, initial implementation costs might impact short-term financials. The focus on pay transparency and real-time data updates may require substantial investments in technology infrastructure. Investors should watch for companies that can effectively balance these costs with the potential for improved operational efficiency and employee satisfaction, which could translate to better financial performance over time.

Enterprises boost preparedness for growing data privacy risks by quickly adopting new, AI-enabled features, ISG Provider Lens™ report says

STAMFORD, Conn.--(BUSINESS WIRE)-- Enterprises in the U.S. are adopting new payroll technologies and services to solve increasingly complex problems, in some cases faster than companies in other regions, 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™ Payroll Solutions and Services report for the U.S. finds that changes in enterprise management and employee experience, such as the rise of remote work, make payroll a more strategic function and introduce new challenges. Facing new requirements with limited internal resources, many enterprises are outsourcing components of payroll to gain access to the latest technologies.

“Employees and governments both are demanding more from payroll departments,” said Stacey Cadigan, partner, ISG Human Capital Management and Enterprise Transformation. “Service providers continue to develop new ways to address and anticipate new requirements, especially using AI.”

AI and ML are central to many advances in payroll technology, introducing greater accuracy, efficiency and intelligence, the report says. As in other regions, U.S. enterprises are starting to deploy AI in all business processes, including customer-facing functions.

Increasing regulation is shaping payroll challenges and solutions. In the U.S., equal pay legislation has led companies to prioritize pay transparency to attract new hires and maintain good employee relations, ISG says. They expect systems to accurately update pay data in real time and make it available on easy-to-use dashboards.

U.S. enterprises have sharpened their focus on payroll data privacy over the past year, though most remain less aware than firms in Europe, where penalties for unsafe data handling are higher, ISG notes. As U.S. laws grow stricter, providers are prioritizing encryption, secure data storage and access control methods, including multi-factor authentication and role-based permissions. Providers’ toolkits also include incident response plans and regular employee training.

“The U.S. market is increasingly savvy about payroll privacy,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Enterprises are embracing new tools and expect providers to use best practices and regular testing.”

Companies in the U.S. have been quicker than others to adopt some tools that give employees more visibility and control of payroll, ISG says. On-demand pay, which lets workers receive partial payment before the pay period ends, has seen slower-than-expected adoption in most of the world but more acceptance in the U.S. Likewise, the U.S. market shows greater interest in apps that let employees check and correct their pay stubs before payroll is processed.

The report also explores other trends affecting U.S. payroll organizations, including the growing importance of predictive analytics and AI-powered personalized financial insights for employees.

For more details on payroll challenges U.S. enterprises face, including the integration of new platforms with legacy systems and the risks of offering on-demand wage access, see the ISG Provider Lens™ Focal Points briefing here.

The 2024 ISG Provider Lens™ Payroll Solutions and Services report for the U.S. evaluates the capabilities of 16 providers in one quadrant: Managed Payroll Services: U.S.

The report names ADP, isolved, Paychex, Paycom, Paycor and Strada (formerly Alight) as Leaders 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.

The 2024 ISG Provider Lens™ Payroll Solutions and Services report for the U.S. 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240920682666/en/

Press Contacts:

Will Thoretz, ISG

+1 203 517 3119

will.thoretz@isg-one.com

Julianna Sheridan, Matter Communications for ISG

+1 978-518-4520

isg@matternow.com

Source: Information Services Group, Inc.

FAQ

What are the key findings of the 2024 ISG Provider Lens™ Payroll Solutions and Services report for the U.S.?

The report highlights rapid adoption of new payroll technologies, increased use of AI and ML, focus on pay transparency and data privacy, quicker adoption of employee-centric tools, and growing importance of predictive analytics in payroll solutions.

Who are the Leaders in the Managed Payroll Services: U.S. quadrant according to the ISG report?

The report names ADP, isolved, Paychex, Paycom, Paycor, and Strada (formerly Alight) as Leaders in the Managed Payroll Services: U.S. quadrant.

How is AI impacting payroll solutions in the U.S. according to the ISG report?

AI and ML are central to advances in payroll technology, introducing greater accuracy, efficiency, and intelligence. They are being deployed in all business processes, including customer-facing functions.

What is driving the focus on pay transparency in U.S. enterprises?

Equal pay legislation has led U.S. companies to prioritize pay transparency to attract new hires and maintain good employee relations. Companies expect systems to accurately update pay data in real time and make it available on easy-to-use dashboards.