With 2021 already here, we can see the advancement in digitization, work flexibility, and increased competition for skilled workers which leads to some significant changes in the payroll functions.

This year upgrading contracting, payroll, and benefits solutions becomes more important than ever before. Attracting and retaining top talent is pivotal for all businesses negatively impacted by the Covid-19 crisis.

In recent years, we have seen several inefficient payroll systems that are hard to administration heavy, time-consuming and expensive for most businesses. But the good news is that with all the digitization around, payroll has not been left behind. In 2021 smart, automated, and streamlined payroll solutions have become a necessity for businesses across the globe.

“92 million U.S. employees – or 59% of the American workforce – are concerned by payroll problems”


The new, advanced payroll software will see many businesses moving away from the conventional way of outsourcing and will enter a new era of better-integrated payroll and HR systems, making information sharing and reporting far easier and more efficient. With this trend, we will see a rise in the need for companies to attract the right talent with the right incentives. We can expect many companies to offer better equity, salary compensation, employee benefits with the changing priorities of an increasingly remote workforce post-COVID. 

Thus with the advancement of futuristic technologies, payroll functions are undergoing a significant transformation. Nowadays, payroll management is not only limited to giving out employee paychecks as seamless payroll processing plays an important role in the overall success of an organization.

Here are the four latest trends in payroll management to understand what the future holds for the payroll industry. Organizations and HR managers need to understand these trends and implement them to improve their HR process and stay relevant in the market. In addition with so many options in the market, companies need to do their research well in advance to choose the right payroll software. 

Increase in use of cloud-based technology

The cloud-based payroll software systems market is expected to grow over $13.3 billion by 2026.

Cloud-based technology allows you to access your data from anywhere on any device. As work from home becomes more popular, it is even more useful for HR departments as it saves their time and trouble of being physically present at the office. Thus it enables the HR managers to view and modify payroll anytime, anywhere.

With cloud-based technology, cybercrime and computer hacks are largely eliminated as cloud-based payroll software systems feature cybersecurity and software updates to ensure the safety of sensitive personal data. This allows organizations of all sizes to easily scale their business.

A study done by Forbes in 2018 revealed that 83% of enterprise workload will run on cloud platforms by 2021. Thus investing in scalable cloud-based payroll software is a great way to streamline payroll operations.  Payroll processing is an important task ruled by a host of regulations. Cloud-based payroll software not only helps businesses stay compliant with these regulations but also helps to maintain tax compliance with ease. Thus, every small and medium-sized business should embrace cloud-based payroll software for its flexibility and cost-effectiveness. 

Artificial intelligence-driven payroll

With the popularity of artificial intelligence in various fields, it comes as no surprise that AI technology is utilized in the payroll industry as well. Previously, a payroll system was limited to calculating employees’ salaries, paying them, and generating an invoice report. But now, with the latest advancements and increased demand, it is changing the way people get paid. Now employees can be paid automatically or they can be classified based upon internal rules paid accordingly.

Also, in this data-driven world, it becomes even more imperative to understand and analyze the amount of payroll data collected. This analysis can provide insights and help plan the company’s budget, identify expenses, and contribute to the overall success of the organization. As well as the AI-based chatbots can be used to help the employees with non-urgent tasks like getting their queries answered using automated chatbots.

Integration of HR Technology

The payroll systems and HRIS ( human resources management systems), are two different but are interrelated HR software solutions. A number of benefits are associated with integrating payroll and HR software. An integrated system enables managers and employees to easily access all information from a single dashboard, which increases efficiency in managing employee data. Many companies believe that an automated payroll system is too expensive but that isn't true, Transformify’s automated system is accessible to all at affordable prices and the ROI will easily outweigh the small cost.

HR software solutions like Transformify enables you to integrate your payroll system with your tracking and scheduling, accounting, project management software and enables you to share data across systems. Payroll fraud and costly mistakes are eliminated as one can track employee working hours to ensure that no one gets overpaid or underpaid for the hours worked. Thus, having all the data within a single platform enables your HR team to pool together all relevant reports to generate resourceful insights. 

Improved data security

Recently, a new law in the EU posed a requirement for payroll software systems to be GDPR compliant. This means that any sensitive or personal information one enters into the system will be automatically protected by the highest cybersecurity standards in the market. 

Every organization has a huge chunk of employee information to protect such as their wages, addresses, account number, social security number, etc. Advances in payroll like double authentication systems to access high confidentiality information to help support the conventional measures like security questions, help better protect the data. 

The way forward, and beyond

It is the right time for the HR and payroll departments to embrace personalized assistance to each employee. HR and payroll are two of the most personalized functions for any business or organization, and they need to be customized to employee’s specifications. Though these functions always need a human touch, it’s become important for all organizations to consider how automation, new technology, and data-driven KPIs can help handle large volumes of data and make HR and payroll more efficient and cost-effective. Taking advantage of these developments in the payroll domain in 2021 is a key way to stay ahead in the market.