A comprehensive study on the state of pay and payroll and its future in mid and large-sized Indian enterprises
The evolution of payroll in India has reached a pivotal moment. As we step into 2025, organisations are grappling with a rapidly changing economic landscape, evolving regulatory frameworks, and shifting workforce expectations. The complexities of payroll management have expanded beyond traditional compliance and compensation structures; they now encompass financial well-being, digital transformation, and strategic workforce planning.
The latest edition of the "Future of Pay in India 2025" report reflects insights gathered from more than 300 HR, payroll and finance leaders with over 10 in-depth interviews across diverse industries and organisation sizes. We explore in-depth the emerging trends, challenges, and best practices shaping payroll management in India today. You’ll gain key insights into how organisations are adapting their payroll strategies, and imperatives for leaders navigating the future of pay. Our research reveals a compelling narrative: Organisations that embrace payroll modernisation, invest in compliance readiness, and prioritise employee financial well-being are better positioned to navigate the uncertainties of the future workforce.
Key findings: Main themes
Navigating compliance complexities
With regulatory landscapes shifting, compliance has become a primary challenge for businesses. Stricter labour laws, tax policies, and pay equity regulations demand increased vigilance and technological adaptation.
- 71% of organisations consider keeping up with global and local payroll regulatory changes highly challenging.
- 53% find statutory compliance management moderately challenging, yet 48% feel adequately equipped to handle it.
- Data security is a growing concern, with 26% rating it as very or extremely challenging.
Payroll modernisation is key to strategic workforce management
Payroll is transitioning from a transactional function to a strategic enabler of workforce management. AI, automation, and predictive analytics are playing a pivotal role in shaping the future of payroll.
- 47% of respondents cite data analytics limitations as a significant hurdle, highlighting the need for AI-driven payroll insights.
- Cost and scalability remain critical factors, with 30% of organisations facing challenges in customising and expanding payroll solutions.
Financial well-being as a strategic priority
Employee financial security is becoming a central focus for HR and business leaders. Organisations are implementing flexible pay models and expanding financial wellness initiatives to improve employee engagement and retention.
- 46% of organisations are prioritising expanded financial wellness programs, while 30% are exploring flexible pay structures such as performance-based compensation and on-demand pay.
Strategic shifts in payroll for 2025
Organisations are rethinking payroll’s role in employee retention and business continuity. Beyond compliance, payroll strategies are evolving to enhance compensation frameworks and align benefits with workforce expectations.
- 39% of organisations are prioritising competitive pay strategies to retain top talent.
- 33% are focusing on adapting to the impending new Indian labour laws and wage codes.
The insights from this report underscore the urgency for businesses to rethink their payroll strategies—as a strategic asset. Aligning payroll with broader business goals, leveraging technology, and placing employee well-being at the centre of compensation policies enables organisations to build future-ready payroll systems that drive employee satisfaction and business performance.
ADP’s Future of Pay in India 2025 research provides a roadmap for HR, Finance and payroll leaders to confidently navigate these transformations.
For further insights into the perspectives of senior HR and payroll leaders regarding the future of payroll landscape in India, access our research publication, 'Future of Pay in India Report 2025.'
