Chennai, India, Mar 17th: Asia Pacific’s (APAC) organisations are scaling up the use of artificial intelligence (AI) to modernise payroll delivery as skills shortages persist and workforce models evolve, according to ADP’s latest report, The Potential of Payroll 2026.
The report finds that skills shortages continue to challenge payroll teams in APAC, with 80% of organisations reviewing how to run payroll with fewer people, well above the global average of 72%. Reskilling and upskilling are top-of-mind priorities to address this, with nearly seven in 10 (74%) payroll leaders in APAC reporting that staff shortages have already impacted their payroll operations.
Organisations are turning to AI to complement upskilling, with nearly half (49%) of respondents exploring the technology to support leaner operating models, and a further 33% of organisations identifying AI as a key driver of payroll transformation over the next 2-3 years. Today, organisations are primarily using AI to detect fraudulent transactions, accelerate report generation, and automate data entry.
India is emerging as one of the most proactive markets globally in adopting AI into payroll process. More than one-third (34%) of Indian organisations surveyed plan to implement AI in the near term, ranking second worldwide.
AI adoption in India is already expanding across critical payroll functions. Around half of the companies using AI are applying it to automate workflows, streamline data entry, and calculate taxes, benefits and overtime. Additional areas currently being explored or implemented include audits, compliance management and data validation, according to the report.
Rahul Goyal, Managing Director, ADP India and Southeast Asia, said: “In India, payroll sits at the intersection of scale and scrutiny. Organisations are prioritising stronger controls, audit readiness, and high quality data to support decision-making. As AI takes on repeatable tasks, payroll teams will shift their focus to data integrity, regulatory navigation and governance excellence.”
The study surveyed over 1,800 senior payroll stakeholders from organisations with 1,000 or more employees globally. Respondents included leaders from Australia, China, Singapore, India, and Japan, and the study examined how payroll is adapting to technological, regulatory, and workforce changes.
Data Security and Compliance: Top of Mind for APAC
Alongside AI efficiency, data security has emerged as a factor influencing payroll transformation in APAC. The report finds that 79% of organisations believe data security regulations are slowing AI adoption. About half (51%) of respondents want payroll teams to spend more time strengthening data security practices in the year ahead, by pursuing initiatives like new policies, safeguards, and continuity plans.
Compliance challenges remain persistent in APAC, with 71% of respondents admitting they have incurred penalties for payroll non-compliance once or twice a year. The region’s complex regulatory landscape has contributed to these challenges, with four in five organisations (80%) reporting difficulty keeping up with local payroll regulations across multiple countries. To adapt, 78% are considering outsourcing payroll processes to better support workforces across multiple geographies.
Global Evolution of Payroll
AI transformation, data security enhancements, and navigating regional compliance reflect a broader global shift as organisations strategically restructure and modernise their payroll operations to adapt to an evolving world of work.
According to the survey, in 2026, organisations are also planning to pursue the following strategies:
- Strengthening payroll’s strategic identity through skills and capability development: Payroll is becoming more visible and decoupling from finance functions, with nearly half of organisations (43%) operating with stand-alone payroll functions, a marked shift from last year. However, 68% of respondents admit that their payroll service has been affected by a shortage of payroll staff and are using this environment to redesign their teams and build future-ready capacity.
- Growing data integration and IT Maturity: Foundations around IT readiness, governance, and data connectivity are strengthening, with just under a third of organisations integrating payroll data with other global business solutions across all countries they operate in, and 33% saying they have some global integration across several countries.
- Enhancing global reporting and visibility: Only 12% of leaders today have full regional and global reporting, with 31% having no such visibility at all. In response, organisations are pursuing improved data flows, quality, standardisation, and analytics to inform strategic business activities like workforce planning and financial forecasting.
- Elevating the employee experience: Leaders are recognising payroll’s role as a driver of trust and engagement among employees, and prioritising accuracy (45%), better communication (34%), improved self-service (35%), and pay-on-demand (36%) to deliver more visible and accurate payroll.
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