Automation is changing the way nearly every professional does their work in the modern world.
One look at the HR payroll software market, and it becomes obvious that payroll is no different as new software solutions are making the task of a payroll run easier than ever before.
In this article, I'm going to dig into the growth of the HR payroll software market, where it’s headed and take a look at some of the best solutions that are out there.
HR Payroll Software Market
Differing analysis of any market will leave with you quite a range of valuations and projections for market growth or decline.
Current size
For example, in 2023, the HR payroll software market was valued somewhere between $7.3 billion and $27 billion depending on which report you read. That number is expected to grow to somewhere between $8.1 billion and $33 billion in 2024.
Rather than get lost in the valuation, perhaps the more important thing to note is the compound annual growth rate (CAGR) for this market, which by all accounts is set for growth with the average estimate being somewhere in the ballpark of 10% annual growth.
Projected Size
At that growth rate, the HR payroll software market will grow to be worth somewhere between $19 billion and $60 billion by 2030.
In any case, the estimates are realistic given the implementation of AI into payroll processing and the increased reliability of payroll software platforms to tackle any compliance concern.
Importance of Payroll Software
Payroll software is of increasing importance for employers as practices around pay transparency and equity have become increasingly important to employees and are examined by state and national governments.
Other business factors making payroll software a major factor in organizational success include:
- Improving data security
- Creating efficiency that replaces manual processes
- Improved analytics and reporting
- Scalability for growing businesses
- Flexibility that suits technology capabilities
- Cost savings
Types of Payroll Software
Different types of payroll software cater to different business needs, providing solutions that range from comprehensive, all-in-one systems to specialized, industry-focused applications.
Here, we’ll focus on five of the most common types.
1. On-Premises Payroll Software
- Description: Installed directly on the company’s local servers and computers.
- Advantages: Offers full control over data security, customization, and integration with other on-premises systems.
- Ideal For: Large organizations with dedicated IT staff and specific customization needs.
2. Cloud-Based Payroll Software
- Description: Hosted on remote servers and accessed via the internet.
- Advantages: Provides flexibility, automatic updates, and remote access. Reduces the need for extensive IT infrastructure.
- Ideal For: Small to medium-sized businesses, remote teams, and companies looking for scalable solutions.
3. Integrated HR and Payroll Software
- Description: Combines payroll functions with broader human resources management tasks. Often comes in the form of an HRIS that has payroll functionality.
- Advantages: Streamlines HR processes, enhances data accuracy, and improves overall employee management.
- Ideal For: Organizations seeking a unified solution for HR and payroll management.
4. Industry-Specific Payroll Software
- Description: Tailored to meet the unique needs of specific industries, such as construction, healthcare, or retail.
- Advantages: Offers specialized features and compliance tools relevant to the industry.
- Ideal For: Businesses requiring industry-specific payroll functionalities and compliance requirements.
Related read: Reviews of the best payroll software for construction companies
5. Outsourced Payroll Services
- Description: Outsourced payroll is managed by third-party providers who handle all payroll-related tasks, such as a professional employer organization or employer of record.
- Advantages: The pros of using a payroll service include reduced administrative burden, ensured compliance, and allowing businesses to focus on core activities.
- Ideal For: Small businesses without dedicated payroll staff and companies looking to outsource non-core functions.
Drivers of Payroll Software Market Growth
The payroll software market’s growth is driven by several key factors that are reshaping how businesses manage their payroll and HR functions. Let’s take a look at some of the most important ones.
Cloud vs. On-Premises Solutions
One of the biggest trends is the shift from traditional on-premises payroll software to cloud-based solutions. Cloud-based payroll software offers flexibility, scalability, and cost-effectiveness.
Businesses no longer need to maintain extensive IT infrastructure or worry about regular updates and security patches. With cloud solutions, everything is handled remotely, making it easier for businesses to scale their operations and access their payroll data from anywhere, at any time.
Artificial Intelligence (AI)
AI is revolutionizing the payroll software market by introducing advanced features that enhance accuracy and efficiency. AI-driven tools can automate complex calculations, predict payroll trends, and identify discrepancies before they become issues.
For example, AI can flag unusual patterns in payroll data that might indicate fraud or errors, helping businesses maintain payroll compliance and avoid costly mistakes.
Additionally, AI-powered chatbots can provide instant support to employees, answering common payroll queries and reducing the burden on HR teams.
Increased Automation of HR Processes
Modern payroll software integrates seamlessly with other HR systems, automating a wide range of processes from time tracking to benefits administration.
This automation reduces manual work, minimizes errors, and ensures that payroll processing is faster and more reliable.
For instance, automated time tracking systems can directly feed into payroll calculations, ensuring employees are paid accurately for the hours they've worked without manual data entry.
Regulatory Compliance and Reporting
Staying compliant with ever-changing labor laws and tax regulations is a major challenge for businesses. Payroll software simplifies compliance by automatically updating to reflect new laws and generating accurate tax reports.
This not only saves time but also helps businesses avoid penalties and legal issues. The ability to generate detailed reports and analytics also supports better decision-making and strategic planning.
Employee Self-Service
Modern payroll software often includes employee self-service portals, where employees can access their pay stubs, tax forms, and personal information. This feature improves transparency and empowers employees to manage their own payroll-related tasks, reducing the workload for HR departments.
Cost Efficiency
For many businesses, especially small and medium-sized enterprises, the cost is a significant factor when looking at payroll services or software.
Payroll technology can reduce the need for a large in-house HR team by automating many routine tasks. The shift to subscription-based models also means businesses can spread the cost over time, rather than making a large upfront investment.
Future Trends and Predictions
Employee expectations around pay are changing and with it, payroll systems will have to evolve to meet those expectations. Here are some areas where your payroll service or software providers will be looking to up their game in the coming years.
Flexible pay
Payroll is now predominantly a digital function, with only about 3% of U.S. employees still receiving paper checks. Offering diverse payment options will become essential as employees increase their financial literacy and begin to manage their money in new ways.
According to research from ADP, 76% of all employees say that it’s important to them that their employer offer flexible pay, sometimes called Earned Wage Access (EWA), or the ability to pull from accrued wages whenever they want rather than only receiving funds on a specific day within the pay period.
This also sometimes referred to as "on demand pay".
There are now systems that let employees manage their own payment schedules, with vendors and apps allowing them to choose when they get paid without disrupting their employer’s payroll processes.
Growth of cryptocurrency
And how those payments are received will likely change as well.
Cryptocurrency payments are becoming more popular, for example. A report from Statista shows that over 39% of American adults would consider using Bitcoin for transactions and purchases they make. It’s not unlikely then that more people will warm to the idea of receiving their paycheck via crypto in the future.
However, many employers are still unfamiliar with cryptocurrency and the associated risks and regulations. Issues like taxes, international laws, and the definition of “legal tender” need careful consideration.
For instance, Bitcoin isn't recognized as legal tender in countries like Belgium, Finland, and Sweden, but it isn't banned either. Payroll software can help manage these complexities with automated compliance, enabling employers to adopt Bitcoin payments smoothly.
More AI
There are some remarkable capabilities around AI for payroll. Whether that’s detecting anomalies, predicting employee requests or streamlining compliance, and avoiding errors through the automation of time-consuming tasks that are prone to error. But it also will drive improvement in some other key areas.
Real time analysis
AI-powered payroll systems can instantly analyze vast amounts of data, providing real-time insights and identifying patterns that human analysts might miss.
For example, AI can monitor payroll data for discrepancies, such as overtime inconsistencies or unusual payment patterns, and flag these issues immediately.
This level of instant analysis could help businesses address problems before they escalate, ensuring payroll accuracy and compliance with labor laws.
Predictive Analytics
AI can also use historical payroll data to predict future trends. By analyzing past payroll records, AI algorithms can forecast labor costs, budget needs, and potential financial risks.
This predictive capability allows businesses to plan more effectively and make informed decisions about hiring, budgeting, and resource allocation.
Conversational experience
The days of manual payroll reporting are coming to an end. Earlier this year, UKG announced it was deploying generative AI in its "Pro" platform to create a question-and-answer experience to streamline the payroll reporting process.
In other words, no more combing through datasets or manually reviewing employee profiles. A user of the platform can simply ask a text-based question such as “Show me all employees who have a wage garnishment” or “Create a list of all employees paying into multiple retirement accounts.”
“Payroll reporting often feels like seeking a needle in a haystack, and by the time the frantic search for information is over, it’s often too late to take action on,” said Hugo Sarrazin, chief product and technology officer at UKG in a press release. “With generative AI, we’re making critical payroll data easily searchable and accessible through conversational experiences, while also putting that information into actionable context for payroll teams.”
Enhanced security protocols
Advanced algorithms can identify unusual patterns and potential breaches instantly, allowing for swift action to protect sensitive data. AI also ensures continuous monitoring and updates, keeping payroll systems secure against evolving cyber threats.
This proactive approach minimizes risks and maintains the integrity of payroll information.
The Gig Economy Impact
More than one-third of the U.S. workforce is made of gig workers and that number is expected to grow to more than half of the workforce by 2027.
This trend presents an interesting question for our society about how these workers receive benefits with more insurance companies now offering policies and services specifically tailored to independent contractors.
In the future, it’s likely that payroll software will have to account for this and streamline payment of premiums to the contractors desired healthcare provider.
Best Solutions on the Market
At this point, you might be wondering about the best solutions on the market. We’re here to help.
Deel
Best for compliant payroll in 150+ countries
Deel is a global payroll platform available in over 150 countries and all 50 U.S. states, ensuring compliance with local regulations. With Deel, you can hire and pay anyone as a contractor or employee without worrying about local laws, complicated tax systems, or international payroll.
Why I picked Deel: I chose this software because it provides end-to-end global workforce management, including contract adjustments, expense reimbursements, and off-cycle payroll adjustments. You can schedule payments in advance and run off-cycle payroll whenever needed.
It's also worth noting that the company has local country experts working in-house to run global payroll and ensure all regional contributions are accounted for. Their team provides 24/7 online support, and dedicated account managers are available for specific requests.
Deel Standout Features and Integrations:
Standout features I noticed were the software's 10+ payment options, ranging from bank transfers to cryptocurrency pay-ins. What makes this stand out from other options is that employees and contractors can self-manage their pay and personal data, and use providers like Wise, PayPal, Payoneer, and Revolut for easy international withdrawals.
Integrations include Ashby, BambooHR, Expensify, Greenhouse, Hibob, NetSuite, Okta, OneLogin, QuickBooks, Xero, Workday, and Workable. The software’s open API can support additional custom software integrations.
Pros and cons
Pros
- Knowledgeable support staff
- Detailed dashboards
- Add-ons available to localized benefits and global payroll
Cons
- Limited invoice customization
- Contract templates could be simplified
Rippling
Best for global payroll with tons of integrations
Rippling’s modern payroll system is part of their all-in one HR, payroll, and IT platform. It provides the robust functionality of legacy systems with the ease of newer systems to deliver the best of both worlds.
Why I picked Rippling: Rippling allows users to onboard new hires quickly and automatically, run payroll with a click, and pay employees or contractors, anywhere. Their system is built on centralized employee data, so businesses can automate all of the admin work that’s normally required to run payroll and update employee information.
Rippling Features and Integrations:
Features include domestic and global payroll, an organization chart, expense management, talent management, local tax filing, country-specific compliance, and international benefits programs. Companies can also manage their employees’ offer letters, I-9s, health insurance, and time off.
One feature I found particularly useful is the ability to compare your current pay run with previous runs side-by-side to quickly spot any changes. This visual comparison tool makes it easier to spot potential errors and verify that all expected payroll changes have been entered.
Integrations are available with Google Workspace, Typeform, Databricks, BrightHire, Atlassian, Google Workspace, Slack, Checkr, Zoom, GitHub, Asana, 1Password, Zendesk, Dropbox, Sage Intacct, Netsuite, Microsoft 365, QuickBooks, DocuSign, Upwork, LinkedIn, and dozens more.
RUN Powered by ADP
Best for small businesses
RUN by ADP is a comprehensive payroll and HR software solution designed to enhance payroll processing and human resource management for small businesses.
Why I picked RUN by ADP: I like its comprehensive suite of features tailored to meet the needs of small businesses. One of the most significant advantages is its ability to automate payroll processes, including tax calculations and filings. This feature not only saves time but also reduces the risk of errors, ensuring compliance with federal and state regulations.
The software also automatically calculates benefits and retirement deductions, and it customizes the experience based on the specific needs of the business and its employees.
RUN by ADP Standout Features and Integrations:
Standout features include AI-powered error detection that learns your payroll and proofs your data for you, flagging potential errors before they happen. It also offers direct deposit, multi-jurisdiction payroll, job costing, and a range of HR functions, like background checks, new employee onboarding, and forms and documents.
Integrations include Quickbooks, Wave, Xero, ClockShark, Points North, TruSaic, Compy, Wex, Synerion, JazzHR, 7Shifts, Snappy Gifts, Absorb LMS, SmartRecruiters, and hundreds more.
Pros and cons
Pros
- Good integrations
- Employee self-service portal
- Good mobile app
Cons
- Most HR functions are only available on higher-tier plans
- Setup can be complex
Remote
Best for international and local payroll consolidation
Remote empowers companies of all sizes to pay and manage full-time and contract workers around the world. Remote makes it possible for users to take care of international payroll, benefits, taxes, stock options, and compliance in over 50 countries.
Why I picked Remote: Their payroll software makes it easy to onboard and pay your contractors and employees in one modern, secure, cloud-based platform, freeing you and your team up to focus on more strategic work.
Through Remote’s platform, you’ll have access to your most important employment documents, data, and HR processes, while Remote takes care of your localized payroll, benefits, compliance, IP protection, and taxes wherever your team works.
Their platform is managed by a network of HR and legal experts who stay on top of the nuances, changes, and complexities of local regulations to ensure full compliance with all relevant legislation at all times, giving their clients peace of mind.
Remote Standout Features and Integrations:
Features include full-service global payroll, expertly-managed compliance tracking, and a centralized platform to manage all your employee and payroll data efficiently.
Remote also partners with powerful HR systems to connect people, payroll and HR data. Through Remote’s global employee API and native partner integrations, Remote empowers partners to leverage its global infrastructure in their offerings and help more customers scale their global teams faster.
Integrations are available with 25+ software applications including Workday, BambooHR, Greenhouse, Gusto, Hibob, Personio, Slack, Xero, and other systems. Users can also connect Remote with over 5,000 external apps via the Zapier integration.
Paylocity
Best for automated tax calculations
Paylocity is an all-in-one payroll and human resources platform built to help businesses manage their workforce efficiently. It offers solutions for handling payroll, talent management, and time tracking, all through a cloud-based system.
Why I picked Paylocity: When it comes to payroll, Paylocity helps you run payroll accurately and on time with automated tax calculations and filings. You can manage deductions and garnishments, ensure compliance with wage and hour regulations, and track payments for direct deposits or paychecks.
The system also provides detailed payroll reports that let you analyze labor costs and payroll data in real time. This way, you can keep track of everything from overtime to tax liabilities, without needing manual calculations or separate tools.
Paylocity Standout Features and Integrations:
Standout features include expense management, tax services that cover all 50 US states, on-demand payments, managed garnishment services, and global payroll abilities covering 100+ countries.
In addition to Paylocity's payroll features, their software also includes time and labor management tools that let you track employee attendance and manage shift schedules. Its talent management tools allow you to set up performance reviews and manage employee development. Additionally, the benefits administration feature helps your team handle employee health plans, retirement options, and other benefit packages.
Integrations include ClearStar, Microsoft Dynamics 365, 7shifts, AirMason, APA Benefits, Azure, Atlassian, Asana, Box, ClearCompany, Dropbox, Freshdesk, Google Workspace, Greenhouse, HubSpot, Slack, Salesforce, Trakstar, and Zoho People.
Pros and cons
Pros
- Includes tax compliance services
- On demand payment options
- Includes performance management features
Cons
- Setup can be time consuming
- Lacks support for independent contractor payments
Paycor
Best for automating payroll tasks
Paycor is a human capital management solution with payroll, workforce management, and employee experience features. The payroll product can handle payroll, expense management, time and attendance, and more.
Why I picked Paycor: Paycor offers automation features to run payroll automatically, as scheduled for a specific day and time. Multiple payment options are available through the software, including direct deposit, paycards, or on-demand pay. It also provides in-depth compliance feedback to help you respect the employment laws in your state. Because of its robust functionality, I think it's best suited to large and enterprise businesses.
Paycor Standout Features and Integrations:
Standout features include its pay-on-demand feature, which allows employees to access their earned wages before their next official payday. I thought this was a modern functionality. It's also convenient that expense management, scheduling and time tracking, and employee experience monitoring are all also available in the platform.
Integrations include several other tools for wage and salary verification, expense management, employee wellness, certified payroll, and FMLA. Key software systems to note include Certify, ESR, Payfactors, and WageWorks.
Pros and cons
Pros
- All-in-one solution well suited to enterprise businesses
- Live and on-demand product training and industry webinars
- Mobile app allows for payroll management on the go
Cons
- Time cards are a bit simplistic
- UX can be a little clunky at times
GoCo
Best for flexible payroll systems
GoCo is an all-in-one HR platform designed to simplify payroll and HR tasks for small and mid-sized businesses. It offers tools for payroll processing, benefits administration, time tracking, and compliance management.
Why I picked GoCo: GoCo offers flexible payroll solutions, featuring integration capabilities with existing payroll systems as well as its own embedded system, Execupay. This flexibility supports businesses in selecting the most suitable payroll management option, whether it's their own or GoCo's.
GoCo Standout Features and Integrations:
Features include automated new-hire setup, benefits deductions, paycheck calculations, time tracking, and PTO management, which collectively enhance accuracy and minimize administrative tasks.
Other standout features include tax calculation and filing services that help you stay compliant with tax regulations, reducing the risk of penalties. GoCo also provides unified HR and payroll support, offering a single point of contact for assistance. It even offers the ability for users to create and automate custom HR workflows.
Integrations include QuickBooks Online, ADP Workforce Now, Paychex, JazzHR, Greenhouse, Workable, Slack, Zoom, Google Workspace, Microsoft Teams, Checkr, and Verified First.
Pros and cons
Pros
- Strong onboarding and benefits administration
- Automates various HR processes
- Flexible payroll integration options
Cons
- Limited customization options
- May not be ideal for large enterprises
Oyster HR
Best for hiring in 180+ countries
Oyster’s HR and payroll management platform delivers fully-compliant online global payroll services with automatic local deductions, taxes, and contributions, no matter where your team is located.
Why I picked Oyster: Organizations in over 180 countries can use the software to recruit and hire staff globally, so I picked Oyster for its global and remote payroll management. You can pay international employees or independent contractors in their local currency (over 120 currencies are supported), and reimburse them for out-of-pocket expenses.
The software has built-in tools to help you manage international payroll taxes and employment law. It has carefully crafted compliance guardrails in place to ensure your company receives the legal protection you’ll need when operating in a new territory.
Oyster Standout Features and Integrations:
Standout features include the employment cost calculator that estimates the cost of hiring a new employee in any country, including their required taxes and government contributions. I was also impressed by its built-in contractor misclassification assessment tool, which helps you determine whether a vacant position should be filled with a new employee or an independent contractor.
Integrations include BambooHR, Bob, Expensify, Greenhouse, Okta, Oracle Netsuite, QuickBooks Online, Xero, and Workday.
Pros and cons
Pros
- Global health insurance add-on available
- Oyster Academy provides relevant training and resources
- Automated onboarding for speedier implementation
Cons
- Robust system, can take time to learn
- Refundable security deposit required
RemoFirst
Best international payroll software for global teams in 170+ countries
RemoFirst is a payroll software that provides users with a secure, efficient, and easy-to-use platform for managing payroll processes in 170+ countries. Users can input employee information, calculate taxes, and generate pay stubs. The software offers many features, including employee self-service, direct deposit, tax compliance, and reporting.
Why I picked RemoFirst: Using RemoFirst, you can manage payroll and invoicing for businesses with employees abroad. The software automatically generates accurate paychecks and invoices in the local currency and tracks employee vacation days, sick leave, and expense reimbursements. RemoFirst sends invoices every month, ensuring your employees are paid on time. Users can access a dedicated account manager and RemoFirst's knowledge base to troubleshoot any issues.
RemoFirst also lets businesses manage employee benefits programs with ease. Users can track employee eligibility, enroll employees in benefits plans, and even change existing plans. It also allows businesses to generate employee enrollment and participation reports. Dashboards summarize team distribution and spending with visual graphs and charts.
RemoFirst Standout Features and Integrations:
Features include a cost calculation tool that helps businesses budget costs effectively by considering various factors, including the number of employees, the type of benefits provided, and the frequency of payments. Employees can also view their equity and bonus information in real time, and the system automatically calculates vesting schedules and payout dates.
Other features include tools for managing employee shares and dilution, plus tools to issue specialized reports on equity and bonus activity. Its reporting feature allows users to generate detailed reports on their payroll data which can be generated for a specific period.
Integrations include Slack, Microsoft Teams, Google Workspace, BambooHR, Greenhouse, Workable, Lever, Gusto, QuickBooks, Xero, Zapier, HubSpot, Salesforce, Asana, Trello, Jira, PayPal, Stripe, and TransferWise.
Pros and cons
Pros
- Dedicated account managers
- Customizable dashboards
- Multi-currency abilities within a single payroll run
Cons
- Pricing structure varies for different services
- No mobile app available
OnPay
Best for niche industries
OnPay’s payroll platform helps organizations with payroll processing, managing HR functions, and integrating employee benefits, all in one place. Their software includes a full suite of payroll services and compliance settings for the US, covering all 50 states.
Why I picked OnPay: I picked this company because special payroll services are offered at no additional cost for niche industries like restaurants, farms and agriculture, churches and clergy, and nonprofits.
They provide great customer service in addition to the payroll platform, which is helpful when you have specific business needs. Platform specialists are available to help you set up your payroll process and automate your taxes, even if you don’t have any previous experience with this kind of software.
OnPay Standout Features and Integrations:
Standout features include their team of licensed in-house insurance brokers. I like that they can help you set up health, dental and vision plans with top providers such as Humana, Cigna, Blue Cross / Blue Shield, and UnitedHealthcare. You can also set up a 401k integration that supports employer matching and profit sharing arrangements.
Integrations include Deputy, Magnify, Mineral, PosterElite, QuickBooks, When I Work, Xero, Guideline, and Vestwell.
Pros and cons
Pros
- QSEHRA payments can be made
- Clean, intuitive user interface
- A team of specialists come with the cost
Cons
- Employee files can be a bit complex
- Integrations can be a bit tricky to set up
Competitive Landscape
The competition for payroll software is fierce, including some of the biggest names in HR related software solutions. You’ll recognize some of these names and will have likely interacted with several of them if you’ve been in HR for a long period of time. They include the likes of:
- ADP
- Papaya Global
- Paychex
- Paycor
- BambooHR
- Deel
- Quickbooks
All of these payroll companies have cloud-based solutions and most are in some stage of implementing AI into their payroll solutions. Additionally, they all typically integrate with the most popular HRIS systems.
Some, like Deel, have fully embraced the flexible pay trend and are offering cryptocurrency pay-ins. Others, like ADP, have set themselves apart on the self-service front. Finding the right payroll solution for your business just depends on your needs, size and goals.
Familiarize yourself with the key features of payroll software that your business needs in a solution and establish a step-by-step process for selection.
FAQs
How do I select the right payroll software?
Essentially, the answer to this question will be much clearer once you follow a four step process.
- Define what requirements you have of the software
- Set a budget
- Evaluate features and functionality
- Make a pros and cons list to help you decide.
How much does payroll software cost?
Base plans for payroll software can start as low as $17 per month, while more established payroll service providers provide enterprise plans starting at $140 per month. You’ll want to check out our guide to payroll software costs to learn more.
Are some payroll software or service providers better for small businesses?
Yes. Different sized businesses have different needs and capabilities. Those with customizable features that can evolve as your company scales, a high level of affordability and a user friendly interface that someone in either HR or accounting can use with similar ease are best. Check out our favorites for best payroll services for small businesses.
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