India is becoming a leader in AI-driven payroll transformation, with 35 percent of businesses citing the adoption of artificial intelligence as the main catalyst for HR and payroll innovation, according to a report published on Tuesday.

Within the Asia-Pacific region, the percentage of Indian companies recognizing AI as a key driver of payroll innovation over the next two to three years is notably the highest, as stated in the ADP India report.

In addition, 68 percent of organizations reported utilizing AI to enhance workflows and lessen dependence on manual processes.

However, the report pointed out that merely 12 percent of Indian companies have payroll operations fully prepared for future requirements, indicating a readiness gap that needs to be addressed to maintain growth and resilience.

“The workforce in India is entering a critical stage of transformation as businesses adapt to various geographies, generational shifts, and employment models,” the report indicated.

Rahul Goyal, Managing Director of ADP India and Southeast Asia, stated that “skills are becoming the new currency, automation is changing how tasks are performed, and employees are seeking a work experience that fosters both productivity and personal well-being.”

The report highlighted key HR and payroll trends likely to shape workplace strategies by 2026, including automation as a key enabler, advancements in workforce management through biometric technologies, a redefined employee value proposition focusing on well-being, and digital, transparent pay systems.

Organizations are projected to increase investments in biometric systems, secure mobile attendance tools, and geolocation-enabled solutions to guarantee accurate records.

Conversely, integrated scheduling tools are anticipated to help eliminate roster discrepancies, reduce shift gaps, and enhance resource planning. Real-time dashboards are expected to provide leaders with insights into attendance patterns, overtime usage, and absenteeism, transforming operational data into strategic insights.

“Interactive payslips, digital pay wallets, and earned wage access solutions are predicted to gain popularity. Skills-based pay models are expected to see steady growth, especially in the technology sector, GICs, and other specialized service areas,” the report mentioned.