India is emerging as one of the most AI‑forward markets in payroll transformation, with 35 per cent of businesses identifying artificial intelligence adoption as the primary enabler of HR and payroll innovation, a report said on Tuesday.

The number of businesses in India that identified AI as the driver in payroll innovation over the next two to three years was the highest across the Asia‑Pacific region, the report from ADP India said. Meanwhile, 68 per cent of organisations reported integrating AI to streamline workflows and reduce reliance on manual processes.

The report, however, noted that only 12 per cent of Indian organisations have payroll functions fully equipped for future demands, highlighting a readiness gap that must be closed to sustain growth and resilience. “India’s workforce is entering a decisive phase of transformation as organisations adapt to diverse geographies, generations and employment models,” the report said.

Rahul Goyal, Managing Director of ADP India and Southeast Asia, said that “skills are becoming the new currency, automation is reshaping how work gets done, and employees are expecting work experience that supports both productivity and personal well‑being”.

The report outlined key HR and payroll trends set to define workplace strategies in 2026, including automation as a scale enabler, workforce management gains with biometric tools, a redefined employee value proposition with wellbeing initiatives, and digital, transparent pay systems. Organisations are expected to invest more in biometric systems, secure mobile attendance tools and geolocation-enabled solutions to ensure reliable records, it is forecast.

Meanwhile, integrated scheduling tools will help reduce roster inconsistencies, minimise shift gaps and improve resource planning. Real-time dashboards will enable leaders to track attendance patterns, overtime usage, and absenteeism, transforming operational data into strategic insights.

“Interactive payslips, digital pay wallets, and earned wage access solutions will gain traction. Skills-based pay models are expected to grow steadily, particularly in technology, GICs, and other specialised service sectors,” the report noted.