Global payroll market analysis: trends, dynamics and more

The global payroll market is expected to continue its impressive growth trajectory in years to come. Global expansion and an increasing demand for automation and AI-powered tools are among the top factors that drive global payroll market growth.

Businesses need a good understanding of the dynamics of the global payroll outsourcing market in order to adapt their global payroll strategy and find the most cost-effective solution for their individual needs.

Read on as we dive deep into global payroll market size, trends, solutions, and more.

So, how big is the global payroll services market? The volume of the global payroll market was estimated at USD 98.5 billion in 2023. According to the Global Payroll Market by Component, Type, Business Size, Industry Vertical, and Geography Report, the market is expected to reach USD 133.69 billion by 2028.

Reports show that other market branches linked to the global payroll industry are also thriving. For instance, the size of the global payroll outsourcing market was valued at USD 8.9 billion in 2022. As GlobeNewswire reports, new estimates predict that the market is set to reach USD 12.1 billion by 2028.

A similar growth trajectory is predicted for the international payroll services market. As the Payroll Services Global Market Report indicates, the payroll services market is expected to reach USD 89.97 billion by 2028. In 2023, the market was valued at USD 75.21 billion.

At the same time, the global market for payroll and HR solutions, which was estimated at USD 26.4 billion in 2022, is expected to reach a volume of USD 50.4 billion by 2030, boasting a compound annual growth rate (CAGR) of no less than 8.4%.

With an expected CAGR of 6.3% until 2028, it’s interesting to see what factors drive growth in the global payroll market. The report “Payroll Outsourcing Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2023-2028” has identified the following main drivers of growth in the global payroll industry:

• Growing demand for payroll outsourcing services: Payroll outsourcing is growing in popularity as organizations realize that there are significant cost and time savings that can be achieved by outsourcing time-intensive payroll functions to external service providers.

• Rise in next-gen technologies: A growing number of businesses are implementing new technologies, such as data analytics and cloud computing. In order to leverage the full potential of technological advances, they need a modern global payroll solution that is built for integrating with such technologies.

• Repercussions of the pandemic: COVID-19 has fueled remote work. With a growing number of remote workers, businesses have been forced to shift to online solutions for managing payroll.

Other factors that have been found to drive growth in the global payroll market include:

• Businesses recognizing the value of automation: Payroll automation enables businesses to replace time-consuming manual processes, prevent payroll errors, and enhance payroll accuracy and timeliness. The growing demand for automated payroll solutions is another key growth driver in the global payroll market.

• Increasing adoption of AI-powered solutions in payroll: The future of AI in HR and payroll is full of options. The demand for AI-powered solutions to increase global payroll efficiency is growing, propelling market growth at an unparalleled speed.

• Growing cybersecurity concerns: Payroll data is highly sensitive, which is why it needs to be safeguarded according to the highest security standards. With cybercrime on the rise, businesses are looking for modern, secure solutions that allow them to protect their data from cyber attacks.

The main drivers of growth in the global payroll market go hand in hand with the trends and developments that are currently shaping the global payroll industry. They include:

• Remote work still going strong: The ‘new normal’ requires businesses to shift to online workforce management solutions, including for payroll.

• Compliance taking center stage: Global payroll compliance is a top priority for organizations, hence the growing demand for smart technologies to support compliance management.

• AI and machine learning entering the payroll sphere: Robotic process automation, AI and machine learning are no longer in the distant future as organizations are gearing up for implementation.

• System integration empowering new solutions: As businesses discover the strategic potential of payroll, integrating payroll with other workforce management systems becomes a new key requirement, creating the need for new solutions.

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The global payroll market encompasses different types of solutions and global payroll delivery models. Global payroll solutions can be divided into two main groups:

• Global payroll software and

• Global payroll providers.

Payroll software solutions can further be divided into cloud-based and on-premises software. As for global payroll providers, there is a distinction to be made between providers that operate through their own entities and providers that work with a global partner network.

Many global organizations choose a hybrid approach to managing global payroll, hence combining in-house expertise with outsourced payroll services. When it comes to global payroll outsourcing, there are full-managed and co-managed outsourcing services businesses can choose from.

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