TECHNOLOGY
Are AI and software automation A threat to managed payroll?
Jonathan Misfud ACIPP, Co-Founder and Chief Technology Officer, Buddy, discusses the roles artificial intelligence (AI) and software automation play in the bureau market
A ccording to recent CIPP research, the average payroll professional in a bureau now processes around 640 payslips per month. This figure illustrates both the scale of bureau operations, and the efficiency payroll teams are achieving today. It prompts a bigger question. With technology advancing, data flowing seamlessly between systems and all-in- one human resources (HR) platforms promising payroll at the click of a button, do organisations still need bureaus? Or are they becoming even more critical, especially for the mid-market? The myth of the all-in-one The all-in-one pitch is seductive: software which makes payroll look effortless. Press a button, and it’s done. But payroll is compliance-heavy, ever-changing and data-sensitive. Even the slickest platforms need expert oversight. When errors happen – missed filings, miscalculations, pension oversights – the damage is measured in fines and lost trust. Organisations lured by the ‘plug-and- play’ promise often discover complexity the hard way. Payroll isn’t a software feature – it’s a profession. Technology helps, but responsibility remains. Rising volumes and productivity shifts The CIPP statistic proves how far we’ve come. One professional now handles 640 payslips a month – once unimaginable without a team. Automation, data imports and application programming interface connections mean volumes will only rise. Other industries have seen the same shift. Accountants moved from manual ledgers to cloud systems which scale across dozens of clients. Payroll is following suit. The role won’t vanish, but throughput per person is climbing fast. Some leading bureaus already target 2,000 payslips per processor. Technology isn’t making small gains; it’s redefining bureau capacity. With less time spent on data entry, payroll professionals can focus
on accuracy, insight and risk prevention. For bureaus, that opens opportunities to rethink pricing, expand services and differentiate on value rather than volume. The mid-market dilemma Payroll strategies fall into three groups: 1. Small to medium-sized enterprises (SMEs) rarely justify in-house payroll specialists. Work is handled by HR / finance generalists, accountants or bookkeepers. It’s no surprise that 84% of UK SMEs admit to payroll errors, with 40% penalised. Heavy reliance on spreadsheets and lack of expertise make outsourcing the safer option. However, too often this still lands with non- specialists rather than payroll professionals. 2. Large enterprises have the scale for in-house teams, often supported by global providers – essentially bureau networks under one brand. 3. Mid-market organisations (250-2,000 employees) face the hardest choice. Hiring in-house looks viable on paper but leaves no cover if staff are absent or on leave. Fully managed outsourcing feels costly. This fragile middle ground is where tech-enabled bureaus shine. Scalable, compliant and transparent. Balancing risk, control and AI Payroll is about trust: employees expect accuracy, regulators demand compliance and finance teams need predictability. Mid- market firms want oversight but can’t afford the risks of going it alone. A single absence, a missed filing or a sudden legislative change can put payroll continuity at risk. Bureaus provide the balance – robust controls, scale and expertise – while technology gives clients the transparency of an in-house system combined with the resilience of a specialist partner. AI is now entering this balance. Forward looking bureaus leverage it to manage unstructured client data, turning emails, voice notes and spreadsheets into clean inputs. It can triage queries, flag anomalies and free professionals up for higher value conversations. But AI is a tool, not
a substitute: it cannot interpret context, intent or business nuance the way a skilled payroll professional can. Used well, it amplifies bureau capacity and client service without eroding responsibility. Looking ahead The future isn’t about replacing professionals; it’s about empowering them. As throughput rises, bureaus will serve more clients, more efficiently. For mid-market employers, this means a viable alternative to risky DIY or costly full outsourcing. The 640 payslips per processor benchmark isn’t a ceiling but a baseline. Volumes will rise, and with them, the bureau’s role as the natural partner for mid-sized organisations. With AI and automation, doubling capacity is realistic, but the winners will be those who pair technology with professional judgment and proactive client engagement. And let’s be clear: no software can take away the employer’s responsibility. Holiday pay, statutory sick pay, occupational maternity pay, Alabaster calculations and national minimum wage may be handled by the system, but compliance sits firmly with the business. Software cannot intuit context but a good payroll professional can. If leaders see payroll as nothing more than a big red button, it falls to us – the payroll professionals, bureaus and honest providers – to remind them of the risks. Here’s the crux: companies pour money into people, with salary raises, benefits and wellbeing programmes to retain staff, yet won’t spend the price of a pint to ensure pay is correct and compliant. Payroll is the foundation of trust. It deserves the investment and respect to match. n
51
| Professional in Payroll, Pensions and Reward |
Issue 114 | October 2025
Made with FlippingBook - Online magazine maker