Cloud Based Payroll Software Market Research Report and Outlook by 2028

The market for cloud-based payroll software is anticipated to increase from US$ 10,254.01 million in 2022 to US$ 20,355.22 million by 2028, reflecting a compound annual growth rate (CAGR) of 12.1% during this period.

The rapid growth of the IT and telecommunications sectors, along with the numerous benefits that cloud-based payroll solutions offer compared to traditional on-premise systems, are key factors propelling this market forward.

As industries such as Banking, Financial Services, and Insurance (BFSI) and IT & Telecom continue to expand, the complexity and demands placed on human resources (HR) management are increasing. Payroll processing is a critical function within HR, and organizations are increasingly adopting advanced technologies to meet the evolving requirements of the business landscape. Payroll involves various elements, including overtime compensation, benefits, and adherence to legal regulations, all of which must be meticulously managed to prevent compliance issues. By implementing payroll software, businesses are able to standardize and optimize their global payroll processes, enhancing efficiency, ensuring business continuity, and lowering operational costs. Additionally, firms in the IT and telecom sectors are making significant investments in developing and executing effective payroll models, often leveraging cloud-based payroll software. Consequently, the demand for cloud solutions is surging, driven by the need for cost-effective payroll management solutions amidst the rapid growth of the IT and telecom industries, which in turn fuels the cloud-based payroll software market expansion.

The cloud-based payroll software market is categorized by organization size into small and medium enterprises (SMEs) and large enterprises. In 2021, the large enterprises segment was the leading segment in the cloud-based payroll software market. This segment primarily consists of organizations with over 1,000 employees and annual revenues exceeding US$ 1 billion. These large companies typically employ a significant number of full-time staff, resulting in a substantial demand for cloud-based payroll solutions. This demand is driven by the need for a more adaptable HR function capable of responding to changes swiftly. Moreover, large enterprises are increasingly adopting integrated cloud-based payroll systems that combine HR and payroll functions to maximize efficiency and automate administrative tasks within a unified online platform. The complex organizational structures of large enterprises complicate employee management for HR departments, leading to a heightened need for flexible payroll solutions. By migrating their extensive data to the cloud, these organizations aim to enhance speed, accuracy, and scalability within their value chains, thereby contributing to the growth of the cloud-based payroll software market.

When examining the market by industry vertical, the cloud-based payroll software market is divided into sectors such as BFSI, manufacturing, healthcare, IT & telecom, retail, hospitality, and others. The BFSI sector was the dominant segment in the cloud-based payroll software market in 2021. The increasing need for payroll software in this sector is primarily driven by the requirements to analyze payroll data, process payroll transactions, establish salary accounts, and generate employee pay slips. Furthermore, cloud-based payroll software is crucial for various functions, including payroll calculations, updating payroll information, transferring monthly salaries to employees' accounts, and verifying banking details.

The cloud-based payroll software market is segmented by components, organization size, industry verticals, and geographical regions. In terms of components, the market is divided into software and services. Regarding organizational size, it is categorized into small and medium enterprises and large enterprises. The industry verticals include healthcare, manufacturing, IT & telecom, BFSI, retail, hospitality, and others. Geographically, the market is segmented into North America, Europe, Asia Pacific, the Middle East & Africa, and South & Central America.

The overall size of the cloud-based payroll software market has been determined through a combination of primary and secondary research methods. Extensive secondary research has been conducted using both internal and external sources to gather qualitative and quantitative data related to the cloud-based payroll software market. This research process aids in providing a comprehensive overview and forecast of the market across all segments. Additionally, numerous primary interviews have been carried out with industry stakeholders to validate the data and obtain analytical insights. This includes discussions with industry experts such as vice presidents, business development managers, market intelligence managers, and national sales managers, as well as external consultants like valuation experts, research analysts, and key opinion leaders specializing in the cloud-based payroll software sector.