Payroll intelligence for the agentic era

Payroll is often described as the heartbeat of an organization.

Although payroll is responsible for the timely and accurate compensation of employees, it is also a recurring touchpoint and affirmation of an individual’s relationship with an organization, while it represents the single largest controllable operating expense for most enterprises.

Yet, beneath the surface, payroll is often imperfect, and payroll leakage seems to be an elusive and challenging reality; for many, a number of operational issues remain a silent drain on profitability and operating trust:

In today’s Agentic Era, where AI-driven systems are reshaping business operations, organizations must rethink payroll not just as a back-office function, but as a strategic lever for cost containment, risk management, and workforce optimization.

The hidden cost no one’s auditing

Despite its critical importance, payroll is rarely scrutinized with the rigor applied to vendor spend or taxes.

The result? Potential millions of dollars are lost annually via intentional and unintentional payroll leakage, including overpayments, policy violations or exceptions, misclassified roles, and weak/ missing controls.

What if your largest investment was silently eroding by 2% to 5% every year? For every $1B+ enterprise, this isn’t a hypothetical—it’s the reality of payroll leakage. This translates to a multi-million-dollar annual loss, not from market downturns, but from the quiet friction of manual processes. While over half of businesses cling to these outdated methods, they’re not just running inefficiently; they’re actively channeling funds away from innovation and growth directly into a sinkhole of payroll leakage, compliance risks and financial penalties¹.

Payroll and Workforce spend: The next frontier

Labor costs account for up to 70% of a company’s operating spend, yet payroll is often managed as a fixed cost.²

The path forward isn’t about shrinking the workforce; it’s about shrinking the inefficiencies that waste time and money. Intelligent and digitally enabled operational workforce management, digital automation, reducing manual modification of job-based pay and shift premiums through digital configuration, real-time alerts, and linking payroll outputs to performance data are just a few ways organizations can drive cost efficiency.

Transformation can deliver a 15–20% reduction in payroll processing costs, a 70% drop in compliance issues, and a 25% boost in employee and manager satisfaction.

Diagnosing the invisible

Payroll leakage is rarely about inability, it’s about invisibility.

Organizations must adopt a risk mindset, treating payroll as a function to be constantly audited and optimized.

Emerging risks include AI models trained on outdated policies and Agentic AI overriding human checks without transparency. The symptoms are clear, but the solutions require a new lens.

The Agentic era: from automation to autonomy

Traditional AI has helped organizations automate repetitive tasks and surface insights.

But Agentic AI and multi-agent collaboration marks a profound shift: systems that learn continuously, make decisions based on policies, controls, and proactively flag anomalies.

In payroll, this means cycle times may drop by up to 35%, leakage detection alone drives 5–12% potential in real cost savings, and “system memory” scales with complexity⁴.

Agentic AI doesn’t just automate, it orchestrates labor with precision, self-improves, and acts as a firewall against potential invisible losses.

Real-world impact

Consider the case of a global technology company with 80K+ employees.

Fragmented global payroll operations led to overpayments, manual work, and weak controls, resulting in $28 million in known payroll leakage in a single year. When extrapolating the 1:5 ratio of known vs unknown leakage, we can see that the numbers quickly become very material and meaningful to every organization.

Through comprehensive assessment and transformation, the organization has already realized a net benefit of up to $29.5 million annually, while we anticipate that policy adherence and reduction in exceptions will yield an additional $70-100M/ year in savings, demonstrating the tangible value of payroll intelligence⁵.

What organizations should do next

To thrive in the Agentic AI Era, organizations must:

KPMG can help

KPMG stands ready to guide organizations through this transformation

Our approach spans global payroll implementation, vendor landscape analysis, strategy and design, and robust change management. We leverage proprietary tools—Elev8Pay (our Global Payroll Modeler), Elev8Controls (our Payroll Control Framework and Elev8DMD (our JIRA and ARIS integrated leading practice Process Maps or Data Migration Maps)—and alliances with leading platforms to deliver measurable results.

Our deep expertise in global payroll remediation, risk management, and operational excellence ensures that clients not only address today’s challenges but build resilient, future-ready payroll operations.

The Agentic Era demands more than automation—it requires intelligence, autonomy, and strategic vision. KPMG can help you unlock the full potential of payroll, eliminate hidden leakages, and rewire your cost structure for sustainable success.

Let’s move beyond the status quo and build payroll operations that power your business for the future.

https://kpmg.com/us/en/articles/2025/payroll-intelligence-agentic-era.html


Dimitris Papageorgiou	Chris Thoman	Matthew Busanic	Sauvik De
Partner, Global Payroll, and Workforce Management Leader, KPMG US	Managing Director, Advisory, Global Workforce Mgmt. and UKG Technology Leader, KPMG US	Director, Global Payroll and Workforce Management, KPMG US	Director, Human Capital Advisory, KPMG US
dpapageorgiou1@kpmg.com	cthoman@kpmg.com	busanic@kpmg.com	sauvikde@kpmg.com