Indian firms focus on employee financial well-being

Bengaluru

Indian businesses are prioritizing employee financial well-being in 2025, focusing on flexible pay models, salary-linked financial support, and personalized benefits, according to a report by global technology firm ADP released Wednesday.

The report found that 46% of Indian organizations have identified expanding financial well-being programs as their top priority. Financial stress is now recognized as a major factor affecting productivity, engagement, and retention, with 55% of business leaders acknowledging payroll’s role in reducing stress and improving employee experience.

“Financial well-being isn’t just about increasing salaries; it’s about equipping employees with the right knowledge and tools,” said Rahul Goyal, Managing Director of ADP India and Southeast Asia. He emphasized that financial education and coaching can foster long-term security and informed decision-making.

Companies are increasingly adopting flexible pay models, with 30% introducing performance-based compensation and salary-linked financial support. Additionally, 65% of payroll leaders find compliance risk management challenging due to evolving tax regulations and upcoming wage code reforms. This has driven a shift toward automated payroll solutions.

Investments in modern payroll technology are growing, aimed at improving efficiency, data security, and compliance. Employees now expect consumer-grade digital experiences with advanced functionalities. However, 30% of organizations face challenges in scalability and customization, while 28% cite high costs as a barrier to widespread adoption.

Despite these efforts, only 12% of organizations report having a payroll system fully equipped to meet future workforce demands. Goyal stressed the urgent need for payroll modernization to enhance compliance readiness and align with employee expectations.