For many small and mid-sized enterprises (SMEs), payroll has long been a time-consuming, error-prone process—one that eats into resources and often leads to compliance headaches. But that’s rapidly changing. In a candid conversation with People Matters, Rashmi Agarwal, Co-founder of HRStop, shared how automation is revolutionising payroll and HR processes for SMEs—unlocking efficiencies, saving costs, and most importantly, creating better employee experiences.

According to Rashmi Agarwal, this status quo is ripe for disruption. “We’ve seen organisations spend tens of hours each month just on payroll processing. That’s valuable time lost to a function that can be streamlined with the right technology.”

The impact of automation, as demonstrated through HRStop’s implementation, is not only measurable; it’s transformative. One mid-sized client, for example, reduced payroll processing time from nearly 40 hours to just 2–4 hours. The ripple effect of this efficiency is powerful: fewer errors, increased audit readiness, and a reported 95% reduction in legal penalties due to improved compliance and documentation.

But the gains extend far beyond the finance sheet. When salaries are processed on time, consistently, and correctly, it directly strengthens employee satisfaction and trust, critical drivers of retention in today’s competitive talent landscape.

To dive deeper into how this transformation is taking place, we spoke with Rashmi about the real-world impact of payroll automation on SMEs. 

Here’s the conversation that unfolded:

Q: What’s holding SMEs back from adopting automated payroll solutions?

Ans: Despite the clear business case for automation, adoption among SMEs has been slower than expected. I see three primary challenges that hold them back: resistance to change, constrained budgets, and limited in-house IT expertise.

Many SME leaders still view HR technology as a luxury, not a necessity. There’s often a fear that automating payroll means losing control or overcomplicating something that’s currently being ‘managed,’ even if inefficiently. This mindset can make it hard to take the leap towards automation.

Budgetary concerns are also a major factor. In smaller organisations, every rupee counts, and allocating funds to a new system, especially one that doesn’t generate immediate revenue, can feel like a gamble. And when you add a lack of IT support or digital fluency into the mix, the thought of transitioning to a new platform can seem overwhelming.

That’s where HRStop’s model is tailored for SMEs. We’ve designed our platform with scalability and simplicity at its core, so it removes entry barriers. With flexible pricing, an intuitive user experience, and dedicated onboarding support, we aim to help SMEs overcome their hesitation and build long-term confidence in digital tools.

Q: What strategies can drive the adoption of automated payroll solutions among SMEs?

Ans: A key part of HRStop’s approach is to show value early and often, which is why education and experience are so important. We focus on showing, not just telling. We offer short trial access and proof-of-concept demonstrations so SMEs can see the value firsthand without committing large budgets upfront.

Another cornerstone of our strategy is addressing data security concerns early on. For many business owners, payroll data is one of the most sensitive pieces of information they hold. We walk them through security parameters, compliance frameworks, and the reliability of cloud-based systems. Once trust is established, the conversation shifts from ‘Is it safe?’ to ‘How soon can we start?’

Crucially, I emphasise the importance of framing automation as a return on investment rather than just a cost centre. Beyond the visible time and cost savings, automation contributes to brand value. A tech-enabled, compliant HR function sends a strong signal to employees and candidates; it shows the organisation values structure, transparency, and scalability.

Most importantly, we position automation as a business enabler, not just a line-item expense. Beyond saving time and effort, an automated HR function signals organisational maturity. It reflects a commitment to transparency, structure, and scalability, values that resonate with both employees and external stakeholders.

Q: What should SMEs look for when choosing the right payroll solution?

Ans: With the growing availability of HR tech platforms, choosing the right solution can feel overwhelming. My recommendation is to take a future-orientated, integration-ready approach.

Start with your growth plan. Your payroll system should be able to scale with your team size, handle evolving statutory compliance, and integrate smoothly with other systems, whether that’s attendance, leave management, or accounting software. This is a core principle behind HRStop’s product roadmap; we focus on supporting companies through team growth, compliance changes, and integrations with leave, attendance, and accounting systems.

Another often-overlooked but crucial capability is insights and analytics. With the right data, organisations can make more informed, preventive decisions. Whether it’s spotting patterns in absenteeism or forecasting payroll costs during expansion phases, analytics provides critical foresight.

Q: How does automation empower HR and the wider organisation?

Ans: The real power of automation lies not just in what it removes but in what it unlocks. By eliminating manual tasks and system inefficiencies, automation frees HR leaders to step into more strategic and analytical roles. Instead of reacting to issues, they can anticipate trends, prevent burnout, and guide leadership with data-backed insights.

With HRStop handling routine and regulatory-heavy tasks, HR professionals are freed to operate at a more strategic level. They can focus on workforce planning, employee well-being, and supporting business growth, not just month-end calculations.

Automation isn’t about replacing human judgement; it’s about enhancing it,” says Rashmi. “When HR teams have the tools to analyse trends in productivity, engagement, or compliance, they become strategic advisors, not just administrators.”

This shift is particularly meaningful for SMEs, where HR professionals often juggle multiple roles. Empowerment through automation means they can finally focus on building culture, planning workforce strategies, and supporting leadership decisions—transforming HR from a cost centre into a growth engine.

And the benefits aren’t limited to HR. This strategic uplift influences the entire organisation, enabling faster decisions, better resource allocation, and a culture where data and people strategy go hand in hand.

Q: How do you see automation shaping the future of SME growth?

Ans: As digital transformation reshapes the future of work, I firmly believe automation is no longer optional for SMEs; it’s essential. The sooner organisations embrace these tools, the sooner they unlock their growth potential,” asserts Rashmi.

From ensuring compliance to enhancing employee satisfaction and enabling strategic HR practices, the benefits of automation touch every part of the business. With the right partners, support, and mindset, SMEs can transform payroll from a source of stress into a powerful enabler of agility and resilience.