Back in January, I stuck my neck out on LinkedIn and said embedded payroll would be the single biggest disruptor of 2025.

Six months later, it’s time to grade that prediction, pour a little cold water where it’s deserved, and see whether the second half of the year still has upset-special potential.

A 60-Second Refresher — What Is Embedded Payroll?

Traditionally, HRIS vendors fall into two camps:

1. Payroll-Centric Platforms: ADP, Dayforce, Paycom, etc.
2. “People” Platforms: BambooHR, HiBob, Lattice, Darwinbox, and friends.

If you’re in Camp 2 and want true payroll, you either (a) build an engine from scratch - long, expensive, mind-numbing work - or (b) send clients to a partner and lose the revenue (and stickiness) that payroll provides.

Embedded payroll offers a third door. Think of it as “Stripe for paychecks.” A best-of-breed payroll engine - Gusto, ADP’s API unit, Worklio, etc. - plugs into an HRIS via API. In theory, the HRIS gains full-fledged payroll while focusing its own R&D on UX, workflows, and talent modules.

Done well, it’s a win-win:

• Vendors keep customers inside one interface.
• Buyers avoid swivel-chairing between platforms.
• Payroll engines monetize without chasing new distribution.

Sounds lovely, right? Well, let’s talk reality.

The Cold-Shower Case Study: GoCo + Gusto

GoCo was one of the first out of the gate, stitching Gusto’s payroll APIs into its HRIS. We’ve now spoken with a handful of <50-employee clients who tried it. Two ugly themes surfaced:

1. No Payroll Adults in the Room
   Implementation teams knew the API calls but not the dark art of payroll compliance. Taxes were misconfigured, the company-match 401(k) was set up wrong, and insurance deductions were flipped post-tax instead of pre-tax. After two failed pay runs, one client told us, “We cut bait before someone’s rent was late.”
2. Support Ping-Pong
   When things broke, GoCo had to go ask Gusto, adding an extra hop (and a 48-hour delay) to every ticket. Not what you want when employees’ paychecks are on the line.

Does that mean embedded payroll is dead on arrival? Not necessarily.

Important Context

• GoCo was just acquired by Intuit QuickBooks and is no longer selling its HRIS to the public. Motivation to perfect the GoCo-Gusto relationship is… minimal.
• Gusto knows QuickBooks Payroll will almost certainly replace it once the ink dries. How eager would you be to keep optimizing an integration destined for the scrap heap?

In other words: right product concept, wrong corporate backdrop.

Bigger Players, Deeper Pockets

The next crop of embedded payroll hopefuls (HiBob, Lattice, possibly Darwinbox) has more capital, larger customer bases, and a longer runway to get this right. If they embed ADP’s APIs, Worklio, or build with Gusto, they can:

• Hire real payroll SMEs to sit in onboarding calls.
• Control the end-to-end CX instead of passing tickets to a frenemy.
• Roll embedded payroll out in waves (e.g., start with straight salary states, add tricky jurisdictions later).

If that sounds intensive, it should—you need a service-heavy mindset when you’re messing with people’s paychecks.

The Global Twist: Unbundling Is Already Normal

One subplot that often gets missed: global companies are already splitting HRIS and payroll—and doing just fine.

• HRIS Layer: They pick a global “people OS” (HiBob, Workday, Personio, etc.) for org charts, workflows, and reporting across 50+ countries.
• Payroll Layer: They bolt on a global payroll aggregator (Deel, Papaya, Activpayroll) or a network of in-country providers.

Why? Because no vendor offers both rock-solid talent management and localized payroll in 150+ jurisdictions. Even Rippling and Deel are still sewing those wings mid-flight.

That unbundled mindset is quietly training buyers to accept a world where HRIS ≠ Payroll. Once you’re comfortable with two systems globally, using an embedded payroll engine for your U.S. headcount feels… normal.

Where We Stand at Halftime

Reasons for Skepticism

• Domain Expertise Matters. APIs won’t teach your CSM how to set up Pennsylvania local taxes.
• Support Complexity. Two vendors = two SLA clocks unless the partnership is iron-clad.
• First Impressions Count. GoCo’s horror stories will live forever on G2 and Reddit.

Reasons for Optimism

• Better-Funded Entrants. HiBob and Lattice have war chests and brand equity GoCo never had.
• API Maturity. Payroll engines are shipping richer endpoints—quarterly tax reconciliation, retro pay adjustments, garnishments.
• Buyer Conditioning. Global orgs are already fine with decoupling; domestic buyers may follow.

My January prediction doesn’t look quite as bullet-proof as it did over holiday egg-nog, but I’m not walking it back, either.

The second half of 2025 will hinge on whether the next embedded roll-outs arrive with actual payroll practitioners and airtight support SLAs. If they do, incumbents may finally feel that moat spring a leak.

Stay tuned—we’ll keep testing, poking, and (when required) sounding the sprinkler alarms.