The 2025 State of HR in Pakistan: What 500+ Businesses Told Us

Executive Summary

Based on Peoplifi platform data from over 500 businesses using the system as of 2025, supplemented by onboarding surveys, five headline findings stand out:

1. The majority of businesses were still running payroll manually at the point of signup. Excel spreadsheets and manual registers remain the dominant payroll tool for Pakistan's SMB sector at initial adoption.
2. FBR Section 149 withholding is the most cited compliance pain point, ahead of EOBI deposit deadlines and PESSI calculations combined.
3. Payroll run time drops dramatically after automation, from a typical 2-3 days per cycle to under 4 hours for most companies within three months of going live on an HR platform.
4. Biometric attendance is near-universal in manufacturing customers but is at an early stage of adoption in the services sector, where desktop agent tools are growing fastest.
5. Voluntary attrition is highest in IT, with manufacturing showing the most stable retention patterns, particularly where automated attendance management reduces unjustified departures.

Methodology

This report is based on Peoplifi platform analytics from 500+ active business customers as of 2025, supplemented by voluntary onboarding survey responses collected during the first 30 days of each customer's engagement. The findings are directional: they reflect the characteristics and experiences of Peoplifi's customer base, not a randomised or nationally representative sample of Pakistan businesses. Where specific percentages are cited, they are drawn from platform data. Where directional language is used ("the majority," "a clear minority"), this reflects patterns in the data that were consistent but not measured with precision sufficient for a specific percentage claim. This is not an academic study and should be read as practitioner insight, not statistical research.

Section 1: Headcount and Growth Patterns

Peoplifi's customer base skews toward small and mid-sized enterprises, with the majority of customers managing between 20 and 200 employees. Customers managing more than 500 employees represent a smaller but growing segment.

The sectors most represented in the customer base are:

• Information Technology and software services: The most active segment in terms of new signups, reflecting both the sector's growth and its familiarity with software adoption.
• Manufacturing and industrial: The second-largest segment, where biometric attendance and multi-shift payroll create the most acute need for automation.
• Healthcare: A growing segment, with clinics, hospitals and pharmaceutical companies increasingly seeking payroll solutions that handle medical staff allowances and shift differentials.
• Retail and distribution: A significant segment characterised by high headcount variability, seasonal hiring and a mix of permanent and contractual staff.

Growth patterns suggest that HR software adoption in Pakistan is still in an early phase for the SMB sector. A large number of businesses joining the platform are making their first investment in dedicated HR software, transitioning directly from spreadsheets rather than from a competing platform.

Section 2: Payroll Automation Adoption

The picture at the point of signup is consistent: the majority of new customers describe their payroll process as primarily manual. The most common toolset is a combination of Excel for payroll calculation, a separate attendance register (paper or basic software), and manual bank transfers or cheques. The HR team (often a single person in companies below 50 employees) typically spends 2-3 full working days per month on payroll processing.

Three months after implementation, the picture has changed substantially. The clear majority of customers report:

• Payroll run time reduced to under 4 hours for most company sizes in the 20-150 employee range.
• FBR Section 149 calculations fully automated, with no manual tax computation required.
• EOBI contribution calculations handled automatically, with deposit reports generated in the correct format.
• PESSI/SESSI calculations set up correctly for the relevant province.

The time saving is most dramatic in the 50-150 employee range, where manual payroll was most labor-intensive. Below 20 employees, the time savings are meaningful but less dramatic. Above 200 employees, the complexity reduction (fewer errors, automated exception handling) is the primary value driver rather than raw time savings.

Section 3: Top Compliance Pain Points

Onboarding surveys consistently identify the same hierarchy of compliance concerns:

1. FBR Section 149 Withholding Tax

The most common compliance challenge cited by new customers. Pakistan's progressive income tax structure, combined with mid-year salary changes, bonus payments, and annual slab updates in each Federal Budget, makes manual Section 149 calculation error-prone. The most frequent specific problems reported: using the wrong tax slab after a budget announcement, failing to adjust withholding mid-year when an employee receives a raise, and incorrectly treating allowances as non-taxable.

2. EOBI Deposit Deadlines

The second most common source of compliance penalties. EOBI contributions are due by the 15th of the following month. Late deposits attract a 3% per month surcharge. The challenge is not the calculation (EOBI rates are straightforward) but the administrative discipline of generating the deposit report, reconciling it against payroll, and ensuring the payment reaches EOBI before the deadline. Manual processes are susceptible to month-end workload peaks that push EOBI filing to late in the month.

3. PESSI/SESSI Multi-Province

For manufacturing companies with operations in multiple provinces, managing different provincial social security contribution rates, registration requirements and filing deadlines is the most complex compliance challenge. PESSI (Punjab) and SESSI (Sindh) have different rate structures and different forms. Companies that expand from one province to two frequently discover their payroll system cannot handle multi-province SESSI/PESSI without significant manual intervention.

Section 4: Retention and Turnover Trends

Voluntary attrition patterns across the customer base show clear sector differentiation:

• IT and software services: Voluntary attrition is the highest of any sector in the Peoplifi customer base, estimated at 20-30% annually for companies with no structured retention programs. High demand for technical talent in both the domestic and remote work market creates constant competitive pressure on compensation and career development.
• Manufacturing: The most stable retention patterns. Where biometric attendance systems are in place and consistently enforced, unjustified absences that previously led to informal departures are reduced. Clear attendance policies, enforced through automated systems, appear to stabilise the employment relationship for a portion of the workforce.
• Healthcare: Moderate voluntary attrition, driven primarily by movement between hospital systems and to international opportunities (particularly for nursing and technical staff). Compensation benchmarking is a recurring theme in healthcare HR.
• Retail: High headcount turnover driven by the contractual and seasonal nature of much retail employment. Permanent staff retention is generally better than sector-wide turnover figures suggest, once contract and seasonal staff are excluded.

Section 5: Remote, Hybrid and In-Office Work Patterns

Work arrangement patterns differ sharply by sector:

• IT companies are predominantly hybrid, with the majority operating a 2-3 day in-office model. A clear minority of IT customers are fully remote. In-office five days per week is a small minority in the IT sector.
• Manufacturing is almost entirely in-office with biometric attendance. Remote work is not applicable to production roles and is rare even in manufacturing back-office functions.
• Services sector (finance, consulting, professional services) is mixed: roughly equal portions of customers in this sector are hybrid, fully in-office, or operating with role-dependent arrangements where client-facing staff are in-office more frequently than back-office staff.
• Healthcare is predominantly in-person for clinical roles with some administrative hybrid arrangements.

The demand for remote and hybrid work has created new payroll compliance questions: managing attendance for employees who are not clocking in at a physical device, ensuring overtime policies are applied consistently regardless of work location, and handling expense reimbursements for home office costs.

Section 6: Technology Adoption Rates

Within the Peoplifi customer base, technology adoption patterns are:

• Biometric attendance: Near-universal in manufacturing customers. ZKTeco devices are the dominant hardware brand. In IT and services, physical biometric devices are less common, with software-based clock-in (mobile or desktop) growing as a substitute.
• Desktop agent (activity tracking): Growing adoption in IT sector customers, driven by a need to accurately track billable hours for client projects and to manage output for fully remote employees. The framing matters: customers who position the desktop agent as a billing accuracy tool rather than a surveillance tool report better employee acceptance.
• Mobile self-service: The most demanded feature by employees across all sectors. The ability to view payslips, check leave balances, submit leave requests and update personal information via mobile is consistently the feature employees mention most in Peoplifi user feedback. Mobile self-service also reduces HR queries: when employees can answer their own payslip questions, the volume of payroll-related HR tickets drops significantly.
• HR analytics dashboards: Used actively by the majority of companies above 100 employees. Below 50 employees, dashboard usage is lower, with HR managers often preferring specific report exports to continuous dashboard monitoring.

Section 7: Predictions for 2026

Based on current trajectory, the following developments are expected to shape HR in Pakistan in 2026:

FBR Digital Integration

FBR's push toward digital filing and real-time reporting is expected to accelerate. Employer obligations under Section 149 are likely to move further toward integrated digital submission, reducing manual reporting and simultaneously reducing the window for errors that only surface at annual filing. HR and payroll platforms that integrate directly with FBR's APIs will provide a compliance advantage.

EOBI Digitization

EOBI's digitization program, including the EOBI online portal for employer registrations and contribution filings, is expected to become more comprehensive. The shift from paper-based to digital EOBI management is already underway; by 2026, fully digital EOBI management will likely be the norm for compliant employers rather than the exception.

AI-Assisted Payroll and Anomaly Detection

AI-generated payslip explanations and anomaly detection (flagging unusual changes in tax calculations, unexplained payroll variances, or missing contributions) will move from premium features to table stakes for HR software. Employers will increasingly expect their payroll platform to alert them to likely errors before the payroll run is finalised, rather than discovering discrepancies during annual reconciliation or audit.

Increasing Compliance Enforcement

The combination of FBR digitization and labour department reforms is expected to increase the practical enforcement of statutory employment obligations. Employers who have relied on the low historical probability of audit to delay compliance may find that probability increasing. Investment in compliance infrastructure, including HR software, is increasingly a risk management decision rather than an operational convenience.

Access the Full Data Dashboard

The findings in this report are drawn from Peoplifi's platform analytics and onboarding surveys. Peoplifi customers have access to their own HR analytics dashboard, benchmarked against aggregated (anonymised) data from the wider customer base. Sign up for Peoplifi to access real-time HR benchmarking alongside your own payroll, attendance and compliance data.

Methodology note: All data in this report is based on Peoplifi platform analytics and voluntary onboarding surveys from 500+ business customers. Findings are directional only and are not the result of a randomised or statistically representative study of Pakistan businesses. Sector estimates are based on the Peoplifi customer base and may not reflect national sector averages.

Frequently Asked Questions

1. How was this data collected?

Data was drawn from two sources: Peoplifi platform analytics (aggregated and anonymised data on payroll processing times, feature usage, compliance configuration, and headcount patterns across active customers) and voluntary onboarding surveys completed by HR managers during the first 30 days of their company's Peoplifi engagement. The survey covers prior payroll process, compliance pain points and key priorities for the first 90 days.

2. Does this report cover all Pakistan businesses or just Peoplifi customers?

This report covers Peoplifi's customer base only. Peoplifi customers are not a random sample of Pakistan businesses: they have self-selected into an HR software solution, which means they are likely more compliance-aware and more growth-oriented than the average Pakistan SMB. The findings should be read as reflecting the experiences of businesses that have adopted HR software, not as a census of all Pakistan employers.

3. How often will Peoplifi publish this report?

The State of HR in Pakistan report is intended to be an annual publication, updated each year with new platform data and an updated survey cycle. The 2026 edition is planned for release in the first half of 2026.

4. My company is experiencing different patterns from what this report describes. Is that unusual?

No. The report describes directional patterns across a diverse customer base. Individual companies vary significantly based on sector, city, management maturity and workforce composition. The report is most useful as a benchmarking reference and a prompt for internal reflection, not as a definitive standard that all companies should conform to.

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