Sector Watch: On-demand software

Small and medium-sized businesses are increasingly turning to on-demand software downloaded from the Internet as an effective way to reduce IT spending; Salary.com, Inc. (Nasdaq: SLRY) and Taleo Corporation (Nasdaq: TLEO) are two leading providers that are reaping the benefits of the growing software need.

Gartner, a research firm, expects sales of on-demand software to grow to $11.5 billion by 2011 from $5.1 billion this year. That growth outlook is three to four times higher than projections for conventional business software. The advantages of on-demand software are that it is relatively inexpensive to implement and easily integrated with packaged software already in place. On-demand software is widely deployed in payroll, merchant services, human resources and customer relationship management applications.

Salary.com provides on-demand compensation software that helps small businesses manage payroll and reduce employee turnover while avoiding significant investments in hardware and IT staffing.

Salary.com software is integrated with a proprietary compensation database that lists market pricing for over 3,000 positions across numerous industries.

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