Taleo Corporation: HR in a box

In the late 1990s, the tech world scoffed at the notion that corporate America would ever accept the concept of paying to download software from the Internet. But today, a growing number of small and medium-sized businesses are using on-demand software, or software-as-a-service (SaaS), for convenience and as an effective way to trim IT costs.

Market researcher IDC predicts that SaaS, which currently accounts for less than 2% of the global software market, will grow 25% annually and become a $14.5 billion industry by 2011. The popularity of on-demand software is growing so fast, in fact, that it is beginning to transform the business software industry. The rise of the SaaS delivery model has software giants Microsoft Corporation (Nasdaq: MSFT), Oracle Corporation (Nasdaq: ORCL) and SAP AG (NYSE: SAP) a little nervous; all are plowing billions into efforts to respond to the emerging SaaS threat.

The emergence of the on-demand software trend reflects companies' growing desire for less cumbersome and more economical means of using information technology (particularly, Web-based systems) to their advantage. For example, a new generation of Tech-savvy workers and global talent shortfalls have changed the face of human resources, which has become a hot segment for on-demand software specialists at a time when even a tiny company may have a tangled mess of disjointed IT.

San Francisco, Calif.-based Taleo Corporation (Nasdaq: TLEO) is a developer of on-demand software that helps companies manage their human resources operations. HR is an area that is often challenging for smaller companies with less manpower dedicated to the department and inefficient ad hoc systems — often based on Excel spreadsheets and emails. Taleo software, which is easy to install, manage and integrate with existing software, helps growing businesses bring their human-resources functions up to snuff by simplifying recruitment, screening and tracking chores. The company sells its software directly to customers and through HR outsourcers with which it has established partnerships.

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