Talent Software Market Expands Despite Economy

While growth rates are less than what was projected a year ago, the talent management market as a whole is growing by about 15 percent and should reach $2.5 billion this year.

October 26, 2009

Despite the sluggish economy, the talent management software market has enjoyed an active summer and fall.

Leading vendors Taleo and SuccessFactors sought to broaden their horizons, while other software providers introduced new features as companies continued to purchase the products.

While growth rates are less than what was projected a year ago, the talent management market as a whole is growing by about 15 percent and should reach $2.5 billion this year, says Josh Bersin, head of research firm Bersin & Associates.

Far from shriveling amid the recession, the talent management software field is expanding as business-services giants IBM, Accenture, Mercer and Hewitt build strategies to deliver a combination of talent management software, consulting and outsourcing, Bersin says.

Talent management software refers to applications that help organizations with key HR tasks such as recruiting, employee performance management and compensation.

Sales of the tools have been growing quickly in recent years as organizations seek to better marshal their people and automate paper-based processes.

SuccessFactors and Taleo have emerged as top players in the field, and both in recent months have tried to widen their purview.

In September, SuccessFactors redefined its mission from performance and talent management to business execution. It also introduced a recruiting tool designed to allow better collaboration between recruiters and line managers.

“We are on a mission to solve the biggest problem in business today: the ability to execute,” SuccessFactors CEO Lars Dalgaard said in a statement September 10.

Equity analyst Terry Tillman of investment firm Raymond James applauded SuccessFactors’ business execution strategy. “We believe the company is smart in continuing to move the needle from a vision perspective,” Tillman wrote in a research note September 11.

Taleo also sought to grab the spotlight in September. It unveiled a new version of its talent management software that includes a new user interface and allows access from mobile devices such as iPhones.

“Taleo 10” also includes an employee development module designed to give managers a view of employees’ development plans mapped to goals, competencies and performance reviews.

Taleo also said in September that it was acquiring compensation software firm Worldwide Compensation.

Other talent management vendors have been busy. Plateau Systems in September introduced its Talent Gateway, a set of Web-based communication and collaboration tools. Employees can create dedicated Web sites and have access to tools such as blogs, message boards and document libraries.

Earlier this month, Lawson Software announced updates to its talent management software, including an improved succession planning tool. It allows organizations to create talent pools to prepare for turnover in executive jobs and other key positions. Unlike a previous Lawson planning tool, individuals can be flagged as possible successors for more than one position.

—Ed Frauenheim

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