Katherine Jones, research director of human capital management at Aberdeen Group, says the Recruiternet-First Advantage deal is part of a trend in which small recruiting or hiring management software companies are being swallowed up by bigger players or joining forces among themselves. Other examples in the past 24 months or so are White Amber's acquisition by Recruitsoft (now Taleo) and Deploy Solutions’ purchase of Humetrics.

In the past five years or so, more than 100 such "e-recruiting" or applicant tracking systems firms have emerged, Jones says. Consolidation of the best providers is a logical development, she suggests, partly because customers are concerned with the economic viability of their vendors. What's more, many of the hiring management products on the market are quite similar, and a merger with a company offering different features or services can grab customers' attention, she argues. "It's a natural progression," she says.

Additional mergers and acquisitions are on the horizon, says Lisa Rowan, an IDC analyst who oversees research of HR and talent management services.

Rowan notes that the broader human resources services industry recently has seen a flurry of tie-ups, such as the Hewitt Associates-Exult merger and Affiliated Computer Services’ purchase of the HR consulting and outsourcing businesses of Mellon Financial Corp.

Big guns in the field now have most of the basic workforce management functions covered, and could be looking to snap up recruiting tech firms as a way to branch out and stand out to customers. "I think talent acquisition and talent management will be that next frontier that will drive acquisitions and mergers," she says.

Oracle, SAP and possibly Lawson also may be interested in expanding in this arena through an acquisition, Rowan notes. "It’s always possible that the ERP vendors would consider an acquisition for talent management," she says.

Recruiternet was founded in 1999 and is headquartered in Portland, Maine. Its clients include pharmacy chain CVS Corp. and computer maker SGI. First Advantage, a majority-owned subsidiary of data provider the First American Corp., says Projectix will be rebranded and marketed as First Advantage Hiring Management Systems.

The challenge for First Advantage, Jones says, is managing its new software business effectively--in other words, supporting Recruiternet customers properly and putting enough money into research and development so the software remains competitive. "The jury is still out on whether they'll invest the resources to make it a top-of-the-line product," she says.

Don’t be surprised if First Advantage swallows up another recruiting software firm. The St. Petersburg,Florida-based company, which bills itself as a "risk mitigation" provider and offers services including insurance fraud investigations and business tax consulting, has bought up more than 30 companies since it began operations in 2003. Renee Svec, director of marketing and communications for First Advantage, says that "we’re going to continue to acquire," and that hiring technology remains a possible target.

–Ed Frauenheim