The purchase is strategically significant not only because Kronos can broaden its portfolio of services or gain access to a set of high-profile clients that includes Home Depot, Securitas and retailer Wawa, but also because Kronos now controls the top two providers of hourly staffing software—Unicru, which was bought last year, and now Deploy.

“I’m not going to lie: It is always a good day when you are able to take one of your main competitors out of the market” said Jim Kizielewicz, senior vice president of corporate strategy and chief marketing officer at Kronos.

Financial terms of the acquisition were not released.

Industry observers say the acquisition is a mixed bag. From the perspectives of Kronos and Newton, Massachusetts-based Deploy, it makes sense. Deploy gets to benefit from the Kronos brand and the company’s ability to create market buzz that could help to drive up revenue. Meanwhile, Deploy can offer Kronos its innovative software, says Naomi Bloom, managing partner at Bloom & Wallace, a consulting firm in Fort Myers, Florida.

Clients, however, run the risk that ongoing consolidation will stifle innovation in an industry that desperately needs a shot of creativity.

“The hourly staffing software space is in desperate need of new ideas,” says Jason Averbook, CEO of consulting firm Knowledge Infusion. “These types of big consolidation moves often create a mishmash of functionalities that creates confusion among clients and dulls innovation.”

Kizielewicz says that one of Deploy’s attributes as an acquisition target is its ability to be creative, and that the company will implement measures to make sure that innovation doesn’t go by the wayside. One such step will be to leave Deploy as an independent company, following in the footsteps of the Unicru acquisition.

“We pretty much left Unicru alone to do its own thing and expect to do the same in this case,” Kizielewicz says. “Deploy, along with Unicru, will form part of the independent Kronos Talent Management Division.”

Some market analysts question the acquisition because Unicru and Deploy deliver similar capabilities. But Kizielewicz says that while both companies are in the business of hourly staffing software services, their strong suits are very different.

Kronos is adept in assessment technology and analytic capabilities, which can help an employer select high-potential candidates and compare the company’s talent management performance with that of industry competitors. Meanwhile, Deploy’s forte lies in its core technology platform, which runs the system, Kizielewicz explains.

“We plan to combine the strongest elements of each company,” he says.

Despite Kronos’ well-defined strategy for domination, players like Vurv Technology and Taleo should stay on their toes, industry observers say.

The consolidation creates an opportunity for those rivals to innovate, Averbook contends. “They are smaller, which allows them to be faster,” he says.

Averbook says creativity is scarce in hourly staffing, particularly when it comes to meeting the expectations of Gen Yers, a key hourly applicant pool. “Right now, the providers haven’t even begun to address the needs of these individuals,” he notes.

—Gina Ruiz