Oracle is buying cloud-based talent management and employee recruitment software vendor Taleo for roughly $1.9 billion, the company announced Thursday. The move comes shortly after SAP’s move to acquire SuccessFactors, a close competitor of Taleo, for $3.4 billion in a deal that has yet to close.

“Human capital management has become a strategic initiative for organizations,” said Thomas Kurian , executive vice president, Oracle Development, in a statement. “Taleo’s industry leading talent management cloud is an important addition to the Oracle Public Cloud.”

The Taleo deal is expected to close in the middle of this year and is subject to shareholder approval, Oracle said. Taleo’s board has unanimously approved the sale.

Taleo’s applications focus on talent management, which includes areas such as recruitment, learning and development, and compensation and succession planning.

It remains to be seen exactly how Taleo’s product portfolio will be aligned with Oracle’s Fusion HCM (human capital management) software, which is also available as a cloud offering, and has some overlapping functionality.

Together, the companies “expect to create a comprehensive cloud offering for organizations to manage their Human Resource operations and employee careers,” Kurian said in a letter to customers. The resulting products will “empower employees and managers to effectively manage careers throughout their entire employment, enable organizations to retain talent and optimize costs, and improve the employee experience through faster on boarding and better collaboration with team members via social media,” he added.

Some 5,000 enterprises use Taleo’s software, which also handles 15 percent of employee hires in the U.S., according to an Oracle document. About half of the world’s top career websites run Taleo as well, Oracle said.

SAP has characterized the pending SuccessFactors purchase as something that will give the company needed “cloud DNA” and expertise in that market.

Oracle’s announcement of the Taleo deal included no similar sentiments, but Taleo is its second major acquisition, along with customer-service vendor RightNow, of a cloud application vendor in the past six months.

Since SAP announced the SuccessFactors deal, speculation had run rampant that Oracle would make a move in response, with Taleo bandied about as a possible acquisition target.

Salesforce.com has also begun a push into human-resources software with its recent acquisition of Rypple, which focuses on employee performance management.

Unlike other software categories, the types of products sold by SuccessFactors, Taleo and Rypple have relevance to every employee in a company, allowing for more profitable large-scale SaaS (software as a service) deals.

There will likely be additional acquisitions in the HCM arena soon, said HR software analyst Naomi Bloom, managing partner of the consulting firm Bloom & Wallace. “I think we can expect that the boards of Cornerstone, of Ultimate Software, they are undoubtedly having conversations at least among themselves if not potential acquirers.”

Oracle’s move doesn’t have “much to do with a technology buy,” Bloom added. Instead, as with the acquisition of ERP (enterprise resource planning) vendor PeopleSoft, Oracle is looking to take out a competitor and gain a revenue stream, she said.

Taleo also has been running a SaaS business and has a lot of knowledge that will be beneficial to Oracle, Bloom said. While Oracle has long sold an on-demand CRM (customer relationship management) application, that experience isn’t as relevant since unlike human resources, CRM isn’t subject to government regulations and it impacts far fewer employees in an organization, she said.

Meanwhile, “if you are a Taleo customer, or God forbid are in the process [of becoming one], this should put ice water in your veins,” Bloom said. “I have great regard for Oracle, they are an amazing financial machine. But if I’m a customer, I might look at it differently.”

Oracle’s announcement stated that it is currently reviewing Taleo’s product road map, and that “any resulting features and timing of release of such features” are at Oracle’s “sole discretion.”

But Oracle has invested heavily in its Fusion Middleware and Fusion Applications as a next-generation software platform. Therefore, Taleo customers could expect some incremental improvements in the software over time, Bloom said. However, “if I entered into business with Taleo because I felt they were going to be a continuous innovation machine, that’s not going to happen,” she added.

The SuccessFactors and Taleo deals also could reflect growing concern on the part of both SAP and Oracle over the rise of Workday, which has landed large deals for its own cloud-based HCM software, Bloom said.

“I think Oracle was drawn in to having to do this deal,” said Forrester Research analyst Paul Hamerman.

“I don’t know why they didn’t make this deal five years ago,” he added. Oracle would have paid much less and would have primarily gained recruitment software, Hamerman said. But today, Taleo has built out the “four pillars” of talent management, namely recruitment, employee job performance, compensation and learning, he said.

While Oracle has had great success selling core HR applications for payroll, benefits and other areas, it hasn’t had much luck with talent management, Hamerman said.

The overlap with Fusion HCM is not that significant, since it currently lacks recruitment, learning and succession planning capabilities, all areas where Taleo is strong, according to Hamerman. “It’s actually a pretty complementary fit.”