European businesses are increasingly deploying human capital management applications via a software-as-a-service model.

Sales of on-demand versions of HCM grew by 72% in 2006, according to market watcher IDC, boosting overall sales of HCM by a healthy 13%. Spending on other human resources applications was slower, with sales of payroll applications rising just 4%.

Overall, the spending in Europe on payroll and HCM applications topped e1.5 billion in 2006, reports IDC. The established vendors continue to dominate market share, with Oracle, SAP, Sage and Netherlands-based ERP systems provider Unit 4 Agresso all achieving double digit growth.