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IBM to aid American ethos with human capital fund

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IBM will dole out a modest amount of cash to fund a new worker retraining program, as the company moves to help employees keep their jobs in a fiercely competitive global economy.

IBM's CEO Sam Palmisano on Monday announced the Human Capital Alliance at the company's ParterWorld event in Las Vegas. This human capital deal will put $25 million toward training employees and partners to skill up and avoid being laid off as jobs move offshore. Palmisano dedicated five minutes of his ParterWorld keynote to the program, spending most of the hour giving an extended pitch for IBM's on-demand computing concept.

The retraining schemes arrives just as IBM, HP, Dell and others are facing increased criticism for sending software and call center jobs overseas.

"It is not appropriate for the American ethos to wish ill will on countries that are simply trying to improve the standards of living of their people," Palmisano said.

IBM's program will differ from similar government efforts in that it will retrain workers for the future instead of the past, Palmisano said. He mentioned "Linux skills," programming, and "intersection points" as some of the key areas IBM will focus its retraining on - although we're not sure how valuable intersection point knowledge will be in the coming years.

IBM's public image has taken a toll in recent months after the Wall Street Journal reported that thousands of US programmers would be replaced by overseas counterparts. IBM responded to the report, confirming some jobs would be sent offshore but adding that it planned to hire thousands more workers in the US. The Human Capital Alliance - surely there was a better name - is a clear response to the grumbling caused by IBM's moves.

Palmisano provided little detail on exactly how the program will work, when it will start or how workers can sign up. He did, however, spend a lot of time touting the company's achievements over the last year, particularly with on-demand computing.

Palmisano borrowed a page out of rival Sun CEO Scott McNealy's book, talking about creating ready-made bundles of hardware and software. In the past, customers would purchase 10 to 15 products and then put them all together on their own.

"(Customers) do not want to be the assembler of piece parts," Palmisano said. "The client is forcing us to focus on solutions."

McNealy often talks about selling customers the "whole car" instead of a mix of parts. And now IBM plans to do the same.

Unlike Sun, however, IBM has billions upon billions to spend on research and development. At one point in his speech, Palmisano boasted that IBM put just a small fraction - $1 billion - of its R&D budget toward futuristic computing plans - seeing where the market might go. This is about half of Sun's total yearly R&D spend and at least part of this massive total could have perhaps been better spent on the employee retraining instead of patenting new ways to virtually flush a toilet.

Palmisano also found time to take coded shots at rival Intel.

"For the past twenty years, this (processor) has been defined by a thing called gigahertz," he said. "It drove. It drove. But guess what . . . this thing is getting too hot. It's like a nuclear reactor."

Intel often likes to point out that its chips will soon run as hot as a nuclear reactor on their way to rivaling the surface of the sun.

IBM, by contrast, is pushing a lower power processor approach. The company will have its Power processor running in everything from Sony Playstations to supercomputers. In each case, IBM makes solid use of multiple processor cores and packaging to up performance while keeping power consumption low.

This is far better than Intel-based Thinkpads that can press your pants and "maybe something else too," Palmisano said. A UK man found this out the hard way last year.

Overall, Palmisano voiced confidence in the IT industry for the coming year.

"We are much more optimistic going into '04 than we have been in several years," he said.

The Americas are leading the growth with Asia - Japan excepted - following closely behind. ®

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