IBM is to spend $25 million retraining its staff away from jobs that it plans to outsource to cheaper countries.

The two-year training fund, announced at the company's PartnerWorld conference, comes amid a growing clamour in the US about jobs lost overseas. IBM CEO Sam Palmisano defended such outsourcing and indicated more was to follow by arguing that countries receiving the contracts "are simply trying to improve the standards of living of their people".

An IBM spokesman acknowledged that the Human Capital Alliance won't be a large program, estimating that it would only cover several thousand employees. Its scope will be global, he said, but admitted it would be directed mostly at the US and UK, and will cover training, relocation and placement costs.

IBM said it will work with its business partners to determine fields in which employees should be retrained. Technologies the company considers strategic include Linux, Web services and business transformation consulting. Staff currently in data entry and legacy application development are the most likely to be affected.

IBM is hoping the fund will displace some criticism over its outsourcing plans - a topic that is gaining political momentum as US voters complain about being put out of work to the benefit of other countries. The company has spoken openly about the savings it has seen from outsourcing manufacturing work, and encourages other companies to outsource IT work to itself.

It is eager not to be seen as moving jobs out of the US as a cost-cutting move. When corporate documents leaked last year suggesting that executives were pursuing such a strategy, officials insisted that expansion plans for India and China would not come at the expense of jobs elsewhere.

While the fund should cover several thousand Western workers, there are fears that many more will be put out of work. Last month, IBM said it was in the process of hiring 15,000 new employees worldwide.