Microsoft said yesterday it plans to spend $500 million (€410.5 million) over the next year trying to persuade businesses to use its software rather than hire International Business Machines consultants.

At a press event in New York, Microsoft chief executive Steve Ballmer showcased forthcoming versions of the company's Microsoft Office and Windows Mobile computer systems, which are being tested by some businesses now and are expected to be widely available later this year.

Ballmer said the new software allows companies to let their employees perform tasks that they may now be paying IBM's huge services operation to handle.

"Getting the most out of their people is on the mind of every business leader I speak with," Mr Ballmer said. "(We) are passionate about the idea that the right software can provide the tools to empower workers to become the drivers of business success."

The company said that new software systems like the Vista operating system and the Sharepoint Web site scheduling system, as well as the updated Office suite of applications including word processing and e-mail programs, were the result of $20 billion in research and development spending over three years.

These kinds of software and software-based services are tools to help employees be more successful, added Jeff Raikes, President of Microsoft's Business Division, in an interview with Reuters.

"Innovation is home-grown, it's not outsourced," he said.