Most companies pay lip service to some form of training, whether online or in the classroom, but intensifying competitive pressures are now forcing them to look hard at ways of using new technology in the learning process.

Some pioneers are already well advanced in the use of e-learning, while others show varying degrees of interest and many remain to be convinced. Yet despite disillusion caused by past hype, there is a growing sense among executives and analysts that e-learning - the use of IT and the internet to enhance training - is a market with huge potential.

"Corporate e-learning is one of the fastest-growing sectors within the education market," says KPMG Consulting. "E-learning is moving out of the early technology phase into a more mainstream business market." As well as connecting employees through e-learning, companies can also link up with partners, suppliers and customers, KPMG adds. "Huge benefits will accrue when content flows seamlessly - often over mobile networks - throughout industry value chains."

IDC, the market research company, forecast last year that the global e-learning market will be worth some $23bn in 2004, though the latest economic slowdown and the impact of last year's terrorist attacks on the US may dent growth this and next year.

Cushing Anderson, an IDC analyst, now says it might take a year or two longer to reach that figure. However, he adds: "There's still going to be very aggressive growth." Technology, he says, can make learning more effective and related to business goals. As with other business processes, he believes that IT must be used to wring out inefficiencies in training activities.

In line with this view, more companies are now starting to adopt e-learning as they see the benefits in time, cost and effectiveness. Gartner, the IT analysis group, says: "The e-learning market is poised for explosive growth." It puts the likely size of the market at $4.2bn this year, forecasting a dramatic rise to over $33bn by 2005 in an estimate that defines the market more widely than IDC.

E-learning still has far to go, however, with experts variously describing it as being in the toddler or pre-adolescent stage. At present, it is only a small part of the overall global training market of more than $100bn. "But by the middle of this decade, it will make up almost one-third of all training deployed," Gartner says.

So what is driving the market? Awareness of tangible business benefits is the main influence. Since IT has been used to speed up and streamline most aspects of business - though with mixed results - it is hardly surprising that it has been applied to the often complex and costly process of training.

Saving money is also an attraction of e-learning, if executed properly, but it should not be the main factor, says Claire Schooley, an analyst with Giga Information Group. "It cannot be the only reason or web-based training will fail."

Schooley's advice to companies is: "Put learning online because it is better. It may be cheaper, too, but the critical point is to have training that accomplishes objectives and makes employees more productive - the cost savings then become secondary."

This means training and development should be managed alongside a company's overall strategy and performance, not as something apart from its main activities. Ms Schooley advises companies to think long and hard about what they want to achieve from e-learning. "The groundwork takes time."

IBM, a big player in the fragmented e-learning market, encourages clients to carry out a strategy study before taking any action, says Mark Frank, a principal in the group's learning services division. "E-learning should be viewed as an essential part of corporate strategy and not just as a fix for a problem."

Once they have decided what they want to achieve, businesses need to think about content, the mix between online and classroom-based training - so-called blended learning - the type of IT systems and architecture they need and whether they want to outsource all or part of the process to outside experts.

Most importantly, they must consider how training ties in with their performance objectives. "They need to see e-learning as part of the way to do business and not in isolation," says John Kay, a member of the management group at PA Consulting. This approach is also in line with the greater focus on return on investment as companies consider how to get the most out of the large sums they have spent on IT in the past few years.

Corporations are now being encouraged to view their training activities from a broader perspective, so that these are integrated into their business. "There is a greater emphasis on tying learning to critical business goals," says Nige Howarth, vice-president for international marketing at NETg, an e-learning specialist.

Some companies, especially in the IT and telecommunications world, are keen to train their employees in the skills needed for today's volatile and fast-moving markets. "There is a desperate need to transfer new skills quickly," says Laura Overton, global programmes manager at SmartForce, another large e-learning company. Like its rival NETg, SmartForce is based in the US.

Other companies need to bring employees up to speed on new products, sales methods, financial practices or regulatory requirements. Another important aspect of e-learning - whether through PCs or portable devices - is to enable people to access up-to-date information as they perform important tasks.

The trick for managers is to combine all these types of training into programmes that improve productivity and thus profitability. "Learning is becoming part of a consolidated approach to performance enhancement," says Peter Cheese, responsible for the human performance practice in Europe of Accenture, the business consultancy.

"Some companies see this but many are not there yet." He is optimistic, though, that the laggards will soon pay more attention to the benefits of e-learning. "This will be a very large and very significant market."

There has been plenty of recent activity as specialists seek to broaden their offerings and big IT groups move onto the scene. NETg, owned by Thomson Corporation of Canada, recently combined with two other Thomson units, Wave Technology and Course Technology, to provide a complete range of e-learning products, tools and services.

SmartForce is adding to its range with the biggest acquisition so far in the e-learning market: the $284m purchase of Centra Software. Greg Priest, SmartForce's chief executive, described this as "a watershed event for the e-learning industry". Critical mass and scale had become more important with the market's growth, he said. SmartForce has already invested some $100m over the past three years.

Seeing the potential in e-learning, the IT giants are eager to gain a bigger slice of the market. IBM has a head start, having already achieved annual savings of well over $200m by adopting e-learning for its own activities. The group is now a leader in the field, but other big concerns such as SAP, Oracle, PeopleSoft, Hewlett-Packard, Sun Microsystems and EDS are ambitious to follow.

Thus Gartner expects significant consolidation in the e-learning market as large companies increase their penetration and smaller ones are swallowed up or find the going too tough. Their success, whatever their size, will depend on how many companies can be persuaded not just to test the waters of the e-learning market but to take the plunge.