HP's buy out of outsourcing giant EDS could send shivers through the outsourcing industry.

According to Reuters the deal will spark a round of consolidation in the global technology outsourcing sector.

Rivals will suddenly become overshadowed by a re-invigorated HP, which is likely to shed staff in its outsourcing centres in India and Eastern Europe to avoid duplication.

Analysts think that Infosys, Tata Consultancy, Wipro and Cognizant, already having a tough time against IBM may now be forced to look for acquisitions to compete with a combined HP and EDS.

CEO of outsourcing consultancy Tholons Avinash Vashistha said that Infosys and Wipro were under pressure.The merger will only make the situation worse for them by potentially creating another significant competiton, he said.

EDS has some 27,000 workers in India after buying 62% of Mphasis, in Bangalore. So far there is no news about the two companies' consolidation plans. Many think that this will involve staff reductions. X