The rumors of a possible tie-up between Indian information technology outsourcing giant Infosys Technologies Ltd. and European IT consulting firm Capgemini are making the rounds of the blogosphere and financial press. Arguments for the deal include Infosys' need to expand its consulting practice. However, Moshe Katri, an analyst at Cowen & Co., argues that the potential deal doesn't make sense because Capgemini's consulting services are generally low-margin, capital-intensive outsourcing deals. He also points out that Capgemini spends much more than Infosys and its margins are "significantly below" that of Infosys. Should a deal go through, there may be "synergies" to be had, but it would drag down Infosys' balance sheet.—Stacey Higginbotham

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