Larsen & Toubro Ltd. is weighing a merger between two of its publicly traded software firms, according to people familiar with the matter, as the Indian conglomerate seeks scale to compete with global digital giants.

The boards of Mindtree Ltd. and Larsen & Toubro Infotech Ltd., two software units controlled by the Mumbai-based engineering firm, could consider share swap ratios for the merger as early as next week, one of the people said, asking not to be identified as the information is not public.

Larsen acquired control of Mindtree in 2019. The conglomerate holds about a 61% stake in the company, which has a market value of $8.3 billion, and has around 74% of L&T Infotech, which has a market capitalization of $13.6 billion, data compiled.

The two companies have minimal overlap in businesses or clients, and a tie-up would give them better pricing power and lower costs, one of the people said.

Deliberations around the merger are ongoing and the plan could be delayed or fall apart, the people said. Representatives for Larsen declined to comment, while representatives for Mindtree and L&T Infotech couldn’t immediately comment. Mindtree and L&T Infotech are scheduled to report earnings Monday and Tuesday respectively.

The proposed merger comes as software companies are seeing surging demand from businesses embracing the digitization that accelerated during Covid-19. Large IT outsourcing firms are also expanding into areas such as cybersecurity, automation and machine-learning support, moving beyond lower-margin traditional back-room services.