Xerox Corp. may outsource its global product engineering business to HCL Technologies, which is already working with the U.S. company for more than two years as a system integration partner.

The latest deal could entail HCL Technologies taking over the business and staff involved in researching and developing products for Xerox and provide the same as services to the U.S. company, say analysts.

Xerox has informed its "selected employee groups," in five locations across the world, "to let them know the steps we're considering," Bill McKee, a company spokesman, said in response to an emailed query from Dow Jones Newswires Tuesday.

"We have great skills and talent in our organization; yet, we don't have the scale necessary to be a leader in all areas. It becomes increasingly clear that to win, we have to partner with other industry leaders," he said.