Nordic IT services groups EDB Business Partner and ErgoGroup are in talks over a possible merger.
In a brief statement, EDB says its board is "evaluating strategic options" and as a result has "initiated formal discussions" with ErgoGroup. The market will be informed when decisions are made, the release concludes.
EDB has seen declining revenues since the global financial crisis first hit, forcing it to embark on a Nkr400 million cost cutting programme, with 150 job axed, last year.
The firm was heavily linked with a merger with Tieto, another struggling IT services firm, in 2008 but no deal was struck.
A union with ErgoGroup would produce savings in administration and IT infrastructure, with lay-offs also likely, Nordea Markets analyst Andre Adolfse told Reuters.
However, potential job losses may stymie any deal, says Adolfse, because Ergo is owned by state-controlled Posten Norge and EDB is 51%-owned by Telenor which in turn is 54%-owned by the Norwegian government.