MUMBAI: U.S. computer services firm Electronic Data Systems Corp. will raise its stake in India's MphasiS BFL Ltd. to 61.8 percent, the Indian firm said on Wednesday sending its shares up 17 percent.

EDS, which holds 51.4 percent of the Bangalore-based IT services firm, will raise its holding after a merger of its wholly owned subsidiary, EDS India, with MphasiS, it said.

The two companies would integrate their operations in India by December although the merger, which has to be approved by shareholders, stock exchanges and courts, will be effective from April 1 this year.

In April, MphasiS's board had approved a $380 million bid by EDS for a majority stake in MphasiS.

"This is the next step toward the integration of the operations of MphasiS and EDS," MphasiS Chairman Steve Heidt said in a statement.

Shares in MphasiS soared 17 percent to 156.90 rupees, outpacing a 1.9 percent gain on the main index.

Many mid-sized Indian software services firms are suffering growth pangs as customers prefer to give large, multi-year contracts to leading developers such as Infosys Technologies Ltd. and Tata Consultancy Services Ltd.

Also piling pressure are global firms such as International Business Machines Corp. who are aggressively ramping up their Indian operations, luring talent away from domestic developers.

($1 = 46.8 rupees)