Six London councils have signed a four-year contract with Capgemini to share IT services.
Lambeth, Barking & Dagenham, Brent, Croydon, Lewisham and Havering hope to generate cost savings and improve council services for their combined population of 1.6 million people.
Mike Suarez, executive director for finance and resources for Lambeth Council, which led on the procurement, said: "All councils share common support functions, like HR, finance and procurement, but we have our own ways of doing them.
"If we can use the same system, we will streamline our processes and save money without cutting costs."
He added: "This is also about improving how we do business with our suppliers and enable our staff to do things more quickly and efficiently. Managers will have access to budgets in real time and not need to complete endless paperwork for the simplest of tasks - making real savings for the taxpayer."
Under the contract, Capgemini will deploy its t-Gov (Transform Government) transformation methodology, which involves standardising the councils' systems on Oracle's R12 (Release 12) Enterprise Resource Planning (ERP) software suite.
All six boroughs currently use Oracle's ERP software, with four of them on R11 of the software, and Havering and Croydon on R12.
Havering Council has already been working with Capgemini since May 2010, when it signed a £2.9 million contract to transform its back office IT systems.
It went live with the first part of the project in April 2011 and in January 2012 reported annual cost savings of £1.5 million as a result of the work. The final phase of the transformation was due to be completed in April 2012.
Under the shared services contract, however, Capgemini will implement an "improved", separate version of the t-Gov template that Havering has already implemented. The solution is different to the Havering system, so a re-implementation of the system will be required at the council, Capgemini said.
The new systems are expected to go live in July 2013, and will be managed by Capgemini for an initial period of three years.
The shared services project between the six councils is part of Project Athena, an initiative that aims to align corporate IT systems across the 32 London boroughs, with the aim of developing a single ICT platform for all London public sector organisations. Project Athena came out of a London councils initiative known as Capital Ambition.
Sharing IT services has been a growing trend in local government, as councils face increasing budget pressures.
Three other London councils - Westminster, Hammersmith & Fulham and Kensington and Chelsea - recently provided a one-year update on their achievements, revealing that they hope save an extra £3 million from shared services.