Hampshire County Council and Oxfordshire County Council have signed an agreement to share their IT services, in a bid to improve the systems and cut costs.
Both councils use SAP systems for their human resources and financial services, and the partnership will initially centre on this.
Under the new arrangement, Hampshire County Council will support Oxfordshire's SAP system. Hampshire will take over once Oxfordshire's service contract with a private sector company ends this year, a move expected to save Oxfordshire £1 million over the next three years.
In addition, the councils plan to share and supply services to each other, and work together to improve the terms of existing contracts.
Resources and specialist skills will also be shared between the councils, to meet support and maintenance needs.
The councils insist, however, that no redundancies will be made as a result of the partnership. IT jobs were at risk at Hampshire last year, when the council was making cuts across the organisation.
Councillor David Robertson, the deputy leader of Oxfordshire County Council, said: "Throughout the UK, councils are working ever more closely together to create efficiencies and save money. It is the common sense way forward.
"Skills and knowledge-sharing would bring added resilience to both organisations and Oxford City Council will also benefit given that Oxfordshire County Council provides ICT support to colleagues there and has done for some time."
The councils agreed on the partnership in principle in late 2011, and signed the agreement earlier this week (13 March).
Hampshire has a history of sharing services. Last year, it revealed it was working with supplier UNIT4 to offer a back office shared services business platform to other local authorities. In 2007, a group of eight Hampshire local authorities teamed up to create a joint e-procurement system – the Hampshire Marketplace – to improve efficiency and harness bulk purchasing power.