The public sector is proving to be a channel lifeline, after VAR Northgate Information Systems signed a £3m deal to outsource payroll services for the London Borough of Sutton.
Northgate, which will administer the council's payroll system from its data centre in Hemel Hempstead, provides a similar service to the Greater London Authority and the Royal Borough of Kensington and Chelsea.
Malcolm Aldis, managing director of HR systems at Northgate, said the firm had other, similar deals in the pipeline.
"As a private sector company we offer better value than the internal IT department. Because we own the application we can develop it to fit the needs of individual councils," he said.
Annette Madden, executive head of business services at Sutton Council, said the authority wants to reduce administrative processes being done manually.
Robert Morgan, chief executive of outsourcing consultancy Morgan Chambers, said: "You can use it as a bedrock for other services. Councils are forced to tender, and if you differentiate you can succeed in this area."
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