More government departments could sign up to one of the largest shared services agreements in Whitehall, after supplier LogicaCMG agreed an extension to the deal.

The contract with the Treasury’s buying agency OGCbuying.solutions provides public sector payroll and related human resources (HR) processes.

Shared services contracts provide greater savings the more organisations participate. The expanded framework agreement builds on the original deal between HM Treasury and LogicaCMG, signed in 2002, and will provide up to 30 per cent reduction in payroll costs for participating departments.

Over the past five years, the original membership of 13 organisations has grown to 70, with LogicaCMG now providing payroll services to a third of central government employees.

Aside from reduced costs, other benefits of the framework agreement include increased efficiency through automation of processes, integration of HR and payroll functions through the creation of a single database of employee information and streamlined processes, reduced HR administrative burden, better allocation of resources, economies of scale, software flexibility and improved compliance.

‘There are potentially huge benefits to be gained from shifting to a shared services model and we encourage every public sector organisation to consider this approach in order to improve process efficiency and reduce costs,’ said Matthew Jones, financial controller at OGCbuying.solutions.

‘Framework agreements with suppliers enable public sector organisations to obtain best value for money whilst saving on average 77 days on procurement cycles.’