Three councils from South Worcestershire have signed a five-year shared services partnership with Civica, with the aim of achieving £3 million in savings.
The deal will see 111 employees from Malvern Hills, Worcester City and Wychavon councils join Civica.
The work will be done by the newly formed South Worcestershire Revenues & Benefits Shared Service organisation, with Civica assuming responsibility for the delivery of revenues and benefits to local citizens.
In addition, Civica says it will establish a "centre of excellence" - the ‘Orchard Centre’ - from where it will offer a range of processing and collection services to other councils around the country, "as they seek to overcome increasing service and budgetary pressures".
It also hopes that the centre will create additional local employment.
Councillor Ron Davis, vice chair of the South Worcestershire Shared Services joint committee, said: “Changes to welfare reform, and the advent of Universal Credit in particular, have had a huge impact on the way that local authorities operate.
"This alliance is more than just a commitment to a shared project, it’s a means to create a new centre of excellence to manage both our ambitious rollout and act as a resource for other UK public sector organisations.”
Civica said the deal built on its existing outsourcing partnership with nearby Gloucester City Council, which has been operating for two years.