Birmingham City Council has signed 10 year £475m IT business transformation deal with Capita.

The project, called 'Service Birmingham', is intended to give the council a 'world-class' IT environment to support its services to citizens.

Birmingham deputy council leader Paul Tilsley says the council will benefit from the expertise that Capita can bring in contributing to major changes to complex public organisations.

'We have estimated that the partnership can potentially help us achieve savings of £1bn over the 10 year term. Capita will create a new business centre in Birmingham and has guaranteed to bring hundreds of new jobs into the city during the course of the deal,' he said.

Under the terms of the deal, 500 employees will be transferred from Birmingham to Capita to provide specialist resources for accelerating the programme.

Further extensions to the contract have not been ruled out which could increase the size of the contract.

Brimingham Council's acting chief executive, Stephen Hughes, says Service Birmingham will transform the way the council works and help it achieve its ambitions.

'Not only will our services greatly improve but we estimate that we will achieve a 15 per cent improvement in productivity through business transformation. The partnership will therefore bring real value to the City,' he said.