The two councils have drawn up plans for a joint service after a review carried out by Socitm, the representative body for public sector ICT workers.

They have calculated that joining forces could save them £4m a year, with £2.5m of that coming from reducing the current joint headcount of 300.

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A report going to Islington’s cabinet next week, says: “This integrated operating model would require fewer management and supervisory posts.

“It would also be expected that there would be a further reduction in the workforce from process efficiencies as both Councils would benefit from integrated networks, datacentres and common applications.”

The proposed operating model would see a single officer post created to lead and manage the shared service, which will initially be overseen by a joint committee, but could eventually be spun out into a standalone company.

The move has been prompted by worries over government cuts, which will see both councils needing to save a combined £185m by 2020, along with concerns over a shortage of skilled staff.

“Given the skills set required, both organisations are competing with employers from both the public and private sector and have ongoing difficulties in recruitment and retention. Looking ahead, this represents a significant risk to future service delivery,” the report said.

Upfront investment to deliver the merger has been estimated at £5m, covering project support, restructuring costs and platform/infrastructure costs.

Camden Council’s cabinet member for finance and technology, Theo Blackwell, said: “Both councils have a long history of collaboration and share similar objectives, so it makes perfect sense to come together to provide an improved service at a lower cost. In the future, the joint service may also be able to generate income for both councils through selling its combined expertise.”

The decision on whether to proceed with the proposals will be made by the Cabinet at Camden Council on 9 September and by the Executive at Islington Council on 24 September.