Havering and Newham councils expect to save more than £11m by extending shared services across both boroughs.
The agreement will see a new team created from existing staff to support the two boroughs' technological support systems and to implement a programme to update and standardise systems.
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Mayor of Newham, Sir Robin Wales (pictured), said the move will help meet budgetary pressures. "In terms of grant funding, Newham is being hit harder than any other London borough so we have to make considerable savings.
"By entering into this agreement Newham expects to save around £7.5m over five years. We hope to be able to attract other boroughs to join us, offering the opportunity for even more efficiencies," he added.
Michael White, leader of Havering council, said the move was not about merging services but looking for areas where shared services could create benefits to both councils.