The company expects to implement its OneGov customer relationship management (CRM) solution, to improve citizen access to council information and help the push towards e-government targets.
Southwark selected ITNet despite the company's acrimonious dispute with Hackney Council, where it is contesting a £30m compensation claim from Hackney after the benefits and revenue services contract was terminated.
Hackney said it incurred huge losses as a result of failures to collect council tax or run the housing benefits service at a satisfactory level.
In Southwark, ITNet faces working opposite CSL, which supplies revenue and housing benefit services to the borough. The council would not comment on how the two outsourcers would cooperate or on ITNet's outstanding problems with Hackney Council.
John Mackie, senior consultant at outsourcing consultancy Morgan Chambers, said ITNet must have worked hard to overcome its Hackney legacy.
"ITNet is an innovator in local government and it probably excited Southwark with lots of racy ideas. Southwark must have considered the Hackney problems, not to mention the £30m claim, so the services offered must have been very exciting to make up for this. ITNet does have the credentials to attract councils, despite its recent history."
Mackie said Southwark's handling of its two outsourcers was likely to be crucial to the success of the project. "Southwark's management of its suppliers will dictate how the relationship works. One will have to be named as the primary supplier and there will always be some friction in the partnership."