The council, one of the UK's largest local authorities, has awarded Northgate HR a 10-year hosting contract worth more than £2m for its HR and payroll system Resourcelink.
The system will be used to automate personnel, payroll, training, recruitment and expenses management for the council's 15,000 employees.
Ian McBride, HR and corporate director at Leicester City Council, said, "We previously relied on two standalone systems to manage our HR and payroll, meaning data was being entered two or sometimes three times.
"The integrated Northgate HR system will mean data is keyed in only once, resulting in better quality information and a more efficient department. The new system will give managers much better access to HR information, helping them manage their people more effectively."
The web-based system will allow the introduction of employee self-service and manager self-service systems.
The software will be hosted by Northgate HR at its Hemel Hempstead solutions management centre and will ensure that the council meets national payroll benchmarking standards.
As Resourcelink is web-enabled, the 120 schools within the city's limits will be able to access the system via the internet.
Leicester City Council and Northgate HR are predicting savings in excess of £300,000 a year using the My View intranet system, once implementation is completed in 2006/2007.