HM Revenue & Customs (HMRC) and Capgemini have revised their agreement which will save the government department a further £110 million a year from 2011 onwards.

Systems will be standardised with common industry components, simplified, and modernised to better meet the needs of an integrated organisation.

In return, HMRC have committed to all core external IT spending to be made through the Aspire contract.

Chief executive and permanent secretary for HMRC Lesley Strathie said of the deal: "HMRC and Capgemini have worked together to achieve outstanding savings for the department.

"This is just one of the ways HMRC will be reducing operating costs and it signals the intent to bring IT costs down as announced in the 2009 Budget."

The chief executive of Capgemini Aspire Nigel Martin added that it was made possible by all the company's partners, above all Fujitsu and Accenture.

HMRC's contract with Capgemini will run until 2017 unless renegotiated.

The government department has recently made headlines after it announced that it could be putting football team Southend United into administration after an unpaid bill for £690,000.

In a recent survey of SMEs for Connect, the two most important benefits of outsourcing were guaranteed response times and allowing in-house IT staff to concentrate on more strategic issues.