The Department for Transport has outsourced its back-office function to German-owned BPO provider arvato.

Under a seven-year deal, arvato will take ownership of the DfT's back office delivery centre in Swansea, and all staff will become arvato employees.

Financial terms of the deal have not been revealed.

It is the first time that a central government department has outsourced services in this fashion. It is part of the government's plan to reduce the number of its shared services centres from 8 to 5, which it says could save up to £600 million.

The "planning assumption" of the project is that other government departments, including Culture, Media and Sport and the Department for Communities and Local Government, will in future also use the outsourced function as a shared service.

The Cabinet Office will be responsible for managing the contract with arvato and ensuring that it meets its efficiency targets.

arvato has said that it will ditch the DfT's existing SAP implementation in favour of ERP software from Dutch provider Unit4.

"Our solution provides a new operating model for back office functions, using industry best practice, economies of scale and standardised processes to deliver improved value for money and service quality," said Matthias Mierisch, CEO of arvato UK and Ireland.

arvato provides BPO services to a number of UK public sector organisations, including Chesterfield Borough Council and Sefton Metropolitan Borough Council.