Somerset county council is to bring a number of services currently provided by the Southwest One joint venture, including accounting, business development and pensions, back in-house.
Southwest One was set up in 2007 as a joint venture company between the council, Taunton Deane borough council, Avon and Somerset police and IBM to modernise the local authorities' business processes.
Ken Maddock, leader of Somerset council, said: "We have bent over backwards to try to make this partnership work. But we have to state clearly that our primary duty in looking after the public's hard earned money is to make sure we get the best possible deals, that we get the best possible value for the public's money."