More than 700 jobs have been created as a result of Blackburn with Darwen Council's partnership agreement with Capita to outsource its HR, property management and financial services.
Blackburn with Darwen's HR director, John Connolly, said the £220m 15-year deal, which saw 500 council staff's TUPE rights transferred to Capita in July 2001, has led to significant improvements in service delivery.
The deal has seen the council exceed almost 90 per cent of service improvement targets during the first year of operation.
Connolly, who is employed by Capita, said the partnership, which has the approval of local union representatives, had evolved over the year.
Absenteeism among Capita's former council employees has halved since they transferred to the private sector, and staff turnover is extremely low.
Connolly said staff transferred under TUPE to Capita had retained their pension rights, and while new staff would join on Capita terms and conditions, they would have access to a pension scheme offering comparable benefits.
The 700 new positions have been created through a new contact centre in Darwen funded by Capita, which has taken on work for BBC TV licensing and IT and support services for the Criminal Records Bureau. Capita is also building a business centre in Blackburn that will accommodate 500 staff.
Connolly is in no doubt that private sector companies can play a key role in improving public services, providing both parties are prepared to work together.
He thinks outsourcing the council's HR function has enabled him to take a more strategic role as HR director.