Rotherham Metropolitan Borough Council has unveiled a 12-year, £150m joint venture project with BT to revolutionise its operations.
BT will invest £30m in technology over 12 years to radically improve delivery of services - including HR and payroll.
The authority will save £50m by allowing more money to be re-directed to frontline services.
The partnership will have a turnover of £150m over 12 years.
The new company - RBT Connect - which stands for Rotherham Brought Together - is expected to be finalised in the next few weeks.
It will manage all HR and payroll, information and communications technology functions, procurement, revenues and benefits.
The council has already saved £1m through better management of its procurement process.
Mark Edgell, Rotherham Council leader, believes the move will help council staff learn new skills, widen their experience and develop their careers through improved training and learning opportunities.
All staff will remain employees of the council and their conditions of employment will remain the same.
Edgell said: "Rotherham recognises that to bring the necessary efficiencies and improved business processes to the council and citizens it serves, significant investment is needed. The council would find it difficult to make this level of investment alone, and will benefit from the consequent savings it would bring."