Somerset County Council is set to bring back some 160 staff from its troubled Southwest One outsourcing venture with IBM.
The move follows a review by the council, which concluded the venture was failing.
Southwest One - which was one of the UK's first council shared services ventures and operates on behalf of Somerset and Taunton Deane councils, and Avon and Somerset Police - was recently handed a multimillion pound lifeline by IBM after it reported significant losses.
Southwest One will be left with around 500 staff after the changes.
The staff leaving the venture worked in finance and human resources. Trade union Unison said that the staff returning to Somerset Council may be concerned about their jobs.
Liz French, regional organiser for the trade union Unison, told the BBC: "I have been raising issues with the council through Human Resources about what they're likely to do with the staff when they come back.
"They are saying at the moment there is no proposal to make them redundant but that doesn't mean to say they won't do that in the future, it's a very worrying time for them."
Somerset County Council has not commented. A spokesman at SouthWest One said: "We can confirm Somerset County Council and Southwest One have concluded discussions regarding HR and finance services as part of the council's response to central government's cuts in local government funding."