Seventy staff working for the shared service ICT function between Cheshire East and Chester West and Chester (CWaC) councils are facing job losses due to overrunning costs.
The announcement came as the councils revealed in a mid-year performance report that their shared ICT service had so far overspent by £2.45 million.
Cheshire's overall shared services - which includes HR and finance as well as ICT - had been forecast to achieve £1.5 million in the current year (2011/2012).
The Cheshire councils will begin a three-month consultation on the future structure of the shared ICT service in December.
"The objective will be to produce a new operating model designed to increase the cost-effectiveness and efficiency of the service by1 April next year.
"It is estimated that this restructuring could lead to the loss of around 70 jobs across East and West Cheshire," a spokesperson for Cheshire East said.
The job cuts will affect staff based in Chester, Winsford, Crew, Macclesfield and Sandbach. Currently there are 217 staff delivering the shared ICT systems.
Cheshire East and CWAC began developing the shared ICT service in-house in 2009, when Cheshire East Council was established as part of a re-organisation of local government in Cheshire.
Projects that it has so far completed include the upgrade of its entire Oracle estate, in partnership with PricewaterhouseCoopers (PwC) from version 11.5.10 to R12 in February 2011.
Other key achievements include the harmonisation of telephony systems at both councils, the standardisation of its help desk incorporating Oracle and PARIS databases and an implementation of Microsoft Dynamics CRM 2010 at Cheshire East.