Following a strategic review of the partnership, it has been agreed that a number of services - ranging from welfare rights to human resources - will return to being delivered in-house by the council. Meanwhile BT's role will focus on improving the efficiency and quality of information and communication technology (ICT), revenue, benefits and payroll services.
Both BT and the council agree that the revised arrangement will help deliver further efficiencies, given the changing needs of the council. The changes mean One Connect Limited, the jointly owned company created when the partnership formed, will become a wholly owned BT company and renamed as BT Lancashire Services Limited.
Hundreds of county council staff currently seconded to One Connect will return to the council, with the remainder continuing their secondments as part of the newly slimmed-down partnership. The new arrangements will take effect from 31 March 2014.
Leader of the Council, Jennifer Mein, said: "I'm pleased the council and BT have come to an agreement that I believe has the interests of Lancashire's residents and taxpayers at its heart.
"Both organisations have shown great commitment to reviewing operations over the last few months and looking again at how we can best work together for the benefit of Lancashire residents.
"There is no doubt BT's expertise in cutting edge technology has been a real benefit in a number of service areas to date and as a forward-thinking council we'll continue to need that kind of support and innovation.
"The changes allow us to focus on developing that potential in partnership with BT while bringing back services and decisions that sit better in the county council's structure."
Lancashire County Council Interim Chief Executive, Jo Turton said: "BT is an important partner of the county council's, not just through the strategic partnership but also in supporting us on several key initiatives including the Superfast Lancashire broadband programme and the creation of hundreds of new BT jobs in Accrington.
"Repositioning the partnership with BT will allow us to focus on securing access to BT's technologies and skills that otherwise wouldn't be available to a local council.
"Particularly given the huge funding pressures we're facing, this sort of support really can save money behind the scenes while helping to protect services on the frontline.
"I know that county council employees, including our secondees involved in the revised arrangement, will work hard to make the changes a success."
As the company will be wholly owned by BT, the partnership governance arrangements will no longer involve a joint board of directors.
Instead, senior representatives from both organisations will work together to regularly review progress and identify new opportunities to improve local services.
Tony Chanmugam, Chairman of OCL and BT Group CFO said: “This is a key milestone in our relationship with Lancashire County Council. The environment in which local authorities operate is continually changing. We all appreciated that when OCL was created and it was one reason for agreeing that a strategic review would take place at around this time.
“As a key partner to the Council BT will continually work with the council to agree how we can adapt the services we provide to help the council better serve the citizens of Lancashire. This is the sign of a true partnership and I would like to thank Lancashire County Council for their continued support of our strategic partnership and we look forward to our relationship going from strength to strength during this next phase.
“BT remains fully committed to maintaining a strong presence across the North-West, not just through BT Lancashire Services but across all the BT Group activities.”
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