Serco will continue its contract with Lincolnshire County Council until 2022, despite a number of previous errors.
Senior councillors have signed off on a renewal of the company’s service for a further two-years.
It means that firm will continue to provide IT, payroll, HR, customer services, exchequer services and adult care finance for the authority.
But services such as Freedom of Information, complaints and information governance and the Agresso system administration will be taken in-house.
The five-year contract with Serco is due to expire at the end of March 2020.
It comes as the company’s contract had been beset by problems which led to the authority reconsidering their services.
In December 2015, hundreds of public sector staff were left unpaid following an IT error which resulted in the company apologising to workers.
But both senior county councillors and members of the authority’s overview scrutiny panel have backed an extension.
Council chief executive, Keith Ireland, also said that “his neck is on the line” to deliver the contract.
He said that the company is as “good as anyone” to provide the service.
Council leader, Martin Hill, said it would be right to extend the contract.
“I support the fact that it is the correct course to carry on,” he said.
“I do think that it is a sensible way forward and we would expect Serco to deliver.”
He added that it was the right for the council to bring some services in house.
The council had the opportunity to enter into a shared service agreement with Herefordshire County Council to deliver payroll.
But, officials turned the agreement down after they said they “could not influence” the service going forward.
But Councillor Richard Davies, executive member for highways and IT, said that there has been a difference in the contract in recent months.
“The performance of Serco has improved and there is a risk of moving to a new provider at the moment,” he said.
SUBSCRIBE TO LOCAL DEMOCRACY WEEKLY, our exclusive email newsletter with highlights from our coverage every week and insights and analysis from our local democracy reporters.