Greenwich council has decided to take some services back in-house after warnings that the companies it set up are facing financial problems.
The south London council said it will 'reconfigure' the two companies, GSS and GS Plus, to safeguard economic sustainability and staff jobs.
A decision by its cabinet means fleet, passenger and facilities management services will be in-sourced while other options will be explored for catering, schools ICT and building cleaning services.
It says setting up the businesses was right at the time but continuing austerity, commitment to the London Living Wage and schools having their own budgets had changed the economic landscape.
Council leader, Danny Thorpe, said: 'Continuing the services as normal in the face of increasing austerity is not an option.
'Reacting to economic changes is vital to ensure the future viability of the services and to protect the staff working in both GSPlus and GSS.
'We are committed to finding a way forward that will do both these things.'