The speed of growth in the number of academies has led to a private contractor that was controversially appointed to run Walsall Council's education services having its #163;345 million contract cancelled seven years early.
Serco agreed the deal in summer 2008, with the contract - an extension of a previous agreement signed in 2001 - not due to finish until 2020.
But the council will now resume running the services when Serco's contract is wound up in 2013.
The Tory-controlled council will not have to pay Serco any compensation for ending the contract early because it has given the firm two years' notice.
The council's cabinet member for children's services, Rachel Andrew, said: "We are met with a changing landscape for education that means big changes in how we support education and learning in Walsall.
"Schools will soon be able to buy in services from other places and with more schools taking academy status for greater autonomy, things are changing. The decision will not have an immediate impact on any service or member of staff."
Serco is in charge of 119 schools in the borough and Mrs Andrew said it would now be working with the firm on an "orderly transfer of services".
Serco employs a total of 400 staff on the contract. Its director of children's services, Ged Rowney, said these will be transferred to the council in 2013.
He added that Serco might remain working in the borough if individual schools decided to hire the company. "We'll be offering them the chance to buy services from us, whether it be catering, finance or IT," he said. "If schools want to work with us directly, they can."
Mr Rowney said the decision to cancel the deal at Walsall did not mean the end of private firms being involved with the sector. "The contract we had was set up in 2007 and 2008 and things have changed quite a bit since then," he added.
Serco recently signed a single deal with Warrington and Halton borough councils to provide school-improvement services from this September.
The firm will take on around 20 staff from the councils, which Mr Rowney said will allow the 160 schools covered by the agreement to share best practice and offer support to each other.
Serco has also just signed a deal with North East Lincolnshire Council for a #163;10 million contract to run school improvement and special needs provision over the next five years.