Serco has won a 15-year contract to run the Caledonian Sleeper train service between Scotland and London.
From April 2015, Serco will be responsible for operating all aspects of the company including marketing, sales, passenger services, station facilities and fleet maintenance.
Serco will take over the franchise from Aberdeen-based First Group.
The Caledonian franchise connects Inverness, Fort William, Aberdeen, Edinburgh and Glasgow to London.
The company has promised to invest £100 million in new rolling stock and improvements to en-suite berths, flatbeds, and brasserie-style club car. Serco said there will also be investment in a new website with a broader range of fares, earlier boarding of the trains and the ability for travellers to manage their journey virtually.
Serco, which runs outsourced services in more than 30 countries including air traffic control, prisons, and back-office support, was banned from competing for Government contracts due to the overcharging scandal although this was lifted earlier this year.
RMT union said it was “deeply concerned” that Serco has been awarded the contract following its “truly shocking track record in the delivery of public services”.
“Quite frankly, with their appalling list of failures in the UK and globally they should never have even been considered as contenders for the Scottish sleeper service. The logical option of public ownership was not even looked at,” said RMT acting general secretary Mick Cash.
“RMT will be meeting with the other rail unions but I can make it crystal clear that if there is any threat to the jobs and conditions of the staff transferring across from First to SERCO it will be met with fierce resistance including the use of industrial action if required,” Cash added.
Scottish transport minister Keith Brown said the aim was to "transform this iconic rail service".
"The contract secures the future of the Caledonian Sleeper, ensuring it delivers a service fit for the 21st century and that it provides - as it has done for over 100 years - a unique, valued and high profile overnight service between Scotland and London."
Total revenue to Serco over the 15-year period is estimated at up to £800m, of which approximately £180m will be in the form of franchise payments.
The firm’s chief executive Rupert Soames said: "Serco has a strong track record of providing high quality and efficient rail services around the world, as well as experience in managing large-scale tourism-focused transport services.
"I am delighted that we can use this unique blend of expertise to transform the iconic Caledonian Sleeper into a modern, high quality hospitality service to make Scotland proud."