Security firm Reliance has lost the £30m contract to tag offenders in Scotland to its rival, Serco.
Serco will provide a range of tagging services
The winning bidder, which will base its operation in East Kilbride, will take over the five-year contract next May.
Serco subsidiaries already run tagging services in Wales and parts of England and operate Scotland's only private prison at Kilmarnock.
The Scottish Executive said the contract covered the full range of electronic monitoring.
This includes Restriction of Liberty Orders, probation conditions, monitoring through the children's hearing system and home detention curfews, if they are approved by parliament.
A spokesman for Serco said: "We are very pleased that the Scottish Executive has selected us to provide this important service to the people of Scotland.
"In this, as in all our operations, we are determined to perform to the highest standards.
"We take very seriously our responsibility in ensuring that an efficient, effective electronic monitoring service contributes to reducing offending and improving public safety."
Justice Minister Cathy Jamieson said: "The decision was based upon a competitive tendering process and took full consideration of both quality of service and value for money.
"I want to take the opportunity to thank the current contractors Reliance Monitoring Services, who have provided a high standard of service over a number of years."
An executive spokesman said the decision was not related to the problems Reliance experienced when it took over responsibility for court and prison escort duties last year.
He said the two activities were carried out by different Reliance companies.
Norman Brown, operations manager for Reliance Monitoring Services, said: "While this is a very disappointing decision, we know that the Scottish Executive have been pleased with our performance and reliability.
"We will continue to provide the same high quality of service until the end of the contract."
He said Reliance had successfully monitored more than 3,500 orders since May 2002.
"As a leading supplier of outsourced business processes in the UK, Reliance continues to provide a wide range of other services to the Home Office, the Scottish Executive, government agencies and police authorities across the UK," he added.