Satyam Computer Services has had its IT outsourcing contract with US-based State Farm Insurance terminated in the wake of revelations about a $1 billion accounting fraud at the Indian firm.
According to Illinois-based newspaper The Pantagraph, around 400 Satyam employees working on-site at State Farm will lose their jobs after the insurance firm decided to axe the contract.
Satyam says it is "disappointed" with State Farm's decision but claims over 90% of clients have committed to it since the scandal broke.
State Farm was one of Satyam's top ten outsourcing clients.
One of India's biggest IT firms, Satyam employs around 53,000 and counts Citi, Merrill Lynch and Emirates Bank among its clients. It is not clear yet whether any of these deals are under threat.
Earlier this month the vendor's founder and chairman B Ramalinga Raju resigned after admitting the company's profits have been falsely inflated for several years, leading to a $1 billion hole in the balance sheet.
In his resignation letter to the board, Raju says that the firm's balance sheet, as of 30 September 2008, has a hole of around $1 billion. The sheet of Rs5361 crore includes "non-existent" cash and bank balances of Rs5040 crore.
Raju and his brother have since been arrested on charges including criminal conspiracy and forgery.
The company is already barred from World Bank contracts for eight years for "providing improper benefits to Bank staff and failing to maintain documentation to support fees charged for its subcontractors".