Starbucks, the world’s largest coffee chain, has terminated its HR outsourcing contract with Convergys, which was signed last july.

"The decision to discontinue the contract was made based on the changing needs of Starbuck's business and in no way reflects on the quality of the work Convergys has done for Starbucks,” said a company statement from Convergys.

The provider had generated about 9% revenue from this contract. However, the company recently said, in an analyst meet, that the deal termination would have no effect on its 2008 or 2009 revenue or income targets for this unit.

HR outsourcing deals in 2007 plunged to $3.27 billion from $5.35 billion a year ago, said some industry analysts.

For Convergys, the Starbucks cancellation comes within three weeks of rival Hewitt Associates announcing the termination of HR outsourcing contract by Wachovia, one of its largest clients.