Kier is cutting more than 100 jobs on its Highways England Area 9 contract.
The Enquirer understands a voluntary redundancy programme has been ongoing since Christmas which has seen around 40 staff leave.
That has now moved into a compulsory redundancy programme with another 100 jobs under threat.
Kier won a three-year extension to the Area 9 deal in 2018 covering highways maintenance and repairs to major roads across Herefordshire, Worcestershire, Warwckshire, Staffordshire and Shropshire as well as parts of Gloucestershire, Derbyshire and Leicestershire.
A site source said: “This has come as a bit of a shock to everyone and the numbers are higher than anyone was expecting.
“We were told the job losses were due to budget cuts by Highways England.”
A Highways England spokesperson said: “We have not reduced our funding for the Strategic Road Network in the Midlands and we remain committed to delivering our £15 billion road improvement programme for the roads period 2015 to 2020.”
A Kier spokesperson said: “We align the size and shape of our workforce to the forward workload we have visibility of at the time.”