Hougang United revealed Balgumaran's contract was not extended as the club under the 52-year-old had not met KPIs (Key Performance Indicators) in the 2016 S.League season.
The Cheetahs started the season on a high beating Home United in their opener and were looking set to seal an AFC Cup spot for the first time in their history. However, Bala's team was able to manage only one win in their last five encounters, which included three consecutive defeats in their last three games.
Hougang thus finished five points behind Home, who sealed the AFC Cup spot by finishing as the second highest-ranked local team after Tampines Rovers, who conceded the league title to Albirex Niigata.
However, the sixth-place finish in the recently concluded league season has been their best-ever performance. Notably, the 52-year-old is reportedly the only local coach to have made it to the three-man shortlist for the S.League Coach of the Year Award, which will be announced on Tuesday.
Hougang said that they were eager to continue working with Bala. However, the club maintained the dip in the side's form in the later part of the league was "was tough to swallow" and that they have amicably parted ways with the coach.
"Coach Balagumaran was instrumental to a great run of form early in the season. The initial performance of his squad was very promising and the club sincerely looked forward to seal a long term partnership together," an official statement on the club's website read.
"Unfortunately the team's performance in the second and third round was disappointing. Not only was the mutually agreed KPI not met, but the club only managed to gain a combined total of 16 points from the second and third round – despite achieving 16 points in the first – and ended up crashing out of all cup competitions as well as stumbling out on qualifying for an AFC position."
Bala, who reaped rewards for focussing on youth development at the club, expressed his disappointment and said that coaches should be given more time to prove themselves.
He also revealed that the uncertainty that prevailed over the contract extensions of key stars including top-scorer Stipe Plazibat did not help the team morale during the closing stages of their campaign.
"I think coaches and managers must be given more time to prove themselves. Unfortunately, this is the era of where instant results count in football all over the world," Bala said after he was told about the club's decision on Saturday, as quoted by Today Online.