NYSE-listed StarTek eyes digital deals with CSS Corp

With 26 per cent stake in Chennai headquartered CSS Corp, Rajiv Ahuja, President of NYSE listed StarTek, is all set to accelerate the firm's digital play strategy. Earlier this month StarTek announced acquiring stake in CSS Corp for $30 million.

Though both the companies will work at an arm's length, StarTek will leverage CSS and collaborate on three things; to create a go-to-market strategy to leverage CSS platform-based technology support services to StarTek’s existing customers and develop new customer opportunities for these services. Two, enhance complementary value creation by creating new service offerings by leveraging StarTek’s service delivery capabilities under StarTek Cloud and focused service offerings from CSS across AI, automation, analytics, cloud, and digital solutions.

And three, develop cross-sell opportunities at arm's-length basis where both the companies can bring additional value to customers by leveraging the additional service offerings and enhanced footprint of the companies.

When asked if StarTek will acquire further equity in CSS Corp., Ahuja said, “CSS is a force multiplyer for us and it will certainly add shareholder value. We have stated that we have the ability to take a controlling stake in the company in the next two years. We have two options. The first option was that we have a position in that company and they become a sister company. And option two is that we have the ability to combine these two assets at some point in time in the next two years. But most importantly, I think what it gives us is the ability to synergize each other's capabilities, especially in the tech support area, especially in the digital area where we can work together as teams.”

Ahuja also said the inorganic route of growth is something that the company keeps evaluating and the final decision is based on finding right assets at the right price.

To give its digital foray a serious effort, the company recently hired a digital officer based out of New Jersey who will work closely with CSS Corp.

BPM players have been impacted due to the COVID-19 lockdowns and uncertainty in the market. “While we were just turning the corner in 2019, the COVID related lockdown hit us. But within seven days we had our WFH plan rolled out with 24/7 support for our customers,” said Ahuja. According to the firms recently announced fourth quarter and full year results, while it has seen growth back, the profitability still needs to be worked out. The adjusted EBITDA has improved to $23.3 million for Q4 of CY2020, the company reported net loss of $7.6 million.

At present the company has 52 per cent of its workforce working from home and 46 per cent are working from brick and mortar. During the early days of the pandemic, the company had to release approximately 10 per cent of its workforce, that is 4,500 employees.

StarTek that has 18,000 employees in India (40,000 globally) and half of which caters to the India market is also seeing growth in business. Over the next two quarters the company plans to hire 3,000 people in India. “The other strategy we are following in India is to open up centres in tier III cities. With the second wave of infections rising we do not want to go through the same uncertainty and we feel being close to our employee base will work for us,” added Ahuja. The company over the next two months will finalise which cities it wants to expand into.