With a 26% stake in CSS Corp, headquartered in Chennai, Rajiv Ahuja, chairman of NYSE-listed StarTek, is poised to accelerate the company’s digital gaming strategy. Earlier this month, StarTek announced the acquisition of a stake in CSS Corp for $30 million.
Although the two companies are working remotely, StarTek will leverage CSS and collaborate on three things; to create a go-to-market strategy to leverage CSS platform-based technology support services for existing StarTek customers and develop new customer opportunities for these services. Second, enhance complementary value creation by building new service offerings by leveraging StarTek’s service delivery capabilities under StarTek Cloud and CSS’s targeted service offerings through AI, automation, analytics , cloud and digital solutions.
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And third, develop arm’s length cross-selling opportunities where both companies can provide additional value to customers by leveraging the companies’ additional service offerings and enhanced footprint.
When asked if StarTek will acquire additional shares in CSS Corp., Ahuja said, “CSS is a force multiplier for us and it will definitely add value for shareholders. We have stated that we have the ability to take a majority stake in the company within the next two years. We have two options. The first option was for us to have a position in this company and for it to become a sister company. And the second option is that we have the ability to combine these two assets at some point over the next two years. But most importantly, I think what it gives us is the ability to synergize everyone’s capabilities, especially in the technical support area, especially in the digital area where we can work as a team.
Ahuja also said the inorganic growth path is something the company continues to evaluate and the final decision is based on finding the right assets at the right price.
To give a serious push to its digital foray, the company recently hired a New Jersey-based digital manager who will work closely with CSS Corp.
BPM players have been impacted due to COVID-19 related lockdowns and market uncertainty. “As we had just turned the corner in 2019, the COVID-related lockdown hit us. But in seven days, we rolled out our WFH plan with 24/7 support for our customers,” Ahuja said. According to the companies recently announced fourth quarter and full year results, although it has seen a return to growth, profitability has yet to be determined. Adjusted EBITDA improved to $23.3 million for the fourth quarter of CY2020, the company recorded a net loss of $7.6 million.
Currently, 52% of its workforce works from home and 46% works from bricks and mortar. In the early days of the pandemic, the company had to release around 10% of its workforce, or 4,500 employees.
StarTek, which has 18,000 employees in India (40,000 worldwide) and half of which cater to the Indian market, is also experiencing business growth. 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 centers in Tier III cities. With the increase in the second wave of infections, we don’t want to go through the same uncertainty and believe that being close to our employee base will work for us,” Ahuja added. Over the next two months, the company will determine which cities it wants to expand into.