BPM firm Startek to raise stake in CSS Corp, hire over 2,000 in India

Eyes controlling stake in CSS over time, hopes to build a billion-dollar business after possible merger

Business process management firm Startek expects to increase its minority stake in CSS Corp to give it access to a larger market, even as it plans to hire over 2,000 people in India in the current financial year, the chief financial officer at the firm said.

“The investment (in CSS Corp) gives us an opportunity to buy controlling stake or full stake next year, and if you merge both Startek and CSS together, we have the power to build a billion dollar company, in 12 to 24 months' time,” said CFO Vikash Sureka.

Startek announced a strategic investment worth $30 million in IT services and technology support firm CSS Corp in March. The investment was made in a limited partnership managed by Startek’s majority shareholder, Capital Square Partners.

As part of the deal, Startek acquired both an indirect beneficial interest of approximately 26 per cent in CSS, as well as an option to acquire a controlling stake, the firm said at the time.

Startek, which merged with Indian BPM firm Aegis in 2018, follows a January-December financial year, and reported second quarter results in August.

Net Revenue for the second quarter rose 33 per cent to $189 million as compared to $142.2 million a year ago, helped by growth across healthcare, with significant contributions from the US Covid-19 government contract on vaccine roll-out in the US market.

"So we ramped up close to 2000-3000 agents in the US to support that programme. Obviously this revenue is short term in nature...but it showcases our agility to quickly ramp up, support a very large programme meaningful for the government and execute seamlessly. We really benefited like $24-25 million of revenue from that contract," Sureka added.

The firm worked on similar lines to provide Covid assistance helplines in India as well, but most of them were not revenue contracts.

India contributes to around 15 per cent of the global revenue of the company, and it employs over 18,000 people across 17 BPM centers spread over tier-1 and tier-2 cities. The firm has a big focus on the domestic market due to its legacy Aegis business.

Its India business has increased at 44 per cent in Q2 from the same time a year ago, led by growth from e-commerce and emerging verticals such as food-tech and edu-tech.

Sureka said Startek is planning to expand into tier-3 and tier-4 towns and cities in India now, as the work-from-home and hybrid models of work have given it access to a myriad workforce.

"Our expectation right now is that we should be able to add at least 2,000 plus people in the remainder of this financial year. We follow the January to December cycle, so the next five months or so we will be adding these employees," he added.