StarTek – Will It Survive?

Full disclosure before the article – I was once a StarTek employee for eight years.  I definitely enjoyed my time working for the company – until the seams began falling apart.  This is simply my opinion of the company and where I see it trending.

StarTek is a dying company.  Over the past couple of years, the company has continued to close several call centers in both the United States and Canada.  While they are opening locations overseas, they are continuing to see a loss in market share towards other competitors.  I believe the company has less than ten years left to survive at the current rate of decline – and maybe less.

The company has always had an issue with hiring well-talented management officials.  Look at the flop of the previous Sales Vice President that didn’t bring in an abundance of new business.  At a time when they need talented, tenured individuals that understand the business, they are laying them off and eliminating their positions so they can take jobs overseas.

The company has already saved considerable cost by shipping most of the support positions to the offshore locations – including resource planning and management, accounts payable, training, benefits, project management, and many other departments.  However, the company is also paying the price.  Although the cost for the worker overseas is less, production and efficiency is highly reduced as well.  There have been several instances where invoices are not paid on time and management has been required to put the fire to the Filipinos to get things done.  Employees working offshore do not pay as close attention to detail nor follow company policies and procedures.  It has also been rumored that the loss of business StarTek just suffered – that saw the closure of two additional US sites – stemmed from employee relation issues and unethical behavior from one of the Philippine locations.

Much like the American consumer, StarTek fails to realize that Americans despise talking in foreign countries.  Could you imagine how a potential customer would react if they were called back by a sales person that has an accent and is noticably from another country?  StarTek doesn’t care – they think they are saving money by doing so – when the fact is they are potentially losing leads, good potential employees, and customers because of it.  With all this being said, is the continuous offshoring helping – or hurting the company?

Another round of cost cutting is currently taking place along with downsizing.  The CTO has left although – is being maintained for the month of June.  A few other high-level IT management have left within the past six months.  It also has been reported that the IT security team is also cut down to nothing.  This alone is going to result in the loss of additional business because attempting to maintain or obtain their current security certifications will be more difficult.  Some of these are requirements for clients and so if the company cannot maintain the level they possess, they stand to lose additional clients.

The backbone of StarTek is Information Technology. The company relies on technology to operate.  However, the technology budget has been shrunk to almost nothing and all their staff is overworked.  With the additional cuts, this means additional duties and tasks have to be assigned to the already smaller department.  They cannot even get an approval to purchase needed server upgrades or materials.  They have also cancelled many maintenance contracts they once had with vendors providing support.  The infrastructure of the company is about ready to bust at the seams.

All in all, the company continues to cut jobs and move more overseas.  The current CEO is a southern idealist that micro-manages all aspects of the company.  However, many also have theorized that the CEO himself is attempting to dismantle the company so a competitor can purchase it on the cheap – or completely shut down the company overall.  Realize that the CEO originally came from Sitel – and many of the individuals he has hired on have also come from Sitel.  So, is Sitel pulling the strings of StarTek with the source of power they now have over the company?  Maybe the CEO himself should take a pay cut since he isn’t turning the company around.  Or, maybe the board of directors should outsource the CEO job – along with finance and other overpaid positions overseas.  That will reduce cost considerably.

The Board of Directors need to be awakened and get an idea as to what Chad and other executive management have done to this company.