|
BUSINESS
process outsourcing firm StarTek Inc. said soaring
inflation, wage and attrition rates in the country are
not as “painful” as in the US, boosting confidence of
executives on the center the company is opening late
this month.
“Both
the foreign exchange and inflation are picking up but on
much smaller levels. And even though these rise to 8
percent to 10 percent a year, the uptick is not as
painful as in the
US
environment,” StarTek chief financial officer David
Durham said last week.
Durham
responded to analysts’ questions in a conference call on
the company’s earnings outlook and their decision to
expand in the
Philippines.
President and chief executive Larry Jones said that
after their visit in February to India and the
Philippines, they “decided to greenfield a site in
Manila.”
Jones
said they “engaged an in-country consultant partner and
have organized a subsidiary that will take advantage of
Philippine tax holidays” for their center.
“An
internal implementation team has been assembled and one
of our existing operational vice president will be
transferring to Manila in late May to become the country
manager.”
Jones
added they expect “a facility lease…to be signed within
weeks and site buildout activities should begin” this
month.
“We are
targeting revenue generation in the
Manila site in the fourth quarter from a mix of current and new
clients. This expansion is critical to provide new and
existing clients with a low-cost complement to our
existing North American offering,” the StarTek executive
said.
Durham
said while the company is still negotiating a lease,
they estimate the Philippine center to cost “not a whole
lot more for a single 500-seat site.” Capital spending
for the site is expected to reach between $4 million and
$5 million, excluding the operating lease associated
with information technology equipment. “Even though the
site is likely double the
US
size…construction cost and furniture will not be a whole
lot more for a single 500-seat site in the US, including
the IT component,” Durham said.
He noted
that while there are reports of factors dampening the
attraction of the Philippines as BPO site, “some of that
is real and cannot be avoided.”
“We have
a pretty good formula for recruiting people. It’s
nowhere near India[‘s situation],” Durham said.
“While
attrition rate had increased, our data at least tells us
that it’s significantly lower than we’re experiencing,”
he added.
In terms
of the continued strengthening of the peso against the
greenback, Durham said they “will continue to hedge as
we do over here.”
“Still,
margins in those operations [like the Philippines] tend
to have more headroom to tackle some currency hits.”
He
explained that growth margins tend to be higher in
offshore businesses in countries like the
Philippines.
“If we
move work from the
US
to the Philippines–which is not our intention but there
may be situations where we need to move some – the goal
is to get incremental business to move to the
Philippines.”
StarTek’s move to the
Philippines
came after it lost one of its major clients.
Durham
said the Philippine center would be StarTek’s own
subsidiary. “We got a team here which will soon be on
the ground there as well as a building team on ground
for recruiting,” Durham added.
Founded
in 1987, StarTek is headquartered in Denver, Colorado
and posted a net loss of $2.8 million in 2007. |
