Startek gives up 10% of real estate capacity

Venkatesh Ganesh Mumbai | Updated on December 18, 2020

One-third of Startek’s global workforce to work from home

NYSE-listed Startek has given up 10 per cent of its global real estate capacity and will have one-third of its global workforce in a remote set-up or work from home (WFH) globally.

Talking to BusinessLine, Rajiv Ahuja, President, Startek, said the company has given up 10 per cent of its total real estate capacity as it moves to a complete hybrid model. For example, in Canada, Startek has opted for WFH delivery for its 300 employees and given up the Ontario campus. “Monetising growth and cost by giving away expensive brick and mortar real estate and focus on campus consolidation across markets is the way forward,” he added.

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While Startek does not give out India-specific data on the real state space it holds, globally Startek has around 35,000 seats across 13 countries with over 40,000 employees.

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With the outbreak of Covid, the government, in November, moved to simplify guidelines for IT and BPO sectors. This included removing restrictions on WFH.

Cost-reduction efforts

Companies also see this as the new normal in terms of working, and as an opportunity for cost-reduction efforts. “Continued focus on liquidity and debt reduction to preserve optimum efficiency of the business are the mantras,” said Ahuja. Startek’s total debt in Q3 decreased to $136 million, as compared to $149.9 million on June 30, 2020 primarily due to lower draw-downs on revolver and working capital facilities. As a result, net debt, on September 30, 2020, was reduced to $79.4 million, compared to $93.5 million on June 30, 2020. As per Startek’s Restated Senior Debt agreement, it will make a $4.2-million principal repayment that was previously deferred.

Resurgence fears

Also, companies are seeing this from a prevention prism, in case there’s a resurgence of Covid-19. “We remain well-prepared for a resurgence in Covid-19 cases within any of our geographies," said Ahuja.

While none of the other tech companies have publicly said that they are surrendering real estate space, as leases tend to be multi year, most of them are in discussions to surrender or renegotiate their contracts. Large players such as TCS have said that in the future, not more than 25 per cent of their employees at any given time will work from offices.

Published on December 18, 2020

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