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Rich Tehrani’s Executive Suite is a monthly feature in which leading executives in the VoIP and IP Communications industry discuss their company’s latest developments with TMC (News - Alert) president Rich Tehrani, as well as providing analysis on industry news and trends.

This month, TMC President Rich Tehrani had the opportunity to speak with StarTek CEO Larry Jones about the the outsourcing industry, the company and its future.

Larry Jones

Larry Jones


Rich Tehrani Speaks With StarTek's
New CEO Larry Jones

RT: According to the latest communications from your company, StarTek is poised for growth and has refocused its efforts on the communications industry. Tell me about those plans — why did you decide to focus on the communications industry?

LJ: We’re focused on the communications sector for two key reasons. First, we have extensive experience and a reputation for delivering high-value services to this sector, including basic care, technical support, accounts receivable management, renewal upsell services and IVR/self-service. Second, the communications industry is where we see the largest growth opportunity driven by industry consolidation, the challenges of convergence, and the ever-increasing requirements for high-quality customer care. Our growth strategy is to:

1) Leverage our know-how to expand the penetration of our existing customer base;
2) Leverage our reputation and unique capabilities to gain new customers; and
3) Pursue selective acquisitions that can broaden our service offering.

RT: How do you plan to lower attrition and prepare StarTek for a period of heavy growth serving the communications industry?

LJ: Our focus is in several areas. We have improved our new hire training environment to provide better transition of agents from classroom training to the production floor. Our new Academy Bay program has already delivered significant benefits, with a 60 to 90 percent reduction in attrition. We have also introduced a new and unique coaching environment that produces confident and self-assured agents who are achieving outstanding results in quality and other key metrics right out of the chute that were previously not achieved for at least 60 to 90 days. These two areas, combined with an open and trusting culture, help enhance our sites’ retention.

RT: Given the commoditization of services in the communications industry, what are your expectations for volume growth?

LJ: The commoditization of services has created a “flight to quality” in customer service. In the past year, we have seen more and more customers focus less on cost and more on quality because high-quality customer care yields lower churn, higher revenues per subscriber and an avenue to cross-sell new services. There is also a palpable movement toward returning to onshore service. Our strategy is to deliver North American services, where we know we can guarantee high quality and which is critical in an industry with a high churn rate like communications. As more offshore work returns to the U.S., we’re well-positioned to capture it.

RT: Would you expect to continue diversity of your client base outside of the communications area or do you think your new sales are likely to come from the communications segment?

LJ: Our new focus is on the communications sector and, consequently, over 90 percent of our pipeline is in the communications area. While we have a heavy wireless concentration, we also have clients in the cable, telecom and media space; those are the areas on which we're going to focus. My guess would be that most, if not all, of the new clients will come from those segments. This is where we have a great deal of expertise and where we’re known as the quality provider of customer care in that space. It's our competitive trump card.

RT: Would you describe some of the telecom opportunities that you have out there as new and incremental outsourcing opportunities for just the outsourcing business or are they opportunities that are currently outsourced and the carrier is looking to consolidate vendors or just looking for newer vendors?

LJ: I would say they’re both. With the growing demand for new services in the telecom industry, there are providers who simply cannot handle the growth in-house without sacrificing customer satisfaction and raising contact center costs. For these potential clients, outsourcing some portion of their high-end customer care will make the most strategic and financial sense for them. Alternatively, many telecom providers will be reevaluating their current outsourcing partners as they make strategic business decisions regarding new business models, partnerships and services. With the intense competition for wallet share, these communication companies simply cannot afford to accept a lower quality of service – increasing customer stickiness has to be one of their top priorities.

RT: From your perspective, what trends are you seeing in the communications space?

LJ: With wire line, wireless, video and data all converging, we’re seeing dramatic changes for service providers of all flavors. The competition in this space is intense and providers are struggling to keep pace with the technological advances that are being pushed upon them. Convergence (News - Alert) is affecting everyone…no provider is immune. Cable, media and entertainment, wireless, and voice/VoIP companies are all facing the same issues, just from different perspectives as the lines between the various markets blur. I believe that bringing success into focus will require service providers to master a critical component: customer care.

RT: Based on your experience, what is the biggest mistake you have seen in the communications space?

LJ: Without a doubt, the biggest mistake I’ve seen in the communications space is to make cost-cutting the primary reason for outsourcing. Outsourcing deals most frequently stumble when they focus on reducing costs, because the quality of the outsourced work becomes quickly eroded. To achieve the broad business improvements communications providers need, they should establish strategic outsourcing partnerships. These partnerships, rather than focusing on cost-cutting alone, create a foundation for continuous improvement and innovation that enables service providers to meet strategic business goals such as increasing customer loyalty, expanding revenues, creating a competitive edge and profitably expanding the business.

RT: What has been the most surprising success?

LJ: I’d have to say it’s our success in the wireless market. This segment of the industry has had very high churn rates and significant customer care challenges. While we’ve had a solid track record for high rankings of customer satisfaction across the communications industry, we’re very proud of how we’ve been able to help our wireless customers achieve customer care goals.

RT: Where will your company be in five years?

LJ: In five years, StarTek will celebrate 25 years of success in the BPO customer care space. We’ll be one of the top five BPO companies serving the customer care segment of the communications industry with over $500MM in revenues. And having helped our communications customers meet the challenges of convergence, we’ll be there to help them successfully weather the next storm on the horizon.

RT: Thank you for your time, Larry.

Rich Tehrani is President and Editor in Chief at TMC.

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