1031029--2/25/2010--STARTEK

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{product, market, service}

{system, service, information}

{stock, price, operating}

{operation, international, foreign}

{customer, product, revenue}

{condition, economic, financial}

{personnel, key, retain}

{control, financial, internal}

{cost, operation, labor}

{acquisition, growth, future}

{capital, credit, financial}

{financial, litigation, operation}

{loan, real, estate}

{competitive, industry, competition}

Continuing unfavorable economic conditions could have a material adverse effect on our results of operations and financial condition. Over 80% of our revenue in 2009 and 2008, and over 70% of our revenue in 2007, has been received from our two largest clients. The loss or reduction in business from any of these clients would adversely affect our business and results of operations. We face considerable pricing pressure in our business, and if we are not able to continually increase productivity, our gross margins and results of operations may be adversely affected. Our contracts generally do not contain minimum purchase requirements and can generally be terminated by our customers on short notice without penalty. Our client base is concentrated in the communications industry, which has recently experienced consolidation trends. As our clients businesses change as a result of merger and acquisition activity, there is no guarantee that the newly formed companies will continue to use our services. Our client base is concentrated in the communications industry and our strategy partially depends on a trend of communications companies continuing to outsource non-core services. If the communications industry suffers a downturn or the trend toward outsourcing reverses, our business will suffer. We have experienced significant management turnover and need to retain key management personnel. If we are not able to hire and retain qualified employees, our ability to service our existing customers and retain new customers will be adversely If we are unable to renew or replace sources of capital funding on satisfactory terms, potential growth and results of operations may suffer. Our operating costs may increase as a result of higher labor costs. We may need to add specialized sales personnel in order to grow our business. We may have difficulty recruiting candidates for these positions. We may need to develop new products or services in order to compete for new customers or retain our existing customers. Our operating results may be adversely affected if we are unable to maximize We generate revenue based on the demand for, and inquiries generated by, our clients products and services. If our clients products and services are not successful or do not generate the anticipated call volumes, our revenue and results of operations will be adversely affected. Our existing and potential clients are currently decreasing the number of vendors they are using to outsource their business process services. If we lose more business than we gain as a result of this vendor consolidation, our business and results of operations will be adversely affected. If we do not effectively manage our growth or control costs related to growth, our results of operations will suffer. Unauthorized disclosure of sensitive or confidential client and customer data could expose us to protracted and costly litigation and penalties and may cause us to lose clients. We process, transmit and store personally identifiable information and unauthorized access to or the unintended release of this information could result in a claim for damage or loss of business and create unfavorable publicity. If we fail to integrate businesses and assets that we may acquire through acquisitions, we may lose clients, and our liquidity, capital resources and profitability may be adversely affected. Failure to implement technological advancements could make our services less Our markets are highly competitive. If we do not compete effectively, we may lose our existing business or fail to gain new business. Our operations in Canada, the Philippines and Costa Rica subject us to the risk of currency exchange We face risks inherent in conducting business outside of North America. Our lack of a significant international presence outside of North America may adversely affect our ability to serve existing customers or limit our ability Our largest stockholder has the ability to significantly influence corporate actions. Our stock price has been volatile and may decline significantly and If we experience an interruption to our business, our results of operations may Increases in the cost of telephone and data services or significant interruptions in such services could adversely affect our business. Compliance with SEC rules requiring that we and our independent auditors assess the effectiveness of our internal controls over financial reporting may have adverse consequences. Our quarterly operating results have historically varied, and may not be a good If the value of our portfolio of investment securities declines, our results of

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1031029--2/25/2010--STARTEK_INC