Fast-growing Data Firm Starschema Aims to Double Staff, Conquer CEE

BBJ: Starschema was founded by freelance IT advisors in 2006, initially focusing on traditional business intelligence projects. How and when did the shift to alternative data processing methods, which became the company’s recipe for success, come about?

Tamás Földi: It was the idea of my founding partner, Péter Csillag, to invest in alternative, new-generation and open-source solutions around two-three years after getting started. At the time, the company lacked a clear focus, and we couldn’t compete with industry giants like Oracle and IQsoft in the Hungarian market when it came to traditional technologies. However, there weren’t many companies involved in new-generation, riskier and more innovative technologies at the time, and large businesses preferred tried-and-true solutions. Although these new-generation technologies were initially only in use at smaller companies, the increasing pressure on bigger players to digitalize and innovate also drove them to embrace new solutions. And by that time, we already had a considerable advantage of experience with these technologies over our competitors.

This mentality would pay off later as well. As innovation partners, we helped our clients to find their way around the technology environment so that they could use the agile solutions of the “data world” to deliver products faster and at a reduced cost.

BBJ: What were the critical factors behind Starschema’s overseas breakout? Who were the first major clients in the United States who came on board?

TF: The significant advantage of the U.S. market is that it’s far less conservative than Europe. Heads of U.S. companies tend to take bigger risks for bigger potential rewards, whereas European businesses prefer to play it safe. The former attitude is more compatible with the solutions we deliver, so it was primarily North American companies that began to approach us. That said, it was through a Hungarian subsidiary that we were able to get our foot in the door at our first large client, an industrial conglomerate. Our good relationship with the Hungarian company made it easier to start a conversation with the U.S. headquarters, which was looking for the specialized expertise I mentioned earlier on an international scale. We were then able to use this as a reference to find our footing overseas and gain new clients.

BBJ: Apart from the big companies like Facebook and Netflix, does the company have any big clients here in Hungary?

TF: The company is currently very export-oriented, with 85-90% of our revenue coming from abroad. Of course, we also work with innovative Hungarian companies like Magyar Telekom and OTP Bank. An excellent example of our “relationship beyond the contract” mentality is our recent joint publication with Telekom in Nature Magazine about the dynamics between COVID and mobility.

BBJ: In 2018, the PortfoLion regional fund, owned by Eximbank and OTP, invested USD 5 million into Starschema. What was the most significant impact of this investment?

TF: The investment was necessary for multiple reasons, both on a strategic and operative level. For one, our rapid growth at the time had led to constant working capital-related problems, and so part of the investment went towards financing outstanding debts. In addition, we wanted to reduce client concentration and open an office in the United States. Although this last item ended up costing more and taking longer than planned, it paid off in new clients and higher daily rates.

BBJ: This spring, Starschema was acquired by Indian multinational IT and consulting firm HCL Technologies for nearly HUF 13 billion. Your company achieved a yearly growth rate of around 20% and piqued the interest of several Fortune 500 businesses even before the acquisition; what are Starschema’s goals for the next five years?

TF: Growth is in our DNA, and we continue to have ambitious goals: we want to double our staff and expand to other countries in our region. This is definitely a challenge with the current state of the job market, so the emphasis will be on our core values (employee first, client second) and winning larger and better projects. There can be no growth without sticking to these values; fairness, a supportive environment, and tasks you can actually enjoy are key for recruiting and retaining employees.

BBJ: With the newfound support from HCL, Starschema is looking to attract experts not only from Hungary but the CEE region in general. How exactly does the company plan to tap into the Central European talent pool?

TF: HCL Technologies is present in more than 52 countries, and its infrastructure and experience are invaluable when it comes to opening new offices. We need to serve the prevailing demands of the CEE region in the 21st century, such as hybrid work and global R&D projects for the most prestigious clients in an organization defined by an engineering mindset. The first step will be building a brand and a local community, for which we’re currently making plans.

BBJ: HCL puts particular emphasis on ESG aspects in its operation, and Starschema also has a track record of supporting humanitarian efforts; even the UN utilizes your data analysis solutions. Can you tell us about some of the most important projects in which the company was involved?

TF: We’re proud to have an opportunity to use our expertise to promote social causes we hold important. Nonprofits run into similar problems as large companies: how to get aid shipments most effectively to their destination, collect and analyze data on microloans to farmers or measure the impact of water purification equipment on the health of schoolchildren in Ethiopia. Projects like these are all built around collecting and analyzing data, and we can readily leverage the experience gained in the competitive sector here. I believe that the most effective way to help is to help with what we do best.

This article was first published in the Budapest Business Journal print issue of May 20, 2022.