Wednesday, June 8, 2011

Fragmentation in the Translation Industry, or Why There Aren’t Any L10N Billionaires

Kilgore: Someday this war's gonna end...
Apocalypse Now

I finally got around to taking a look at the press release announcing Common Sense Advisory’s ranking of the top 50 T&I agencies. I am not going to read the full report because it is $495 and pffft... with that I can buy about 30 books, or pretty much the entire Western canon.

However, a cursory inspection of the short executive summary provides two interesting takeaways:

1.- Fragmentation. The top five McLocalization companies by revenue are:


Mission Essential Personnel with 2010 revenues of US$588 million, Hewlett-Packard's Application and Content Globalization group ($460 million), Global Linguist Solutions ($435 million), Lionbridge Technologies ($405 million), and TransPerfect/Translations.com ($252 million).

Two of those I had never heard of, although their G.I.-Joeish name already provided some clue as to what they do. A minimum amount of googling reveals that Mission Essential Peeps and Global Linguist Solutions are basically huge military contractors who provide interpreters for the Iraqi and Afghani U.S. military missions. Both are younger than Bush’s “Mission Accomplished” speech; the former was founded in 2004 and the latter in 2006.

That is indicative of an amazing degree of fragmentation. Two of the largest “players” are just pumped up mosquitoes that feed off of a single client: the U.S. Government. And neither is even a decade old. That means that when Obama pulls the plug on those two missions, they will probably deflate back to less gargantuan proportions and (predictably) try to poach market share from the other top companies.

2.- No Pareto distribution. It is an almost universal rule that most markets are not evenly distributed and usually respond to the 80/20 rule. Twenty percent of the people in almost any country generally own eighty percent of the wealth. Likewise, 20% of the companies in any market usually account for 80% of revenues.

But when you add up the revenues cited in this summary of the top 5 translationl10n companies, it adds up to only $1.7 billion out of the global revenue figure of $31 billion, or only 5.5% of the whole (i.e., laughably less than 80%).

That, in turn, suggests that staying up late at night wondering what Lionbridge will or won’t do is pretty futile. And it is also pretty futile to aspire to replace Lionbridge. So, when you say that major multinationals like Lionbridge are hurting the market, don’t think along the lines of Walmart or Microsoft. Think more along the lines of the largest bullfrog in a bullfrog-infested pond. Sure, the biggest bullfrog is super-ugly and a horrible bully, but far from a price-setter.


Miguel Llorens is a freelance financial translator based in Madrid who works from Spanish into English. He is specialized in equity research, economics, accounting, and investment strategy. To contact him, visit his website and write to the address listed there. Feel free to join his LinkedIn network or to follow him on Twitter.

4 comments:

Kevin Lossner said...

The biggest bullfrog in an overcrowded pond will inevitably be a stunted creature.

Anonymous said...

It's interesting to see FX statistics, we have worked with them for years and from time to time have a price struggles with them too, but I must say that they are reasonable people- our latest struggle was just this year and finally they agreed to our conditions. IFUs with 3 proofreadings after are not done exactly by students, you know...

Uldis

translationinsider said...

Interesting post.

At my last job I remember receiving many e-mails, letters and calls from dozens of different l10n companies I have never heard of - all claiming to be the market leader. ;-)

Financial Translator said...

Thanks translationinsider. Increasingly, I am coming to the conclusion that leadership in translation isn't measured by quantity but quality. And that perhaps bulk is a very,very bad sign.