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Global Software Firms Seek to Capture More Revenue from International Markets

(BOSTON, MA) – Facebook is now available in more than 70 languages. Google search is possible in 136. How many languages does your company offer? Multilingual software products and applications are not a passing trend. As businesses of all sizes attempt to grow in today’s global high-tech marketplace, multi-language support is critical. But what do these firms spend on localization and translation services in order to obtain more international revenue?

New research from Common Sense Advisory, “How to Benchmark Your Localization Budget,” answers this question. The firm surveyed 156 global product developers to determine what they were spending on localization. The majority of respondents worked for firms headquartered in North America and Northern Europe with revenue between US$1 and US$9 billion

“To understand the value of localization, you only need three words – international revenue enablement,” explains report lead analyst Rebecca Ray. “Most global software developers generate up to 50% of their total corporate revenue by spending a miniscule 1 to 2% of their development budgets on localization.”

The report found that the demand for localized versions of all types of software is exploding. The vast majority of software and application developers (84.21%) said that they planned to increase their localization activities over the next 12 months. “Respondents do not plan to hire more internal localization staff – instead, they plan to outsource more work to language service providers,” Ray points out. “So, the scalability of third-party localization companies will be an essential consideration for developers as they aim to unlock more global revenue.”


The 33-page report contains helpful benchmarks that enable software and application developers to calculate what they should be spending on localization and translation, including:


·         Localization budget size by domestic versus international revenue split

·         Language-related expenditure as a percentage of total software budget

·         Size of internal localization team based on region of headquarters and corporate revenue

·         Spending on outsourced localization services by region of headquarters

·         How budget ownership influences localization spending


Key findings from the study include:


·         Spending on third parties consumes most localization budgets. Most companies rely heavily on outsourcing, spending 60 to 100% of their total localization budget on third-party services. Companies with higher international revenue relied even more heavily on external providers.


·         Companies plan to send more work to third-party suppliers next year. A large portion of the companies surveyed (40.91%) said that they expected to contract with more third-party localization companies within the next year. However, more than half (52.73%) also intended to send greater volumes to their existing providers.


·         Small internal localization teams are common. Most organizations favored teams with two to five people, or more than 10. Neither the companies’ total revenue nor their percentage of international revenue affected this preference. For more on the firm’s research, visit www.commonsenseadvisory.com.


About Common Sense Advisory

Common Sense Advisory, Inc. is an independent research and analysis firm specializing in the on- and offline operations driving business globalization, internationalization, localization, translation, and interpretation. Its research, consulting, and training help organizations improve the quality of their global business operations. For more information, visit: www.commonsenseadvisory.com or www.twitter.com/CSA_Research.

Submitted On: 1/13/2011

Common Sense Advisory research and analysts are frequently cited in the New York Times, International Herald Tribune, Wall Street Journal, Boston Globe, Fortune Magazine, Inc Magazine, and BusinessWeek.
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