Translation Demand-Supply Mismatch

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Global Watchtower

Common Sense Advisory Blogs

Posted by Donald A. DePalma on May 17, 2012 in the following blogs: Market Data, Supplier Business Issues, Technology, Translation and Localization
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Given the US$31.4 billion in language service revenue booked in 2011, it may seem counterintuitive to state that high-quality human translation may soon become a scarce, if not more expensive, offering. However, in our recent report on translation providers, we saw a coming shortage caused by burgeoning demand for translation, a chronic shortfall of qualified language specialists, and stagnant translator productivity (see “Translation Future Shock,” Apr12):

Enterprise information is on the rise. Our survey of the largest buyers found that content volumes have increased at 87.76% of them (see “Translation at Fortune 500 Companies,” Mar12). Smaller companies, new buyers, and new markets add even more to the demand for content to be translated.

The supply of translators is shrinking. Executives at language service providers (LSPs) regularly tell us they cannot find enough qualified language specialists to meet their needs. In every quarter of the six-year duration of our Global Business Confidence Survey, LSP respondents complained about not being able to find enough staff to do the job (see “Language Services and the Real Economy,” Jun11).

Translator productivity has stagnated. Estimates for translators typically range from two to three thousand words per day. In the survey we conducted for this report, we found that individual translators averaged just 2,684 words every day. This number hasn’t changed much for decades, if not centuries.

With such a classic case of high demand and inadequate supply, prices would rise, much to the delight of LSPs and freelance translators. In fact, some providers have tested price increases as the economy improved, just as they adjusted their fees downward when the recession hit (see “What to Do When Translation Vendors Raise Prices,” Apr12, and “Price Pressure in Language Services,” Jul09).

However, we don’t see widespread rate increases any time soon, given the price sensitivity of the language sector and tight budgets at companies stockpiling cash (according to Moody’s Investor Service, non-financial U.S. firms held US$1.24 trillion in cash at the end of 2011). Instead, we see a few scenarios: 1) More providers enter the market, but with less qualified translators, thus decreasing the overall quality of the translation supply; 2) lots of unrefined machine translation (MT) output comes on to the grid, also decreasing quality (see “The Business Case for Machine Translation,”Aug09); and 3) some informed companies and specialists intelligently apply MT and other translation automation to the problem.

In any of these scenarios, we expect that many buyers and suppliers will merely react to the changes rather than permanently change their behaviors. If they can step back from their day-to-day issues, though, they will see that the market for language services market has fundamentally changed. Once a cottage industry, language has become a core business process and critical enabler for a range of economic, political, and humanitarian activities – and subject to all the attendant macroeconomic pressures. Some participants will be unnerved by so many changes in such as a short time, leading to the displacement that sociologists labeled “future shock.“ To survive, they will have to adapt to the new realities and economics of language services.

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