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Common Sense Advisory Blogs
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Just How Big Is the Language Industry?
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Medieval theologians used to argue about how many angels you can fit on the head of a pin. We remember Monsignor Bidgood's answer from our childhood in New York -- he said that you could fit "many, many angels" on that philosophical pinpoint. A similar debate about the size of the language industry occurs regularly.
We estimate that language services will earn suppliers US$9.4 billion this year. Some say it will be more, others less. For example, LISA's CSO and IBM executive Bill Sullivan recently echoed the late astronomer Carl Sagan's catchphrase of "billions and billions" in LISA's Globalization Insider. He wrote that "no one knows how big this market is. Anyone who says they do know is wrong or worse... That's the way I feel -- and others in our industry feel -- about the localization opportunity. It's big, really big." But while Sullivan feels in his heart of hearts that the market is mindboggingly huge, Lionbridge CEO Rory Cowan last year asked a conference audience (with tongue firmly implanted in cheek) "where in heaven's name did these guys come up with eight billion dollars? I'd like to see more of that money."
Bottom line: We agree with Sullivan's brobdingnagian claims -- it is indeed a huge opportunity, but today's actual business process outsourcing (BPO) of language services is not immeasurable. In our buyer-based research we found that 87% of companies outsource some or all of their language services, so some work remains in-house. Our figure does not include this internal spending, which means the economic activity associated with translation and localization is certainly greater than our estimate of US$9.4 billion in BPO spending.
Finally, we always apply a simple reality check to our outsourcing estimates. If the market were indeed unbounded, how could we explain announcements such as SDL's interim earnings report for the first 6 months of the year? SDL laudably turned over €45.5 million (or approximately US$86 million). In a market of unlimited size, the third-largest supplier in the industry would be booking a lot more revenue than what would seem to be a rounding error, say, over at Exxon-Mobil. So when someone tells you the market is limitless, remember that he's probably talking about as yet untapped opportunity, not what language service providers are actually booking now. And if you still want to believe that it's really, really bigger than you could ever imagine, we have a bridge to sell you.
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