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Common Sense Advisory has published an annual list of the largest language service providers (LSPs) since 2005. Increased market visibility and transparency have led us to increase the number of vendors we cover in this year’s report.

Industry Experiences Continued Growth, Slight Slowdown in 2008

The revenue data reveals that 2008 was a strong year for many suppliers in the language services industry. Among the Top 25 players that appeared in our 2007 ranking, the average year-over-year growth rate was 19.7 percent, a slight decrease from the previous year, in which the average was 26.68 percent. The change relates in part to revenue from a large-scale military linguist contract that shifted from L-3 Communications to Global Linguist Solutions, the new number one company in our ranking. Excluding L-3’s 42 percent decrease in revenue, the average is 22.3 percent, closer to the previous year’s numbers.

Taking into account the somewhat less aggressive growth reported by LSPs in 2008 compared with 2007, we adjusted our market size projections (see Table 1). We predict that the market will reach US$22.5 billion by 2012, slightly less than our prior estimate of US$24 billion. That growth equates to a compound annual growth rate (CAGR) of 10.76 percent over the next five years.

Region	Market Share	2009 US$ M	2010 US$ M	2011 US$ M	2012 US$ M	2013 US$ M
Europe	43%	6,468	7,331	8,409	9,703	10,781
U.S.	40%	6,074	6,884	7,896	9,111	10,123
Asia	12%	1,735	1,965	2,255	2,601	2,891
ROW	5%	722	818	939	1,083	1,203
Growth Totals
	100%	15,000	17,000	19,500	22,500	25,000

Table 1: Projected Language Services Revenues for 2009-2013 in U.S. Millions of Dollars
Source: Common Sense Advisory, Inc.

How We Ranked the Companies

As always, Common Sense Advisory’s ranking includes companies or divisions of companies that make most of their revenue by providing language services, be it in written or verbal form, on paper, over the web, in person, via video, inside software applications – anywhere around the globe. The list includes both public and private companies. However, not many publicly traded companies work in the language arena, so this ranking always involves a lot more legwork than producing a similar register for the automotive or telecommunications industries.

• Public companies. About a third of the companies in our ranking are public. For most of these firms, we have the luxury of reviewing annual reports and official filings. However, some of these are large corporations with specialized business units for which they do not break out numbers. In those cases, we considered only the revenue from the unit providing language services. Getting these numbers can be a challenge.
• Privately-held companies. These firms consume most of our time, because we approach 100-plus candidate companies to come up with our list of 30. We call their executives to find out what they earned in the preceding year, probe for the magic number, and then ask them for financial statements to confirm their data. Private firms in some countries are not obligated to release any data, so we can only check their financials to the extent that they allow us.

Each year, new companies qualify for a spot in our ranking. Video interpreting provider Purple Communications catapulted onto this year’s list due to the merger of several companies. Newcomers Crestec, (Japan), CBG Konsult (Sweden), SEPROTEC (Spain), and Telelingua (Belgium) also debut on this year’s table.

Various suppliers in the government and military contracting space – such as Allworld Language Consultants, CACI, CALNET, McNeil Technologies, Mission Essential Personnel, MPRI, SM Consulting, TCS Translations, and TRW – have also received language services contracts large enough for them to be contenders for the ranking. However, not all companies are forthcoming about the revenue derived from language services, making it difficult to uncover exact numbers.

The Top 30 List Remains Global in Nature

Our list for 2008 includes suppliers from 15 countries across the globe: the U.S. (9), U.K. (4), Belgium (2), Japan (2), Sweden (2), Switzerland (2) and China, Czech Republic, Finland, France, Ireland, Italy, Luxembourg, Netherlands, and Spain (one each). While American and British companies still dominate the rankings, Asia continues to expand its share of dominant players with a total of three LSPs from China and Japan.

Figure 1: Geographic Distribution Top 30 Language Services Providers in Total Revenues Earned in U.S. Dollars
Source: Common Sense Advisory, Inc.

Given that the companies on our Top 30 list report revenue in an array of currencies, we convert them into a baseline unit – the U.S. dollar – to allow for a direct comparison. For non-U.S. companies outside the United States, we divide revenue in local currency by the average exchange rate for the 365 days of the firm’s fiscal year. Thus, the average exchange rate for twelfth-ranked RWS Holdings was US$1.9731 per pound sterling (GBP) for the fiscal year ended on 30 September 2008. Fourth-ranked SDL, reporting its results on a calendar year, is affected by the devaluation of the pound against the dollar for the balance of 2008, with the pound quoted at US$1.8551.

Three Tiers of Language Services Suppliers Comprise the Top 30

The market for translation, localization, and interpreting services is organized into three major tiers (see Table 2). The six highest-ranked companies on the list report annual revenue in excess of US$200 million. The second tier includes seven companies in the US$106-166 million range. The bottom half of the list includes companies that report US$20-60 million in revenue.

Rank	Company	HQ Country	Revenue in US$M	Employees	Offices	Status
1	Global Linguist Solutions, LLC*	US	691.00	6500	6	Private
2	Lionbridge Technologies	US	461.00	4500	40	Public
3	L-3 Communications (LOTS)	US	434.59	1049	1	Public
4	SDL International	UK	294.54	1981	55	Public
5	Language Line Holdings	US	212.64	4719	7	Private
6	TransPerfect / Translations.com	US	204.77	1115	56	Private
7	STAR Group*	CH	164.83	910	42	Private
8	SDI Media Group	US	140.00	800	1	Private
9	Purple Communications, Inc.	US	130.08	577	5	Public
10	euroscript international S.A.	LU	129.03	1267	32	Private
11	Xerox Global Services*	UK	113.74	506	9	Public
12	RWS Holdings PLC	UK	106.76	451	12	Public
13	CLS Communication	CH	57.62	360	14	Private
14	Manpower Business Solutions	NL	55.91	150	7	Private
15	Semantix A/B	SE	53.26	160	10	Private
16	Logos Group	IT	50.22	135	17	Private
17	thebigword Group	UK	49.90	270	9	Private
18	Welocalize, Inc.	US	49.86	402	12	Private
19	AAC Global Corporation	FI	48.99	304	14	Public
20	Moravia Worldwide	CZ	42.80	446	12	Private
21	Honyaku Center Inc.	JP	42.68	193	7	Public
22	Jonckers Translation & Engineering s.a.	BE	37.21	280	13	Private
23	hiSoft Technology International Ltd.	ZH	35.10	926	16	Private
24	HP ACG	FR	30.06	150	9	Public
25	Merrill-Brink International	US	30.02	100	4	Private
26	Crestec, Inc.	JP	28.56	511	22	Private
27	CBG Konsult AB	SE	28.54	180	9	Private
28	VistaTEC Ltd.	IE	27.23	102	5	Private
29	Telelingua Group	BE	21.98	135	5	Private
30	SEPROTEC Translations	ES	20.12	358	15	Private

Table 2: Top 30 Language Service Providers Worldwide for 2008 (* estimated)
Source: Cited Companies and Common Sense Advisory, Inc.

The Market for Language Services Remains Fragmented

In previous research, we’ve noted how little of the overall language revenue is earned by the largest language service providers. This trend remained consistent in 2008, with the top 30 booking just 26.6 percent of the market total (see Figure 2).

Figure 2: Top 30 Aggregate Revenue for 2008 as a Percentage of Total Language Services Market Size in U.S. Dollars
Source: Common Sense Advisory, Inc.

Finally, to determine whether this fragmentation is getting worse or consolidation increasing too much, we apply the Herfindahl-Hirschman Index (HHI) to gauge industry concentration and competition in the marketplace. The HHI calculates a weighted average market share (which is represented by the sum of the squares of the market shares of each individual firm). The scores range from 0 to 10,000. Low numbers indicate a very large amount of very small firms, while a large number correlates to a single, monopolistic producer.

The language services industry has an extremely low HHI concentration. Although the consolidation has increased slightly since last year, it remains on the lower end of the HHI scale. In fact, even if the 10 biggest companies in the industry merged to form a US$3 billion company, it is unlikely that it would be challenged by anti-trust authorities in the United States.

Most Large Providers Exceed Ten Percent Revenue Growth

Acquisitions continued to fuel the growth of companies like AAC Global, SDL, and Welocalize. However, most companies report significant organic growth from the increased demand for their language services. L-3’s language services division reported negative growth due to the loss of a contract to provide linguist support in combat zones for the United States military. The number for LCJ EEIG (now Jonckers) shrank after the merger of three member companies due to the fact that it no longer reports revenue for Logoscript.

Company	Revenue Growth (Reduction) from 2007 to 2008
hiSoft Technology International Ltd.	59.5%
AAC Global Group	54.7%
thebigword Group	51.1%
Welocalize, Inc.	48.0%
Manpower Business Solutions	44.0%
TransPerfect / Translations.com	31.3%
Hewlett-Packard ACG	30.7%
SDL International	25.3%
VistaTEC	24.9%
Semantix	21.8%
Honyaku Centre	17.6%
RWS Group	17.4%
CLS Communication	17.1%
SDI Media Group	16.9%
Language Line Holdings	16.1%
Xerox Global Services	15.0%
Moravia Worldwide	12.0%
Logos Group	8.0%
euroscript International S.A.	6.7%
Amesto Translation Holding A/S	3.8%
Lionbridge Technologies	2.0%
STAR Group	1.9%
Jonckers Translation & Engineering s.a.	(2.2%)
L-3 Communications Linguist Operations & Technical Support Division	(42.3%)

Table 3: Revenue Growth (Reduction) by Company from 2007 to 2008
Source: Common Sense Advisory, Inc.

The Biggest LSPs Trail in Revenue per Employee

Revenue per employee is a measure of how efficiently a particular company is using its workers. In general, rising revenue per employee shows that the company is using its workers more efficiently. Some of the companies with the most employees – such as Global Linguist Solutions, Language Line, and Lionbridge – are among the least efficient (see Table 4). L-3 Communications, on the other hand, made reductions to its workforce, boosting its efficiency to claim the top spot. The top providers showed a marked improvement in average efficiency this year (US$191,897.71) compared to the previous year (US$162,914.48).

Ranking by Revenue per Employee	Ranking by Number of Employees	Company	Number of Employees	Revenue by Employee in USD
1	7	L-3 Communications (LOTS)	1049	414,289.80
2	25	Manpower Business Solutions	150	372,729.33
3	27	Logos Group	135	371,966.44
4	24	Semantix A/B	160	332,903.13
5	30	Merril-Brink	100	300,200.00
6	29	VistaTEC Ltd.	102	266,911.76
7	14	RWS Holdings PLC	451	236,728.25
8	11	Purple Communications, Inc.	577	225,443.67
9	13	Xerox Global Services*	506	224,772.73
10	22	Honyaku Center Inc.	193	221,139.90
11	26	HP ACG	150	200,400.00
12	21	thebigword Group	270	184,822.93
13	6	Transperfect / Translations.com	1115	183,650.22
14	9	STAR Group*	910	181,131.56
15	10	SDI Media Group	800	175,000.00
16	28	Telelingua Group	135	162,845.66
17	19	AAC Global Corporation	304	161,165.43
18	17	CLS Communication	360	160,061.33
19	23	CBG Konsult AB	180	158,553.33
20	4	SDL International	1981	148,684.25
21	20	Jonckers Translation & Engineering s.a.	280	132,889.92
22	16	Welocalize, Inc.	402	124,029.85
23	1	Global Linguist Solutions, LLC*	6500	106,307.69
24	3	Lionbridge Technologies	4500	102,444.44
25	5	euroscript international S.A.	1267	101,841.37
26	15	Moravia Worldwide	446	95,964.13
27	18	SEPROTEC Translations	358	56,209.41
28	12	Crestec, Inc.	511	55,890.60
29	2	LanguageLine Holdings	4719	45,061.24
30	8	hiSoft Technology International Ltd.	926	37,904.97
Average of Top 30 Companies			984.5	184,731.45

Table 4: Top 30 Language Services Companies Ranked by Revenue per Employee
Source: Common Sense Advisory, Inc.

NOTE:

Every year, right after we publish our ranking of translation companies, we receive several messages with comments and questions ranging from people who think that our numbers are too small or too big, to names of companies that they believe should be included in our list but somehow escaped our notice. We usually address these questions on an individual basis and apply that new knowledge to our next ranking.

However, this year we discovered two items that require correction or clarification:

• Skrivanek. The Czech company, with revenues of US$37.3 million in 2008, ranks as the 22nd biggest LSP. The company has 450 employees in 53 offices around the world.
• Jonckers and LCJ. In the report, we imply that the merger of Locatech, Crossgap, and Jonckers replaced LCJ. Conversely, LCJ EEIG is very much alive, even though three of its shareholders merged into Jonckers in December 2008. Logoscript is still a private, independent company and shareholder of LCJ.

Should your company have been on our list? Do you know of any that we missed? Let us know.