Report written by Hannah Leske
Conducted with assistance from a number of Brazilian language service providers and in conjunction with the Nimdzi 100 ranking of top LSPs on the market, this research report aims to provide an overview of the state of the Brazilian language service provider (LSP) landscape in 2020 and beyond.
Brazil is the economic powerhouse of Latin America and one of the most significant economies in the southern hemisphere. It is a unique economy — rich in natural resources and established agribusiness, with a diversified industrial base and sizable service industries to boot.
One sector which should be highlighted in particular is the online market. As digital technologies have gained traction, online engagement has skyrocketed. According to DataReportal, Brazil currently ranks third in the world for daily time spent on social media platforms and second in the world for daily time spent on the internet, with a whopping average daily internet use of 10 hours and 8 minutes! The potential of this market has been increasingly recognized by business and advertising industries and Brazil is now the 10th largest e-commerce market in the world.
Even looking beyond the quick embrace of social media and the internet, Brazil is known for being a market with high adoption of new technologies. This has been attributed, at least in part, to the developing educational infrastructure of institutions such as the Universidade Federal de Minas Gerais. Many global tech companies have taken advantage of the open-minded and forward-thinking market, establishing local offices in Brazil.
The country is also popular among startups and has produced more than 10,000 new companies in the past decade (Source: Statista.com). This is undoubtedly linked to the prevalence of small- and micro-businesses in the Brazilian economy, which account for 99 percent of all businesses and 55 percent of employment in the country. However, determining which phenomenon caused the other poses a greater challenge: which came first, the startups or the favorable environment?
The following table summarizes data from our survey participants, ranked by their reported revenue for the 2020 fiscal year.
|Rank||Company||2020 Revenue (USD)||Core business|
|1||Brazil Translations||3,169,385||Medical, Legal, Business|
|2||Rajão e Athayde Tradutores||1,980,198||LSPs, Legal, Patents|
|3||Korn Traduções S.A||1,844,302||Legal, Finance|
|4||OXO Innovation||1,226,982||Railways, Finance|
|5||Aliança Traduções||1,184,236||Legal, Finance|
|6||RTS Traduções Ltda.||998,140||LSPs, Video Games|
|7||Varendi Translation||508,639||Life sciences, Engineering|
|8||Flash Traduções||390,215||Oil & Gas, Mining, Legal|
|10||Wordlink Traduções Ltda.||285,948||IT, Web content, Software, Tech|
|11||Paulo R C Camargo Eireli||247,391||LSPs|
|12||Lochouse||213,551||LSPs, Local & international clients|
|13||2tr Global Services||208,599||LSPs, Legal|
|14||Transmaster Traduções||145,723||LSPs, Insurance, Retail|
|15||Brazlate||76,245||Patents, Pharmacy, Legal|
While we cannot provide a figure for the language service industry’s total revenue in Brazil, the above survey results indicate that the market for LSPs is relatively concentrated. The top five LSPs in our study account for a staggering 75 percent of the combined reported revenue, for example.
It is also interesting to note that several international companies — OXO Innovation and RTS — have successfully established Brazilian operations with local clients, generating even more revenue than the majority of local providers. Few international companies have managed this — some, like Lionbridge or SDL (now part of RWS), have offices and operations in Brazil but still do not derive significant revenue from the market.
Brazilian LSPs are active in a wide range of different market sectors, with companies that specialize in everything from finance and medicine to video games and tourism.
The largest share of revenue (38.5 percent) comes from other LSPs and translation companies (both local and foreign) who outsource work to Brazilian firms. Legal and medical sectors rank second and third, with 18 percent and 13 percent market share, respectively. Finally, verticals like life sciences, commerce and marketing, video games, finance, insurance, and software also generate some business for LSPs in the country.
Because of the significant devaluation of the Brazilian real against the US dollar, accumulating a devaluation of 33.17 percent in 2020, and ranking as the worst performing currency in the world, Brazilian LSPs had an average negative growth of -18.3 percent compared to 2019. It is worth noting that a few companies still experienced positive growth, and that the variation above and below the average is significant. The table below lists all survey respondents, ranked by growth in 2020.
|Rank||Company||2019 Revenue (USD)||2020 Revenue (USD)||Growth rate (%)|
|3||Rajão e Athayde Tradutores||1,849,975||1,980,198||7.0|
|6||RTS Traduções Ltda.||1,126,410||998,140||-11.4|
|7||Wordlink Traduções Ltda.||324,238||285,948||-11.8|
|8||Paulo R C Camargo Eireli||305,394||247,391||-19.0|
|9||2tr Global Services||306,386||208,599||-32.0|
|11||Korn Traduções S.A||2,823,112||1,844,302||-34.8|
This data may perhaps be discouraging for any potential business owners or investors in this industry. However, it must be recognized that 2020 was not a “normal” year by any stretch of the imagination.
On top of the devaluation of the currency, the impacts of Covid-19 were keenly felt by businesses around the globe, par ticularly in the second quarter of 2020. Many companies experienced a significant loss of business and revenue for at least several months, so it is unsurprising that this may be reflected in a slower growth rate than normal.
If companies’ expectations for a rapid recovery in 2021 are to be trusted, then perhaps the average growth rate of the same companies in 2019 compared to 2018 is more valuable to look at: +27.5 percent.
Productivity is simply a measure of how efficiently a business allocates its resources. It is easily calculated by dividing the total revenue by the number of full-time employees, as seen below.
|Rank||Company||2020 Revenue (USD)||Productivity (USD per full-time employee)|
|1||Wordlink Traduções Ltda.||285,948||142,974|
|3||Paulo R C Camargo Eireli||247,391||82,464|
|7||RTS Traduções Ltda.||998,140||66,543|
|9||Korn Traduções S.A||1,844,302||59,494|
|11||Rajão e Athayde Tradutores||1,980,198||53,519|
|12||2tr Global Services||208,599||52,150|
According to our research, productivity does not seem to be directly correlated with company size. Indeed, of the five most productive companies, only two ranked in the top five companies for revenue. Similarly, the three largest companies by revenue only just scrape into the top 10 in terms of productivity.
As the largest economy in the Americas south of the United States, Brazil is more or less expected to have a significant domestic market. Where other countries tend to rely on external firms to employ skilled workers, Brazil has a large number of local brands which produce internal revenue.
Average salaries are also higher in Brazil than almost anywhere else in Latin America (Chile being the only exception), so the country hasn’t gained the same reputation as a human resources center for international multi-language vendors as Argentina has, for example.
Almost comparable revenue shares come from North America (31.9 percent) and Europe (27.6 percent). At the other end of the spectrum, Asia and South America combined only contribute 6 percent of revenues in the industry, while Oceania and Africa play almost no role at all.
Interestingly, the largest companies in the market are actually most likely to generate a majority of their revenue from the Brazilian market, while slightly smaller companies tend to concentrate more on supporting the European and North American markets.
Revenue in the Brazilian LSP market is generated predominantly through translation services, which accounted for an average of 69 percent of companies’ total revenue in 2020. More than 93 percent of LSPs surveyed offer translation — for 85 percent it is the dominant service offered, and for half of these companies it accounts for over 90 percent of total revenue!
Localization ranks second, generating an average of 22 percent of all revenue. Interpretation, subtitling, and desktop publishing account for just 2 percent of total revenue each, while other services (such as transcreation, AI, and dubbing) generate just 1 percent of total revenue each.
Despite covering a vast 8.5 million square kilometers (3.28 million square miles), Brazil’s population is heavily concentrated along the coast. Economic activity tends to be even more concentrated, with the two biggest hubs (Rio de Janeiro and São Paulo) located less than 400 km (250 miles) apart.
This is reflected in the results of our research. Of the LSPs surveyed, more than half are based in the state of São Paulo (SP), with a further 30 percent located in Rio de Janeiro (RJ). Within these regions, most companies are also based in the respective capital cities.
Even expanding our search to include a larger selection of companies (using desktop research and other Nimdzi studies, such as the Nimdzi 500 market ranking) doesn’t impact these trends. We did find an additional five LSPs based outside of RJ and SP, but we also found another 12 (previously unincluded) companies within the two hubs.
The infographic below indicates exactly where some of Brazil’s notable LSPs have headquarters.
Some companies surveyed provided additional insights into the LSPs that they consider to be their biggest competition. We noticed considerable overlap between the companies named as perceived competitors and those deemed to be the largest in the local market, suggesting that large, multinational firms are believed to pose a greater threat to Brazilian companies than small or medium-sized agencies. Only one LSP identified freelancers as a significant competition.
At the time of this study, opinions on mergers and acquisitions (M&A) vary significantly between our survey respondents. 43 percent express no interest in M&A, while the remaining 57 percent report that they are either actively looking to acquire new companies (43 percent) or open to discussions with potential buyers (14 percent).
This is largely consistent with the global state of M&A affairs. As aptly observed in the recently published Nimdzi 100 ranking, the market is positioned to favor sellers right now: demand for for-sale companies far exceeds supply.
Despite the interest in M&A from Brazilian companies (which in fact is higher than the global average), we are yet to observe any mammoth mergers or acquisitions which could shake the foundation of the Brazilian market. The top 10 ranking was virtually unaffected by mergers or acquisitions from 2019 to 2020.
Of course, most companies admit that 2020 was a challenging year. However, many LSPs also highlighted an array of positive outcomes.
Some companies used the quieter months to update their processes, tools, and methodologies. Others took the opportunity provided by lockdowns to shift operations online, cutting costs on office-related expenses which may continue well into the future. Many companies were also helped by the diversification of their operations. Different industries had different experiences, so, while clients in one vertical may have struggled, other verticals continued to require translation and localization services that LSPs could invoice for.
The majority of LSPs indicate that their business and workload began to regain some sense of normalcy by June 2020, and had returned to pre-Covid predictions by the end of the year. Expectations for 2021 overwhelmingly indicate that business will continue to grow at the same speed — or higher — as in recent years. Only one company believes that business will continue to limp along until as late as July 2021.
As reported in the 2021 edition of the Nimdzi 100, interpreting has arguably been the sector within the language industry that was the most heavily affected by the COVID-19 pandemic — both positively and negatively..
2020 was a big year for language technology. One lesser-known application for AI, dubbed the “digital shield,” is also set to become a more prominent part of the fight against misleading and manipulative content.
Evaluating and migrating between translation management systems (TMS) is a lot of work and there are always reasons not to do it. It might be the fear of moving away from a familiar TMS, even if it isn’t fit for purpose, the impact on other teams and external stakeholders, or the prospect of the time, technical work, and costs involved. The number of TMS solutions on the market can also make the decision far from simple and straightforward.
The Nimdzi 100 is one of our flagship publications. It includes a ranking of the top 100 LSPs by revenue, a watchlist of large players that don’t disclose their revenues, and a detailed overview of the size and state of the language services industry. The Nimdzi 100 is widely considered an industry standard and is read by tens of thousands of people in the translation and localization space and beyond. LSPs, localization buyers, investors, savvy job seekers, and analysts will benefit from this free resource.