Language service provider (LSP) sales in Europe have grown by 34 percent in the latest seven years tracked, while the number of companies with at least two employees has increased by 32.6 percent. On the surface, the signs are great for current providers: revenue has increased more than the competition. However, providers of different classes have benefited unequally.
Following is an analysis of the Eurostat database on LSPs. It tracks more than 8,300 companies and 82,000 freelancers registered under the activity code for translations. The data comes with a 2-3 year delay, but it is the largest and the most representative sample of the market.
With the market sliced into segments by company size, it is clear that the growth was the fastest for large companies (50+ people on staff). Their performance makes the overall market look better than it is.
For the small and medium-sized companies that list under 50 people on staff, competition has become tougher.
To put the abundance of supply in numbers, we divided total sales by the number of providers, resulting in an average revenue per company (ARPC) indicator.
|Size category||The average revenue per company (ARPC), EUR million||Change over 7 years, %|
|50 to 249 employees||6.0||16.7|
|20 to 49 employees||1.9||-15.1|
|10 to 19 employees||0.8||-29.4|
|2 to 9 employees||0.2||-10.5|
|0 to 1 employee||0.0||-4.5|
For small and medium LSPs, the ARPC has decreased over seven years from 2010 through 2016 on average by 2.5 percent per year. For the large LSPs, ARPC increased by 7.6 percent a year on average.
This process reflects consolidation in the language industry and also the type of market companies swim in. For the small and medium providers, it’s the Red Sea. The same for freelancers: the index of average revenue per freelancer in Europe has decreased from 30,500 euros to 28,360 euros.
Sales volume tracked by Eurostat falls roughly into three equal shares: 30.1percent large companies with 50+ employees, 34.3 percent in medium-sized companies between 2 and 49 employees, 35.5 percent freelancers. Over the 7 years, the share of large providers has grown from 25 to 30 percent at the expense of medium-sized companies, who lost 5.4 percent of the market.
Large players moved more quickly than their smaller rivals.
Eurostat data clearly illustrates that the industry in Europe has become more populous, and it is likely to grow further. A forecast based on a linear projection lands the number of registered EU freelancers at 100,000 by the end of 2021.
The number of companies is bound to increase as well. There is a ratio of one small/medium LSP per nine registered freelancers (FLs), and one large company per 700-800 FLs, so by 2021 there could be at least 11,000 small and medium LSP, and more than 120 large ones.
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