Language services in Finland (full report)Free to preview 

 

Most Finnish LSPs build their businesses around local customers and government programs. However, over the last couple of decades, Finland changed its external trade significantly, and while it still sells a lot to Russia, the top trade partners are now Germany, the United States, Sweden, and the Netherlands.                                                                                 

Overview

Finland boasts the fourth largest economy in the Nordics after Sweden, Norway, and Denmark. Finland is the largest exporter of coated paper in the world, but its best-known global brand is Nokia – a multinational company that caters to telecommunications, information technology, and consumer electronics.

The language in Finland is very different from the rest of the Nordic countries. It has many grammatical cases and inflections, is difficult to learn for most English speakers, and is ranked 4 out of 5 in terms of learning difficulty by the Foreign Service Institute (5 being the most difficult). Only 500,000 Finnish speakers live outside the country (Ethnologue), primarily in the Nordic countries, creating a limited pool of translators. The market is very insular and resilient to outside sales and outside trends – a little like Japan.

Most Finnish LSPs build their businesses around local customers and government programs. However, over the last couple of decades, Finland changed its external trade significantly, and while it still sells a lot to Russia, the top trade partners are now Germany, the United States, Sweden, and the Netherlands. Swedish, the second official language in Finland, and English, the global lingua franca, are the two languages that require the most translation and interpreting services.

(This report is a continuation of Nimdiz’s preliminary findings in June of 2018)

1: LSP turnover exceeds €179 million (USD 208.7 million)

Our preliminary estimate for total sales by language services providers registered in Finland is 179.2 million euros in 2017, roughly USD 208.7 million. The figure is based on a company survey, and on the official national statistics report on all enterprises with “Translation and Interpreting” as the main activity. This also includes the revenue by subcontractors working for larger providers.

Market size is in stark contrast with neighboring countries. Compared to the Baltic states, the Finnish market is approximately twice as large as Latvia, Lithuania, and Estonia combined even though Finland’s population is smaller – 5.5 million inhabitants vs 6.1 million in the Baltics. In contrast to Estonia, in Latvia and in Lithuania, most of the revenue comes from local customers. Compared to Sweden, the Finnish market is smaller and doesn’t have any local player larger than USD 20 million, whereas Sweden has produced at least four players in this price range.

2: More than €27 million in sign language (more than USD 31 million)

The Finnish government invests a significant amount of money into accessibility, creating a niche for Finnish Sign Language interpreting that exceeds 15 percent of the total market. This is for the population of about 5,000 Finnish Sign Language speakers (Ethnologues). The principal player is the Evantia Group, however other sizable providers exist in this space, and some companies are switching from traditional T&I to sign language.

3. High market consolidation

The top-3 providers – Semantix Finland, AAC Global, and Lingsoft – are responsible for 25 percent of the total market volume, and the top-50 LSPs are responsible for 52 percent of the work. The remaining 48 percent is split between 1,287 smaller “Oys”, or limited companies, mostly one-person shops with an average revenue of €66,700 (USD 77, 700). That would equal one person’s salary, including applicable taxes and office costs.

4. Growth expected at 5.5 percent a year

Official statistics put growth at 20.66 percent a year over the last three years, with stagnation over 2013-2014. A 12-percent boost in 2016 was apparently brought about by an influx of asylum seekers who contributed to the demand for interpreting services. Since this crisis is now considered to be over and the GDP growth is slowing down to 1.8-1.2 percent a year (IMF), we expect language services to continue growing at an average pace of 5.5 percent a year. The total market size should exceed €200 million (USD 233 million) by the end of 2020.

5. Probably the highest rates per word in the world

Our early survey results show that companies sell English <> Finnish translations at EUR 0.20 – 0.25 per word (USD 0.23 – 0.29), which is a higher rate than in Germany, France, and United Kingdom for Western European languages. It is even higher than the average rate for translations in large contacts in the United States public sector, and is only comparable to other Nordic countries as well as to specialist translations from Japanese to English.

In Finland, the number of employed linguists, translators, and editors is quite small – about 4000 in total – and according to the national statistics office Tilastokeskus, it has been stable for the last four years. With the annual growth of content volumes produced each year, and with the number of human knowledge workers staying largely the same, rates will remain resilient to pressure for a few years. To process increased volumes and maintain their vendor pool, LSPs will have to rely on increases in translation productivity due to TM and MT, as well as on students from universities in major cities like Helsinki, Turku, and Tampere.

6. Finnish companies are valuable targets for M&A

Finland boasts some of the highest per-word translation rates in the world and the LSPs who work in the country know that Finnish customers are extremely loyal. The market is encapsulated by the complexity of the language. All of this makes LSPs with an established portfolio very attractive for mergers and acquisitions.

Furthermore, due to relatively high taxes and salaries, the potential for cost-cutting is high as well. So, an investor buying a few companies and merging a Finnish LSP with an LSP in a lower-cost zone can improve profits and get better returns.

That’s why acquisitions will likely become more commonplace in 2018-2020. Private equity will look to purchase a bigger share of the market by targeting leading companies, and smaller players will look to merge in order to become more relevant and valuable for one of the Nordic strategic investors.

Language services in Finland (market overview)

Nimdzi Insights is pleased to share with you, the following PowerPoint presentation with accompanying video by our own Chief Researcher, Konstantin Dranch.

The “Language Services Finland” PPT deck is exclusive for Nimdzi Partners.

For access to the full report, please login using your Nimdzi Partners Account. Don’t have a subscription? We’ll help you fix that. Please get in touch with us to find out how you can get access to the entire library of Nimdzi Insight Reports.

The SKY Finnish market presentation video is exclusive for Nimdzi Partners.

For access to the full report, please login using your Nimdzi Partners Account. Don’t have a subscription? We’ll help you fix that. Please get in touch with us to find out how you can get access to the entire library of Nimdzi Insight Reports.

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