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The 2018 Nimdzi 100 – Market Analysis (Revised May 2018)

1 May 2018

Language services market analysis

Revised May, 2018

In the revised version we update figures for many companies with more accurate and more recent numbers. We have also split the reports into three sections:

The original version published in March of 2018 is still available here and you are free to check out the full change log here

If you’d rather download the PDF version of the first edition, you can do that, too! But of course any interactive features will be disabled. Keep in mind that the PDF version is updated on a regular schedule to reflect the most up to date information, but may not always reflect the latest updates that are in the tables below. 

Market analysis

There are more medium and large companies than meets the eye

During several months of research, Nimdzi identified over 170 companies that provide language services with revenue in excess of USD 10 million. This is not a final number as there are certainly more players in the global marketplace. We uncover more information daily. 

Large companies generate USD 10 billion, total market volume exceeds USD 50 billion

Together, medium and large LSPs that we’ve identified generated just under 10 billion in revenue in 2017. Note that this includes large, well-known companies that are not included in the Nimdzi 100. 

By extrapolation, this puts our conservative estimate of the market volume at USD 50 billion for 2018.  With a CAGR of 7.4 percent, Nimdzi believes that the market could reach USD 66.5 billion by the end of 2022.

Large companies generate USD 10 billion, total market volume exceeds USD 50 billion

Together, medium and large LSPs that we’ve identified generated just under 10 billion in revenue in 2017. Note that this includes large, well-known companies that are not included in the Nimdzi 100. 

By extrapolation, this puts our conservative estimate of the market volume at USD 50 billion for 2018.  With a CAGR of 7.4 percent, Nimdzi believes that the market could reach USD 66.5 billion by the end of 2022.

Want to take a closer look? Grab all tables in Google Sheets!

Market is still highly fragmented

Even with the continuing trend of consolidation in the industry, the language services market remains highly segmented, with the top 100 companies comprising approximately 15 percent of the total global market for language services.

Want to take a closer look? Grab all tables in Google Sheets!

Paths to the top

There isn’t a single dominant business model that propels companies to the summit of the language industry (at least in terms of revenue). Companies currently at the top have arrived there with very diverse types of the core businesses.

  • Translation generalists with scale and proprietary technology
  • Build-and-buy new leaders
  • Interpreting and telephone interpreting powerhouses holding large corporate and government contracts
  • Marketing implementation agencies
  • Government & defense contractors

Global translation generalists

Each has scale, a network of offices, a technology offering, and a diverse portfolio of global customers

  • TransPerfect
  • Lionbridge
  • SDL
  • Welocalize
  • Star Group
  • Donnelley Language Solutions

Public sector contractors

These companies win large-scale government contracts for military and civil offices

  • Mission Essential Personnel 
  • Global Linguist Solutions
  • thebigword
  • MVM
  • SOS International

Media localization powerhouses

Offer subtitling, dubbing and other services to broadcasters and online streaming sites

  • Deluxe Media
  • SDI Media
  • BTI
  • VSI

Multilingual marketing agencies

Develop marketing content & multimedia with a dash of multilingual

  • Prodigious
  • Hogarth Worldwide

Buy & Build new leaders

Have rocketed to the Top 20 in 2018 after acquiring other language services companies

  • RWS
  • Keywords Studios

Telephone interpreting companies

Hold contracts and SLAs for phone interpreting with government institutions and large private customers

  • LanguageLine
  • Cyracom

Revenue is vanity, but profit is sanity

The largest companies have very different cost structures, profitability levels, and valuations. For example, although they have similar revenues, Lionbridge was acquired by a private equity firm for USD 360 million, while TransPerfect’s courtroom-brokered deal valued them at USD 770 million. 

At the same time, market capitalization for publicly-traded companies, RWS and Keywords, hovers above USD 1.3 billion each. Similarly, LanguageLine sold for a record USD 1.52 billion in 2016.

The US is the most promising growth market

English-speaking regions

Revenue growth in the United States and other English-speaking countries continues to outpace emerging markets. Out of 155 medium-to-large-sized companies identified, 40% are headquartered in the United States. Throw in the United Kingdom and Ireland, and all of the Nimdzi Top 10 companies are from English-speaking countries.

Top European regions

  • German-speaking (ie: DACH) countries (Germany, Austria, Switzerland) are home to 14 LSPs in the Nimdzi 100.
  • Nordics (Sweden, Norway, Finland) are home to 12 LSPs in the Nimdzi 100.
  • French-speaking (France, Luxembourg, Belgium) are home to 10 LSPs in the Nimdzi 100.

Large LSPs appear around enterprise exporters with complex technical products. They grow mostly in mature markets with high per capita income and high cost of translations. Selling at USD 0.21 per word in the United States, a company can reach USD 10 million with 47 million translated words. At USD 0.02 per word in India, it will take ten times as much in volume.

Thus, while the economies of India and Brazil are very large, and by GDP they both beat Sweden by a factor of four or five, Sweden has produced seven large LSPs and there are hardly any in either Brazil or India.

In conclusion

The Nimdzi 100 indicates that the language services market exceeds previous estimates. The industry is extremely fragmented and incorporates multiple niche segments. These niches grow at different speeds.

Some, like document translation, are fairly stable and grow at a slower rate. The best way to scale quickly in these segments is via acquisitions. Regulated segments such as life sciences and financial services continue to show strong growth. These continue to be safe bets for LSPs looking to grow organically. Other areas like media localization and gaming have recently boomed. Explosive growth in these exciting industries provides ample opportunities for ambitious LSPs that know how to scale.

It is also clear that mergers and acquisitions will continue to play an influential role in our industry. M&A activity is showing no signs of slowing down, so we can all expect to see more consolidation on this front going into 2018 and beyond. 

Many LSPs are entering 2018 on winning streaks. The industry is growing and large LSPs are enjoying the ride. As the saying goes, a rising tide lifts all ships. Despite the looming threat of machine translation, the demand for human language services is larger than ever. The outlook is good. If you need additional confirmation, we encourage you to reach out to any of the companies who earned a spot on the 2018 Nimdzi 100. They will certainly confirm. 

Continue reading…

The revised Nimdzi 100 report is broken into three sections: Nimdzi 100 LSP Rankings, Market Analysis, and Growth Analysis. Continue reading for more information.

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