In every country, the level of centralization of government contracts has a huge impact on the interpreting market. We found that there is a Centralization Goldilocks Zone in which the markets flourish best.
Low centralization
In countries with low government centralization, the market tends to be messy, for both the provider and the buyer. There are lots of small players and individual interpreters that compete for a myriad of small contracts and individual assignments. For both the buyer and the provider this usually means that a lot of time is wasted on the procurement process and there is usually an overload of bureaucracy. In these markets, we won’t see many large players because it is much harder for an LSP to make significant profits. Examples of this are countries like Germany, France, Italy, and Belgium.
High centralization
In countries with high government centralization, usually one or two large players occupy the majority of the market. While this significantly reduces the time spent on procurement, it also means that these one or two large players are in a monopoly position. This poses a number of risks that can have a negative knock-on effect:
- The provider(s) can do whatever they want in terms of rates and who they use for assignments.
- If rates drop significantly, there is a high risk that professional interpreters start leaving the profession.
- This is turn can lead to a drop in fill-rates and an increase in the use of untrained people being used for assignments, both of which ultimately increase costs when for example court hearings have to be adjourned. We have seen examples of this in the UK in the past and are currently seeing a similar trend in Denmark.
- The market becomes stagnant. Smaller players will either fade away or become backup for large ones, which creates a two tier market.
Medium centralization: the Goldilocks Zone
A medium level of centralization is the Goldilocks Zone countries should aim for.
In these markets, there are enough players for a lively market — both small, medium, and large. This means there is a healthy level of competition and opportunity for growth. It also reduces the risk for government buyers as there are enough providers to supply the demand without the risk of creating a monopoly position.
Examples of this can be found in Australia, the US, Canada, and the UK.
