Article written by Renato Beninatto and Laszlo K. Varga.

The Language Industry Curve

Executive Summary

The language services industry is set to undergo significant transformation over the next decade. For language industry players, it is crucial to understand the factors shaping the future of localization and develop adaptive strategies to maintain a competitive edge. We provide a comprehensive projection with the Language Services Development Curve, offering actionable insights into key growth areas, market shifts, and emerging opportunities. By aligning operational strategy, investing in key areas, and fostering a culture of innovation, industry players (buyers, technology developers, LSPs, and freelancers) can continue to break down language barriers, connect with customers globally, and shape the future of localization.

This document serves as a strategic guide to adapt to the challenges and opportunities in the language services industry.
For Nimdzi partners, this paper is available in its full form, as well as in PDF form for download at the end of the article.

Key findings:

General service areas of translation and interpreting, including localization, multimedia, AI-driven services, traditional text translation, and emerging trends, present both challenges and opportunities for language service providers (LSP) to deliver global solutions.

The new wave of AI tools, such as large language models (LLM), LLM-enhanced machine translation, speech recognition, synthetic voices, and voice cloning, are quickly finding their way into localization workflows as features integrated within platforms of translation and content management systems, multimedia and e-learning tools, and more as productivity enhancers.

The same AI tools are also opening new markets for language technology and service providers via offerings such as automated subtitling, machine interpreting, and AI avatars as a viable alternative to no-localization.

The technology-driven – sometimes assumed – productivity gains keep driving the decrease in per-unit costs, an opportunity as new enterprises and more content can now jump the lowering cost bar of language services.

Human expertise remains vital in the localization process of mission-critical content, despite advancements in generative AI (GenAI) and other machine learning technologies.

Strategic recommendations:

Prioritize strategic partnerships and investments in cutting-edge language technologies.

Pursue innovative solutions that push the boundaries of localization, such as immersive technologies and personalized language experiences. 

Integrate language services into the product development lifecycle.

Leverage AI-powered tools for productivity while maintaining human oversight.

Foster a culture of learning, innovation, and collaboration within and across localization teams.

Review linguist compensation methods and invest in talent development and upskilling to combat the challenge arising from the scarcity of qualified language talent.

Introduction

Having outlined the key findings and strategic recommendations in the Executive Summary, let us now explore the factors shaping the future of the language services industry and their implications. The language industry is on the verge of a transformative decade, driven by rapid advancements in technology, evolving customer expectations, and the increasing globalization of business. As companies continue to expand their global footprint, it is crucial to reflect on the dynamics shaping the future of localization and to develop strategies that will enable industry players to create and maintain a competitive edge in the international marketplace.

This comprehensive projection of the language services development leverages expert analysis, market research, and technological forecasts. We also provide insights into the key growth areas, potential market shifts, and emerging opportunities that will define the localization landscape in the coming decade.

Approach

We employed predictive analytics to forecast the future landscape of localization, leveraging the historical data points and trends presented in the Language Services Development Curve. By analyzing the emergence and evolution of various technologies, devices, and industry milestones over the past decades, we identified key factors influencing the historic growth and future direction of the localization industry. 

Taking into consideration the impact of infrastructure advancements, technological breakthroughs, and the adoption of new devices on the localization industry’s trajectory, we collected and preprocessed data, including the introduction, uptake, and dissemination of these elements and the market size at different stages. We then generated predictions for the future of localization. By inputting current market data and anticipated technological developments, we estimated the growth rate, market potential, and the emergence of new localization technologies and services in the coming years. 

Our model, based on the data from the Language Services Development Curve shown in the next section, delivered a data-driven and evidence-based outlook on the future of localization. The insights gained from this predictive analysis will enable industry players to navigate the challenges and opportunities that lie ahead, making informed strategic decisions to capitalize on the evolving market dynamics.

We are painfully aware of the Paradox of the Visionary, described by Watts Wacker and Jim Taylor, which states that “The closer your vision gets to a provable truth, the more likely you are to simply be describing the present. In the same way, the more certain you are of any future outcome, the more likely you’ll be wrong.”

Even though our analysis uses extrapolation and presents what is usually considered a “projected future,” which is a continuation of the past through the present, we are conscious of the Futures Cone (Figure 1), which is a diagram that illustrates the concept of multiple potential futures, emphasizing that there isn’t just one single future to explore.

Figure 1. Futures Cone © 2017 Joseph Voros.

Understanding the future’s non-linear and non-deterministic nature and the non-uniform speed of change in the various domains of business is crucial for developing more nuanced and adaptive approaches to long-term planning, technological development, and product and service offerings. Because the future is not linear, we need to consider that different parts of the language services industry will be at different stages of development at any given time.

The Language Services Development Curve: A Visualization

Before we expand our analysis, let’s use this comprehensive graphic that visualizes how we see the language industry has been progressing in the past and what we see in the next 10 years.

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Figure 2. The Language Services Development Curve © 2024 Nimdzi Insights LLC

Let’s start by focusing on the growth line that spans from 1980 to 2035. This line represents the projected size of the language services industry in USD billions. Notably, the graph indicates that in just 5 years, by 2029, the industry is expected to surpass the impressive milestone of USD 100 billion in size and will keep growing beyond.

Along this growth line, we can see various milestones marked, such as 1G, 2G, and all the way up to 6G. These milestones signify the evolution of the telecommunications infrastructure that has undoubtedly played a crucial role in the development of the language services industry.

The advent of 4G technology, with its significantly enhanced data speeds and reduced latency, has been a catalyst for the creation and growth of numerous companies and technologies. Beyond the wide dissemination of mobile telephony with the swaths of apps and services accessible at the users' fingertips, notable examples of 4G-spurred companies include the ridesharing economy, messaging apps, music and video streaming services, and rich user-generated media content platforms. The new 4G-enabled technologies include the rise of mobile games, video conferencing applications, augmented reality (AR) applications (think Pokémon GO), and mobile payments services. Additionally, the Internet of Things (IoT) ecosystem expanded with 4G, enabling efficient communication between smart devices, wearable technology, and connected cars. 

As we look to the future, 5G is expected to have a similar or even bigger impact on the language services industry. In 2019, Nimdzi warned its clients about the transformative potential of 5G, anticipating a new era in tech development with new companies, platforms, and formats. With its faster speeds, lower latency, and greater connectivity, 5G is set to further change the digital landscape, creating new opportunities for innovation and growth in the language services sector. The 6G era is expected to start in 2030.

The dissemination of cloud computing since the introduction of AWS in 2002 is another significant infrastructure development. Cloud platforms enabled software-as-a-service (SaaS) offerings of technology applications, including those used in the language industry from TMS platforms to machine translation and ChatGPT. The lowered deployment and maintenance cost barriers helped spread these applications to businesses of all sizes and technology dispositions.

Finally, the all-pervasive rise of machine learning in modern technology architectures could not have happened without a breakthrough in infrastructure progress, that of the rapid development in computing capabilities based on new generations of graphical processing units (GPUs). First used successfully outside of video graphics around 2010 for blockchain operations – specifically, for cryptocurrency mining – GPUs quickly became the focus of research and development due to their efficient compute parallelization capabilities used in AI algorithms. This new computing hardware enabled the manipulation of vast amounts of unstructured data, such as text and images from the web, which is fundamental for the creation of the new wave of generative AI tools, including LLMs.

Beneath the main curve, we can observe several S-Curves depicting the launch and development of technologies that have significantly impacted the language industry. Notable examples include the advent of personal computers, the rise of email, the introduction of translation memories, the emergence of translation management systems (TMS), the development of machine translation, and, more recently, the impact of LLMs and GenAI. The last dotted curve is our prediction that a new technology will inevitably appear, continuing this cycle of innovation.

The S-Curve in technology adoption represents the typical lifecycle of innovation over time, characterized by slow initial growth, rapid acceleration, and eventual saturation. This model helps explain how new technologies are adopted and spread within an industry. When one technology reaches maturity, a new one often emerges, starting its own S-Curve. This phenomenon, known as concatenating S-Curves, creates a series of overlapping S-shaped curves that drive continuous innovation and progress.

Within the body of the graph, we can spot key dates marked in purple, indicating the launch of groundbreaking devices.For instance, we see the Apple IIe in 1983, the Motorola StarTAC in 1994, the iPhone in 2007, the iPad in 2010, and the recent virtual reality devices, among others. These devices have revolutionized communication and access to information, thereby shaping the language services industry. 

Additionally, the graph highlights some changes in the way large companies have purchased and continue to buy language services, represented by the dark green markers. We can see milestones such as Hewlett-Packard creating an in-house language service provider (LSP) in 1993, SAP outsourcing translation in 1996, and Netflix expanding to 130 countries in 2019. 

A recent development on the buyer side is the offering of language or language data services directly to other buyers. Having amassed experience in localization project and program management, built in-house language technologies, and recruited large pools of language talent, companies such as Uber or IQVIA are ready to sell their services to third-party companies, effectively entering the LSP market with these offerings.

The graph also features light blue markers that signify other technology milestones. These include the launch of Netscape Navigator in 1994, the introduction of Google Search in 1998, the advent of Google Neural Machine Translation (NMT) in 2016, and the initial rise of the Metaverse in 2020, among others.
This complex graph allows us to grasp the layered significance of technological advancements, infrastructure developments, and key industry events that have shaped and continue to shape the language services industry. It provides a comprehensive overview of the past, present, and projected future of this dynamic and rapidly evolving sector. We anticipate that while new advancements in communication, infrastructure, and technology will keep challenging the status quo, the industry will continue to grow by adapting to the changing circumstances with the resilience and flexibility it has demonstrated with every major external shock.

This article was co-written by Nimdzi's Co-Founder and Chief Advisor, Renato Beninatto.

This article was co-written by Nimdzi's Lead Researcher and Analyst, Laszlo K. Varga.

Copyright Nimdzi Insights 2024

Nimdzi Insights provides global and local research, education, and consulting services
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