Webinar: The Size and State of the Language Services Industry Today

Webinar: Size and State of the Language Services Industry Today

Continuous growth and fragmentation have been the key characteristics of the language services market. In this webinar, we are looked at data collected from the top 100 companies in the world and analyzed how they performed in 2019. We had originally estimated the industry would grow to USD 57 billion by the end of 2020, but considering the effects of COVID-19, we discuss their impact on the industry. Let’s dive into the research with Renato Beninatto and Sarah Hickey in “The Size and State of the Language Services Industry Today.”

Renato_Beninatto_Chief_Executive _Nimdzi_Insights.

CEO and Co-Founder of Nimdzi

Renato brings decades of experience everywhere he goes. With extensive experience in international consulting, market research, sales and marketing, Renato provides the strategic direction that helps Nimdzi better serve clients worldwide.

Sarah Hickey, Chief Researcher

As Chief Researcher, Sarah analyzes the language services market from all angles. Her experience as a translator and conference interpreter allows her to have a unique view of the industry. Her background in journalism has always led her down the path of critical thinking and objective reporting. Sarah leads the research for Nimdzi’s global market studies, such as the Nimdzi 100 and the Nimdzi Interpreting Index. Her research further focuses on Virtual Interpreting Technology (VIT). Sarah also still works as a freelance conference interpreter.

Full webinar transcript:

Nika Allahverdi: 0:00:05

Hi everybody. We are about to start the presentation about the size and state of the language services industry. My name is Nika Allahverdi. I am the Global Marketing and Engagement Manager Nimdzi. Our presentation today will last approximately 45 minutes, and at the end we’ll have time to answer questions from the audience. So please submit any questions into the Q&A section. If you haven’t done so already, we strongly suggest that you open up the Nimdzi 100, you can download it at the link that you see on the slide here. It’s also on the landing page of nimdzi.com so you can download it. And our presenters today are Sarah Hickey, our chief researcher and lead analyst in this report, who is based in Galway, Ireland. And Renato Beninatto CEO of Nimdzi Insights, joining us today from Seattle. Sarah, the floor is all yours.


Sarah Hickey: 0:01:00

Thank you, Nika. Let’s start by jumping right into the ranking. This slide, Nika, introduces you to the 15 largest companies in the language services industry based on their 2019 revenues. For the second year in a row, TransPerfect takes the lead, followed by Lionbridge and LanguageLine. These are the only three companies in the world that exceed half a billion dollars in revenue. An interesting fact that my husband actually pointed out to me is that the top 10 companies this year are all headquartered in English speaking countries. The 11th country in our ranking then – STAR Group – has their headquarters in Switzerland. You will also notice that 30% of the top 10 are gaming and media localization companies: We have Keywords, SDI media and IYUNO, who represent one of the fastest growing segments in language services, as we will discuss later in this webinar.


Sarah Hickey: 0:02:10

For now let’s take a look at some of the characteristics of the top two companies in our list: TransPerfect and Lionbridge. One of the things that has contributed to TransPerfect’s continuous growth is their independence of very large accounts. Unlike other LSPs who depend on a handful of customers for more than 50% of their revenue. Client concentration is not a problem at TransPerfect. TransPerfect and Lionbridge also have their hands in many pots and are investing in key markets. As it gets more difficult to grow organically the bigger an LSP gets, investing in upcoming sectors of the industry is key. The market for game and media localization is increasing rapidly and the top two on our list know it. Both companies have made a number of strategic acquisitions in this field in 2019. When it comes to technology, AI support services such as data annotation and data labeling are a growth driver that both companies have cast an eye on. There are huge opportunities in the manufacturing space in Europe and the demand for data training is high worldwide. We will discuss other trends in the industry later on. But for now, I want to ask for Renato to talk a little bit about the market size and growth.


Renato Beninatto: 0:03:44

Thank you, Sarah. Before we talk more about growth, let’s address the elephant in the room. I don’t want, and I don’t, and I don’t need to explain that this is a unique situation that anything we say here is pure speculation. But one thing is clear that our industry as a whole plays a key role in saving lives and advancing knowledge and communication in this global phenomenon. The pandemic will have lasting effects on the way clients consume language services and will affect industries, the players in our industry financially, until the pieces of this new puzzle are reorganized. In 2008, when we had a recession, companies had to deal on average with one bad month in that year. At this stage, based on the conversations and surveys with, with industry players of all sizes, two thirds of the companies will not suffer too much, while a third will see very negative results. Anecdotally, I have talked to businesses that have seen the number of projects jump from 200 to 450 a week and to some that have seen 75% of their business completely evaporate. The good news is that China seems to be coming out of their quarantine and they report similar results.


Renato Beninatto: 0:05:15

Now let’s talk about growth. What, what happened? The data. Last year, although growth was slower and it has slowed down from 17.5% To 11.5% among the top 100 companies, the market was still growing at a healthy rate for an industry the size of ours. In this slide, you can see, a breakdown in the growth rates for the different bands of our ranking in the top 10 to top 50, and the top 51 to 100. The report has a lot more detail about these numbers, including the growth rates according to the number of employees in the company. Smaller companies tend to grow at a faster rate than the bigger ones. Last year there were lots of macroeconomic factors that created this “wait-and-see” mode for segments like media and entertainment and trade as a whole, because of the economic policies towards China and NAFTA by the US administration.


Renato Beninatto: 0:06:27

So when we finished the writing of the Nimdzi 100 in February of 2020 this year, the coronavirus hadn’t been declared a pandemic yet, but we alerted in our report to the fact that the translation industry will be impacted in the same proportion as the industries that it serves. Both negatively and positively. So our projection, projection for 2020, was that the industry would reach $57 billion and that it would continue to grow at a compound annual growth rate of 6.2%. This was already a reduction in the growth rate from the 7% that we had estimated in 2018. So we have adjusted our projections because the reality has completely changed. So we believe that there’s still going to be growth, but at a much lower rate. We estimate that we will be close to $55 billion instead of 57 this year, and we reduced our growth projections for 2020 to 2.5%.


Renato Beninatto: 0:07:42

As you know the OACD has projected that the growth of the world economy is going to be cut in half to 1.5%. And as our industry grows a little bit faster than the general GDP growth of, of the world, I think that 2.5 as a conservative growth estimate is still realistic. And I must caveat this. Today April of 2020, we don’t know what’s going to happen moving forward, right? And we reduced the growth projection from 6.2% a year to 5% a year as of 2021. So the projection is that we will be around 66.7 million in 2024. But even though consolidation continues to happen, the language services industry is still fragmented. So this graph shows you that the top 100 companies concentrate about 14.5% of the industry revenue. If you count the watchlist, where we have an additional 50 companies that we track, you can say that the top 150 LSPs tracked by Nimdzi account for about 20.1% of the industry as a whole. The industry is still mostly made up of companies much smaller than $10 million in revenue.


Renato Beninatto: 0:09:25

As we’re still talking about growth, this graph shows you, it’s a little small here, but you can read it better in the downloaded copy or on our website. Seven companies grew more than 50% year-over-year in our ranking, with the top prize going to the Japanese company Rosetta, which sells machine translation services. Vistatec and Acclaro grew organically, while Summa Linguae grew by 70% through acquisitions, and you can read more about them in the full report.


Renato Beninatto: 0:09:59

Another metric that we collected was the productivity of LSPs. Looking at the top 100, the average revenue per employee in 2019 was about $128,000. When I started tracking the industry some 20 years ago, this number was around $67,000 and you can see that the productivity has increased or inflation has affected it. But considering a company size, four out of the five most productive companies in 2019 employ under 100 professionals. Only one company in this ranking falls into a higher category and has over 500 full time employees.


Renato Beninatto: 0:10:49

What the ranking doesn’t show is that many of the top players in the industry are not indirect competition with one another, and this is why very frequently you, as an LSP, don’t see all the players that we have in our list. The market is fragmented and there are many clusters of top players in the various sectors within the language services industries. While companies from the top ranks are trying to diversify and branch out into other segments, no one, for example, comes near Keywords when it comes to gaming, near an SDI Media when it comes to media localization, or near LanguageLine in the area of interpreting. In every segment of the market, there are a handful of top players that have reached the level of brand awareness that puts them in a top-of-mind position for buyers. From a buyer’s point of view, the top players in each segment of the industry form little rankings of themselves. They, represent a market in themselves. So this slide shows these clusters inside of rankings that could be rankings on their own. If you haven’t seen it yet, download also the interpreting index which looks at the top 33 players in the interpretation space and the market dynamics in that space specifically.


Renato Beninatto: 0:12:16

For those of you who like the fine print, here’s a slide about our methodology. For the ranking, we gathered information about companies that were $10 million or more in revenue, which was the threshold for reaching the top 100 last year. This year, the 100th company on the list is closer to $12 million. We even have a a section close but no cigar. These are companies that last year and weren’t in our ranking last year and didn’t make it this year because the threshold went up. We list the full revenue of each company, even if they have other segments that they address, like technology for SDL. The numbers that we use in the report, they refer to the last fiscal year of each company, and as you know, some companies in some countries don’t follow the calendar year for reporting financials. We use the US dollars for all our calculations. So first we converted the numbers using the average annual currency conversion and then calculated the growth rates. We looked at the difference that this would have in calculating in local currency and it was not significant, so it was better to standardize the calculation. Sarah, I think this is a good time for you to share some of the other findings from our research.


Sarah Hickey: 0:13:51

Yes, so the first thing to notice is the breakdown of services provided by the LSPs who participated in our survey for the Nimdzi 100. As you can see on the slides, translation accounts for more than one third of revenues. Localization and interpreting, then, each account for about one fifth of revenues. And transcreation and subtitling are still among the top five services in the industry but are significantly smaller. Another data point is that almost one fifth of companies provide services for what is commonly called the regulated industries, so life sciences, legal, finance, and patents. And media and entertainment is now the second major vertical for the industry as a whole. As video and audio have become more popular because of bandwidth availability, more companies are producing video content, which falls in this category. Software localization, then, accounts for a 13.2% of the market.


Sarah Hickey: 0:15:00

Now let’s talk a little bit about consolidation in the industry, because 2019 has seen a lot of movement on the market. Mergers and acquisitions and strategic business decisions reshuffled the industry and created new leaders in several segments of the market. The most notable ones are on the slide and just to talk briefly about two of them. You can see that Pactera EDGE spun off from Pactera and is now a US-based company which has also made Transn the new LSP leader in China. And Summa Linguae Technologies first made two new acquisitions in 2019 and then sold more than 50% of its shares to a private equity firm called V4C that focuses on investments in mid-market, central European companies. Most of the mergers and acquisitions in 2019, we’re motivated by technology, international expansion, and the current growth opportunities in the media and game localization industries. It’s easy to assume that given the current situation, there is going to be a slow down in M&A activity in 2020.


Sarah Hickey: 0:16:25

Now in our research, we didn’t just look at the revenues and the ranking. We had a lot of interviews with industry experts and we’re able to identify a number of major trends and challenges across the industry that I want to talk you through now. So coming out of 2019 and looking into 2020 and beyond, the two biggest challenges for LSPs will be scalability and capability. It has become easier than ever to generate content, especially online. And this has led to basically an explosion of content and subsequently to an increasing demand for translation and localization services, and while more content promises growth LSPs might struggle to handle these increasing volumes with the existing staff and technologies. This means that finding the right talent and investing in technologies to automate repetitive tasks will be essential in 2020. Adding to this is that the way end users consume content has changed.


Sarah Hickey: 0:17:34

Attention spans have dropped down to around seven seconds and so video content has become more popular and this does not only affect media localization, but also traditional LSPs who may have to adopt new strategies or build out their service offerings to include subtitling for example. Going into 2020, then all eyes are cast on media localization because a lot has happened in this industry in 2019. As traditional distributors like Netflix started to produce original content, traditional producers like Disney realized that to stay competitive, they needed to enter into direct-to-consumer services. So then in light of the anticipation of new OTT platforms like Disney+ and Apple TV+, things slowed down in the first half of 2019. But then in the second half of 2019, there was an explosion of content when these new platforms were launched and players like Netflix and Amazon countered by releasing even more content. So, all of this translated into growth for media and localization providers. Alongside this development, we’ve seen a spike in M&A activity: the major ones are listed as you can see. And in our research we found that there’s a clear move towards small studios wanting to join the big players and large buyers looking to acquire small in-country operations. It can be expected that this trend will continue and that over time, smaller players in this segment will fade away.


Sarah Hickey: 0:19:24

Our research shows that technology is on everyone’s mind for 2020. As the digital transformation continues, technology’s playing a crucial role in enabling LSPs to optimize the internal workflows and to deliver better services to their clients. Buyers are increasingly demanding language service providers to deliver not only localized assets, but to also deliver them in a specific format that is required for the distribution channels. So offering an end-to-end distribution platform for localized assets that optimizes this process is key for localization companies to stand out from their competitors. And when integrating new technologies, the goal should be to offer an easy, efficient, productive and transparent experience. A few companies have already made moves in this direction. For example Zoo Digital Group created its own end-to-end, cloud-based platform called Zoo Studio. CQ fluency developed a system for managed services built on Plunet and memoQ, and SDI Media’s parent company IMAGICA GROUP acquired a significant minority stake in Pixologic, a global provider of content localization and distribution services for the media.


Sarah Hickey: 0:20:50

Talent acquisition subsequently seems to be on everyone’s mind for 2020 because as all LSPs from all corners of the world are scaling up in preparation for the anticipated growth in volumes, finding the right, highly trained professionals for the job is a major challenge. This does not only apply to translators, interpreters and voice actors, but also to project managers and other in house roles and I want to briefly elaborate on a few factors that are adding to this challenge. On the translation side, traditional roles of translators have started to shift due to two major developments. So on the one hand, the use of machine translation that is well established now, it is increasingly seeing the need for translators working as post editors. And then on the other hand, new types of content like video content are demanding translators to acquire new sets of skills.


Sarah Hickey: 0:21:54

And then in the interpreting market rates and conditions have been dropping for a while and highly qualified interpreters have started to either go on strike or leave the profession altogether. Adding to this as the new AB 5 law in California, which was designed to provide some level of work security for example, for Uber drivers but also requires companies to treat their freelance interpreters as in house staff. Since the law came into effect in January 2020, lots of professions have been seeking an exemption and just now, actually, a new bill known as SB-900 was proposed by the California Senate to grant an exemption for interpreters – because given that the majority of interpreters are freelancers, this law is threatening the livelihoods of many in California and also the local LSPs that work with them. In this market where highly qualified talent is becoming a rare commodity, LSPs should think about how they can stand out and become the employer of choice for the best talent in the market because in the end everyone is taken from the same pool.


Sarah Hickey: 0:23:11

So although automation continues, the hype around the machine translation revolution has slowed down. Large and medium sized LSPs alike are reporting that while the use of MT has increased, the perceived benefits from MT have plateaued. We found that despite the increase in the use of MT and higher levels of client acceptance, there are no outstanding new developments in this field. MT engines have reached such a high level that big players like Google, Microsoft and Amazon simply don’t have enough incentive to invest in optimizing their MT engines even further, because given that the current level of MT has been widely accepted and adopted any more investment would simply not translate into high enough returns at this stage.


Sarah Hickey: 0:24:06

Another trend we observed is price pressure in the public sector. So while the demand for language services is increasing due to globalization, immigration, an aging population – which is of course affecting health services in general, but also medical interpreting and life sciences, government budgets are continuously being cut. And that means that in the public sector, the price pressure is very high. And in many countries, LSPs have responded to this pressure with a price battle. So this has put an enormous strain on LSPs and talent alike and one of the effects is that some linguists have started leaving the profession. Which is a dangerous trend, because as we just talked about, they’re becoming a rare commodity, but at the same time, the early stages of a slight turning point can be observed because not all LSPs are surrendering to the price pressure.


Sarah Hickey: 0:25:06

For example, Semantix pulled out of an $82 million interpreting contracts over price pressure. And in addition over centralization in the public sector of some countries started to reveal itself as what is called a false economy. An example of this comes from Denmark, where the largest contract by the Ministry of Justice was held by just one provider and after conditions decreased and rates dropped, interpreters went on strike and there were some serious performance issues. So the result in the end was that after just eight months, the Danish police canceled the contract. As the consolidation wave in the industry continues, we can see two opposing trends: diversification and specialization. On the diversification side, just to name a few examples, a game localization veteran, Keywords Studios, made first moves to branch out into media localization by acquiring a Berlin-based TV Synchron. France-based LSP Ubiqus diversified its client base by acquiring InPuzzle and Dhaxley with clients in Switzerland, Spain, Benelux and Germany and the merger of BTI Studios and IYUNO Media Group didn’t only solidify their position as the number two in the media localization space, but also diversified each company’s portfolio by combining their subtitling and dubbing services. So if you’re asking yourself where this leaves small and medium sized providers. Well, they’re more on the specialization side. So some small players will become acquisition targets of larger players.


Sarah Hickey: 0:27:00

They can also stand out by providing specialized, customized services. Because as the large players keep getting even bigger, some clients have started to revert back to smaller clients who can really focus on them and provide their niche services to them. Medium sized providers might not be able to compete with the large players directly, but they can use the ongoing consolidation as an opportunity to offer new services and stand out by providing better customer service. Okay, now Renato is going to take us through the next section.


Renato Beninatto: 0:27:40

So the language services industry has many different segments and operates in even more verticals. So in this section I’m going to give you an overview of certain sectors and verticals that stood out in 2019 and will be more relevant going into 2020. So how would we survive the quarantine without Netflix and Amazon Prime, right? So the media and gaming localizations are as promising as ever. The forecasts all point to growth in this segment. The size of the global media industry in 2019 was estimated at about $520 billion – that’s 10 times our industry. The global OTT revenues are expected to exceed 200 billion by the end of 2023. But before you ask, and Sarah mentioned it before: OTT means over the top media and it’s what we common humans call streaming services. So at the same time, the games industry is supposed to increase to close to 200 billion by 2022.


Renato Beninatto: 0:28:56

So if we look at these segments a little separately in the media space, the OTT area has been very disruptive. The lines between content creators and distributors is becoming blurry. And this explains why the changes in how content is distributed drives a more centralized structure on the buyer side. So the buyers are — . Instead of buying translations and localization locally, there is a more centralization trend. And what we see is an increase in content that needs to be localized, and also more language combinations. And this is one of the areas where the talent scarcity shows up. This has an excellent impact in the localization industry. And this is what is driving this consumerization that as seen with so many media and entertainment companies in our ranking. The gaming industry is not far behind. There is new distribution models such as games as a service, subscription services, cloud gaming They’re completely reshaping the industry, and I think that this is one of the spaces where 5G might have a big impact. VR and AR create new opportunities for the developers. And at the same time, the development world is getting ready for this new generation of consoles like PlayStation and Xbox that were planned to be released this year. I don’t know how the pandemic has affected that.


Renato Beninatto: 0:30:50

The main challenges in this space, however, continue to be scalability and capacity – because of their exponential growth if you cannot train overnight thousands of translators to do subtitles and dubbing, translation and so on. It has happened and it has been happening, but it’s still a challenge in certain language pairs. The medium localization companies have told us that they are concerned about their workflows, especially also because of space limitations, They need the studios to be creating this content. So building new rooms and finding professionals is expensive. And scalability is also related to finding the talent to perform high quality work. Let’s take a look at the life sciences space, the world is not getting any younger and life expectancy of people is climbing. So this means that there’s more time for people to consume healthcare. So while access to healthcare is still an issue in some parts of the world, governments and private companies continue to invest heavily in.


Renato Beninatto: 0:32:09

As a result, the global healthcare market and the specific market for life sciences likely won’t be slowing down anytime soon. In 2019, the total revenue of the life sciences industry was $1.8 trillion. Nimdzi estimated that the total addressable market for LSPs active in life sciences was around $6 billion in 2019. We wrote a report for our clients specifically about the life sciences space. By 2025, we estimate that this number is going to grow to 8.6 billion, which is an increase of about 7% per year on average. It’s an appetizing pie for LSPs. However localization operations in life sciences do not come without their own set of challenges. Overall, regulatory compliance is one of the key issues. And they vary. These regulations vary from country to country, and the LSPs need to be on top of what is happening to make sure that their operations meet the required standards.


Renato Beninatto: 0:33:24

There is a profusion of content related to life sciences that needs to go multilingual and under tight deadlines. This crisis is a good example of that. LSPs at the top of the food chain like TransPerfect SDL, MAPI, and language technology specialists like Iconic, have been making strides with the use of artificial intelligence and machine translation to help their clients in areas such as language validation, pharmacovigilance (I always have a hard time with “pharmacovigilance”), and clinical trials. Well, traditional services such as translation are not enough anymore to set yourself apart from the competition. So language technology, like NLP (natural language processing) is a game changer. If LSPs are able to integrate it into their client’s workflows, even better. Also the new EU medical device regulation or MDR is going to go in and into effect next month. And this is probably going to be the most impactful event in 2020.


Renato Beninatto: 0:34:41 The life sciences space, it represents an enormous logistical effort, if the inevitable cost and effort to localize all the related documentation is taken into consideration. The fact that medical device manufacturers have been struggling to get ready for it creates an opportunity for the tech savvy LSPs to be able to accommodate the increase in content that is inevitable. So if LSPs haven’t started looking at machine translation yet, 2020 might be this now-or-ever moment. As far as the localization process goes.
Renato Beninatto: 0:35:29

Now, let’s talk about e-commerce. E-commerce has seen amazing growth in the last years, and my guess is that this pandemic will benefit this segment. The global front runner for eCommerce and should serve as a guidance for the e-commerce space, is the buying behavior in China – where already one quarter of all shopping happens online.


Renato Beninatto: 0:35:59

Meanwhile, Amazon’s revenues continues to grow at 30% a year, more or less. So what does this mean for LSPs? More e-commerce means more online content, which triggers higher localization demand. Nimdzi is about to publish a very detailed study about online buyer behavior that indicates that localization drives engagement and triggers buying decisions. We looked at buyer behavior in over 80 countries, and on average 80% of global online users automatically select their native language if it is offered. So good case for e-commerce localization. Another key segment, and we started to talked earlier about the regulated industries.


Renato Beninatto: 0:37:00

With all the hype about media and gaming, it’s easy to forget that there is still a large demand for regular documentary inflation, especially in the legal and financial industry. In 2019, the legal industry generated almost $1 trillion worldwide. Compare that to the $1.8 trillion of the life sciences industry. It is our estimate that the current localization spend in the legal segment is around $4 billion. And the financial segment, you can add another two and a half billion, and you have there a good market that tends to be more focused on value than speed – more focus on value and speed than price . When it comes to the geographical distribution, being a very confrontational country. this vertical fragmentation is very low. The United States represents about 50% of all the revenue in the legal space. Europe is next in line with over a quarter of the revenues of the legal and finance space being generated in those markets.


Renato Beninatto: 0:38:26

In 2019, interpreting had an opportunity to step out of the shadows and become a big business. In the Nimdzi Interpreting Index, we estimate the size of the interpreting market at $7.6 billion. LanguageLine, the number 3 in the Nimdzi 100, is by far the largest player, with an interpreting revenue of around $485 billion. While the interpreting industry is still mostly made up of small companies, M&A and centralization, because of government contracts, are on the rise. As you can see on this slide in the UK, thebigword went from $45 million to $120 million in three years after it took over the Ministry of Justice contract that was held before by Capita Translation. So the big word interpreting services accounted for about 50% of the revenue in 2019. We will watch what happens in 2020 as this type of interpretation was significantly affected by the pandemic. We saw some areas where onsite interpretation, because of the quarantine, has virtually disappeared. When we wrote this report, remote interpreting was finally getting more visibility, but the mandated quarantines and the cancellation of events around the world are giving virtual interpreting the boost that it was waiting for. All large interpreting companies have introduced some kind of remote interpreting. And although over the phone interpretation is still dominant, virtual remote interpreting is seeing the opportunity for growth that they needed. The key challenges though, are related to infrastructure like bandwidth and privacy and also to client acceptance, but that may change now.


Renato Beninatto: 0:40:36

Finally let’s talk a little bit about the IT space. Software is still the fastest growing sector in language services, growing at a rate of about 8.3%. The buyer side, localization managers name internationalization and continuous localization as their two biggest challenges when it comes to machine translation. Adoption is growing and together with e-commerce and life sciences, it is a domain with the highest demand for machine translation. MT is even spreading into creative content like games. Keywords Studios bought KantanMT in Ireland and Electronic Arts has launched updates using machine translation. And one of the most anticipated technologies in this space of machine translation is MT auto-select. It was already implemented by Memsource in a beta version and it automatically identifies the best engine for a specific use case. Finally, machine dubbing is another development expected to gain more visibility this year.


Renato Beninatto: 0:41:54

Amazon AI and the Italian LSP Translated are looking into ways to make automatic dubbing appear more natural. Evernote and Ominiscien in Asia are experimenting with localization automation for subtitles and adding automatically-rendered voiceovers in video. Also, there are these modern text-to-speech engines from Google and IBM that are becoming good enough that users don’t even notice imperfections or forgive the imperfections. In the near future. We believe that neural text-to-speech technologies will be available in more languages and that’s one of the limitations that exists today. And we can expect more and more companies offering auto dubbing tools. And now, back to Sarah for the last part of our presentation here today.


Sarah Hickey: 0:43:08

Yes, emerging trends and buzzwords. That one is, because in a diverse industry like ours it can sometimes feel like the list of trends is endless. New hypes are springing up all the time, but which ones are worth paying attention to and which ones are just empty buzzwords? So to solve that, we compiled a short overview for the most relevant ones for 2020. I want to start with the biggest trend first, and that is that emerging markets in Asia and India are as seen as the most promising geographical areas for growth. While it may not have looked like it in the US and in Europe, the global economy has been on fire in 2019. A. nd there’s an opportunity for established translation markets to provide language services for booming markets in other parts of the world. Media and gaming localization companies in particularly are looking East because there’s a huge demand for Asia to Asia content, especially coming out of China and Korea.


Sarah Hickey: 0:44:18

China and Korea. Also taking the lead and 5G and blockchain, which is going to drive the development of new platforms and new forms of content. The potential for OTT services, then is huge in South East Asia as well, where services like Iflix have started to replace linear channels over the last few years. The biggest challenges for localization companies here are that most business models are based on taking everything into English first and then into other languages. So this means longer turnaround times, greater costs, and also a higher risk of losing important cultural nuances. So this rise in Asia to Asia content will create a need for professional translators, voice actors, and better machine translation solutions to support these new language pairs.


Sarah Hickey: 0:45:17

Looking at India and specifically because India is considered to be the biggest opportunity for growth, the demand for audio visual content is growing in Asia in general But particularly in India auto visual content generated in China (that’s a tough word) is already being imported into India. The biggest challenge here for a Western media localization company is that the price point is so low that companies may struggle to be in India in volume and still make profits. On this last slide of our presentation, I just want to briefly talk you through a few other emerging trends and buzz words that stood out from our research. First there is transcreation, which is a bit of a misunderstood trend. And if it’s supposed to be applied in an efficient way the industry needs to narrow down the concept and turn it into something feasible, which can be understood by enterprise buyers. Because as it stands, the distinction from translation is not always clear.


Sarah Hickey: 0:46:27

There’s a bit of a debate going on about the exact meaning of it. Next up we have the advent of 5G, which already came up a few times throughout the presentation. 5G will affect how content is developed for OTT and gaming and has the potential to unlock new consumer categories which will be good for localization. Brexit was another hot topic or is, I guess, is still ongoing – the aftereffect of it. Most companies we spoke to described it as a non event, but some have seen it as an opportunity because for example, we can expect a spike in legal document translation. Last but not least, then we have machine interpreting, which has become a reality. And in the language services industry, there are a few companies that offer machine interpreting solutions for businesses. For example, from the US, there’s a company that provides simultaneous speech-to-text and speech-to-speech services for conferences and corporate meetings. And in the UK thebigword released an app called Voyager Translates, which is specifically designed for use by armed forces and the defense industry. However, the majority of interpreting technologies – machine interpreting technologies – are targeting individual consumers. There’s a boom in handheld devices, particularly in Japan, but this gadget trend is likely to disappear again as quickly as Pokémon Go.


Sarah Hickey: 0:48:07

This concludes our webinar. Thank you so much for joining us. Make sure you download the full report where you can get the complete list of the 157 companies that we analyzed for this report. And now we will open up for questions, Nika.


Nika Allahverdi: 0:48:24

Thank you, Sarah. So we have a few questions that came in and some more comments in chat. So we’ll try to get through as many as we can here, and then anything that we don’t get through, we can send a follow-up email. So the first question. “I like that you post revenue per employee and noted how amounts have increased. Is it possible that a trend for more use of contractors rather than employees inflates that number?”


Renato Beninatto: 0:48:53

I can take that. I would say no. The reality is that I think that technology is impacting that more. This is an industry that has traditionally been served by sub-contractors. So it’s not a new trend. It’s not something that would affect it that much. My belief is that the increasing productivity is driven by technology repetitions and the ability really to be more efficient in managing projects. There’s less manual tasks and more automated tasks.


Nika Allahverdi: 0:49:46

Thank you, Renato. Someone’s asking if the recording of the presentation will be shared afterwards. And it will be, we will send an email and there will also be a spot on the website for anyone who wants to revisit it. And we have another question here: “General access to MT such as Amazon Translate has gotten so cheap as to be close to free. How is this shaking up the industry if we are in a post-edit world now?


Renato Beninatto: 0:50:17

Sarah, do you want to make a comment, or do you want me to take a stab at it?


Sarah Hickey: 0:50:21

I was just reading the question again. Actually.


Sarah Hickey: 0:50:28

Well shaking up the industry if we’re in a post edit world. I feel like there’s almost two questions in this in this one question. So I’ll actually take the last one first. Yeah, definitely. I would say that the use of MT definitely has increased and there is more post editing requirements. And as I mentioned throughout the presentation, one of the challenges here is for example, that translators have to adopt new skills, for example, to become post editors, and that LSPs need to find the right talent there as well – because it’s a different skill set. Of course some of it is overlapping with translation, but post editing is still a different skill than translating. And so they either need to be training or LSPs will need to find new talent. But this has been an ongoing trend for a while now. With Amazon Translate having gotten so cheap on being close to free, I feel like I would need to get a bit more context about this because I don’t see the exact –


Renato Beninatto: 0:51:36

– Let me say. Machine translation has been perceived as free. That was the biggest challenge in competing with machine translation, that Google Translate is free, Microsoft translator is free, and this is not really something that has affected the perception on the buyer side that much. So what you’re talking about is essentially the ability of customizable, high quality machine translation tools being adopted by LSPs. It makes this even more attractive, which will affect –.


Renato Beninatto: 0:52:19

And by the way, let, let me make a comment here about – and I see that there are questions afterwards about the talent shortage. One of the things that we have in our space is that the volume of translation is growing at a higher pace than the number of translators that come to the market every year. So the volume of translation outbases the availability of human translation, and machine translation covers that gap. And that’s the opportunity of using machine translation for the individual translators that are in our webinar now. That’s the opportunity to increase the productivity as an individual using these professional tools. You, you don’t need to be using paper dictionaries anymore. You can use machine translation and post editing. So it affects productivity that way. But I lost a little bit the track of the topic, but let’s move onto the next question.


Nika Allahverdi: 0:53:37

Thanks. Renato kind of in the same vein: “Given the improvements in MT, is there any measurement of what is perceived as good enough versus correct? How can a company gather and understand measurements such as that?”


Sarah Hickey: 0:53:55

Well in some of the conversations I’ve had with companies who are saying that the benefits from MT has plateaued and that there isn’t enough incentive right now to invest in MT optimization even further at this stage – because it’s been so widely adopted, someone was mentioning to me that the only reason this would go further now would be if there was an accepted quality metric across the board of what is exactly seen as correct and what isn’t. And as it stands, there isn’t one across the board and we don’t expect one anytime soon or maybe ever. I don’t know Renato, if you wanna add to that as well.


Renato Beninatto: 0:54:33

The only thing that I would add is that quality doesn’t matter. And clients don’t care about it. As long as we deliver on time, they will be happy and they will complain about quality after. The more sophisticated customers will have programs in place. There’s a lot of efforts. There are companies like Intento that are developing metrics and ways to automate the analysis of the quality. But at the end of the day all of these metrics are ways for us to skip a process of doing QA and quality control. This would be a topic of another webinar, a whole conversation about quality, machine translation, estimations, evaluations, and so on. But at the end of the day, if you’re delivering on time, the client should be happy at least for a few weeks until they feel quality was bad – I’m being a little funny here – but it’s pretty much what happens in reality.


Nika Allahverdi: 0:55:37

All right, thank you for that. We’ll take a few more questions here. Here’s the next question. “Recently Nimdzi has published a report about the Argentinian LSP landscape, which was very insightful. Are there any plans to publish a similar report specifically for Brazil or Latin America in general?”


Renato Beninatto: 0:55:57

Well, I had like five requests about the Brazilian market. Naturally I would have a lot of interest in doing that. However, the problem is that Argentinians, are much better. And look, it’s a Brazilian saying this and getting together and organizing and having associations and things going, and still today there is no Brazilian association of translation companies. But Abraches reached out to u,s and we’re going to look into organizing together with them a study of the Brazilian market. Other Latin American markets tend to be not that relevant from an international perspective. We see some increase in, in the presence of Peruvian companies and an attempt of Colombian companies to come online. But the reality is that it’s still a very local or locally-driven small markets with the exception of of Brazil naturally. And in Argentina, the local market is also very small. Most of the revenue of the companies in the ranking that we published are exporting services to Europe. And the United States.


Nika Allahverdi: 0:57:12

All right, here’s the next question. This one’s for Sarah: “Hello Sarah. Thank you for this very interesting presentation. I would like to know what makes you say that machine interpreting will die as quickly as it appeared?”


Sarah Hickey: 0:57:26

Okay, that’s a good question because I think this is misunderstanding of what I said, because I don’t believe that machine interpreting will die or disappear. This was specifically related to the handheld gadgets like this gadget trend that I was talking about in Japan right now, because when it comes to – yeah, and in China as well. Exactly. So overall we’ve actually seen a lot of advancement in machine interpreting, and I’m excited to see what comes next. Some of it has really surprised me, so I actually believe that that will stick around. But that was related more to the gadget trend, whereas all these little handheld devices and everyone is bringing out the next one and the next one and we’ve tested some that they weren’t that great. So I feel like that’s a bit of a boom right now, or that’ll disappear again. Whereas the more serious machine interpreting softwares on the market, I expect that they will develop further.


Nika Allahverdi: 0:58:25

All right. Let’s maybe take one more in this webinar. “What’s your prediction on the industry events market for 2020, 2021 and 2022? Will we see the same type of events once the crisis is over?”


Sarah Hickey: 0:58:43

Good question. I guess that’s speculation at this point – because we also don’t know if when the virus goes, if they’ll come back, and how often, and how things will look in the future. My personal guess would be that I hope those events will come back because I love those events and I was very sad when lots of them got canceled, but I can’t say, I hope so!


Renato Beninatto: 0:59:05

Yeah, I think that they will come back because we all miss – we are all gregarious people, and we like to exchange experiences and meet whenever we can. It might take a while, and it might take a different shape. It might be different, but especially, I don’t know if we’re going to be able to get planes to go everywhere we want, anytime we want, but there is no doubt this is a pause and I think that in a couple of years, we will be all back to normal, maybe with some more creative things.


Nika Allahverdi: 0:59:49

Ok, thank you, Renato, and thank you Sarah. We are out of time for more questions at this point, but we’ll try to do the best we can to address the questions in a follow- up email. So with that, I want to say thank you, and stay tuned for the email with the followups.


Renato Beninatto: 1:00:08

Thank you.


Sarah Hickey: 1:00:09

Thank you, everyone, for joining.



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