Copyright © 2006 by Common Sense Advisory, Inc. All rights reserved.

Insight for global market leaders

A Review of the Global Translation Market Place

Renato Beninatto

COO and VP of Consulting

Common Sense Advisory, Inc.

C O M M O N S E N S E A D V I S O R Y, I N C.Copyright © 2006 by Common Sense Advisory, Inc.

Bona fides

20 years making mistakes in the translation businessLast 4 years spent gathering information I wish I had

and sharing it with people who don’t want to pay for itOver 1000 pages of published data about the

translation industryLots of unpublished dataAbsolute independence… to the point of losing

money because of it

C O M M O N S E N S E A D V I S O R Y, I N C.Copyright © 2006 by Common Sense Advisory, Inc.

Agenda

Market todayTrendsWhat doesn’t matter?

• Branding and qualityWhat clients really want

C O M M O N S E N S E A D V I S O R Y, I N C.Copyright © 2006 by Common Sense Advisory, Inc.

Market Data

87% of translation buyers outsource most or all of its jobs

≈ 5,000 companies with more than 5 employees– 42% U.S.– 41% Europe– 12% Asia– 5% R.O.W.

Outsourceable translation market in 2006 will reach USD 9.6 billion

We estimate market growth at 7.5% p.a.

Rank

Company HQ Country Revenue in US$M

Employees Offices Status

1 Lionbridge Technologies

US 405.0 4000 50 Public

2 L-3 US 372.3 n/a n/a Public

3 SDL International UK 142.9 1500 50 Public

4 TransPerfect/Translations

US 74.0 385 30 Private

5 RWS Group UK 66.4 332 8 Public

6 SDI Media Group US 65.0 200 23 Private

7 Xerox Global Services UK 60.0 200 4 Public

8 Euroscript s.a.r.l. LU 59.2 580 10 Private

9 STAR AG CH 52.0 790 35 Private

10 CLS Communication CH 38.6 280 14 Private

11 Logos Group IT 36.5 120 17 Private

12 LCJ EEIG DE/IT/BE/ES

26.5 159 8 Private

13 Moravia CZ 25.2 381 9 Private

14 Merrill Brink International

US 24.5 140 4 Private

15 McNeil Multilingual US 24.3 200 5 Private

16 Hewlett-Packard ACG FR 21.7 65 6 Public

17 Thebigword UK 21.0 108 7 Private

18 Welocalize US 20.5 104 5 Private

19 Skrivanek CZ 18.5 350 50 Private

20 VistaTEC IE 15.6 123 5 Private

TO

P 2

0 T

RA

NS

LA

TIO

N C

OM

PA

NIE

S

C O M M O N S E N S E A D V I S O R Y, I N C.Copyright © 2006 by Common Sense Advisory, Inc.

Which sectors are buying language services? Technology and medical top list

60.9%

46.6%

34.6%

33.4%

31.4%

27.7%

25.7%

13.4%

12.3%

11.1%

9.7%

9.1%

0% 10% 20% 30% 40% 50% 60% 70%

TechnologyMedical

Advertising and MarketingManufacturing

FinancialGovernment

LegalMulticultural or ethnic

TradeNon-governmental

AcademicMultilateral organizations

C O M M O N S E N S E A D V I S O R Y, I N C.Copyright © 2006 by Common Sense Advisory, Inc.

A couple of trends

C O M M O N S E N S E A D V I S O R Y, I N C.Copyright © 2006 by Common Sense Advisory, Inc.

1 – Mid-market heats up

Major acquisitions: Lionbridge, SDL, L-3Minor but important acquisitions in 2005

and early 2006:– Merrill of Brink – RWS of Eclipse– VistaTEC management buy-out– TransPerfect of Crimson, Epik and Architext– Transware of Global Sight– Welocalize of Connect Global and Transco– SDI Media of Studio– Coto of LingoSystems

C O M M O N S E N S E A D V I S O R Y, I N C.Copyright © 2006 by Common Sense Advisory, Inc.

• Localization as a managed service (LaMS)

• Technology is “free”

• Technology rules

• Service becomes cheaper with technology

2 – New Technologies and New Service Models

• Hybrid solutions – thebigword and Transware

• Focus on workflow

• Other hosted solutions - Lingotek

C O M M O N S E N S E A D V I S O R Y, I N C.Copyright © 2006 by Common Sense Advisory, Inc.

¿Donde están la calidad y el branding?

C O M M O N S E N S E A D V I S O R Y, I N C.Copyright © 2006 by Common Sense Advisory, Inc.

Quality: Translator certification important to 80% of LSPs

Useless3.0%

Not important16.9%

Important36.5%

Very important43.6%

C O M M O N S E N S E A D V I S O R Y, I N C.Copyright © 2006 by Common Sense Advisory, Inc.

Quality: Most LSPs have not sought ISO certification

Yes12.0%

No88.0%

C O M M O N S E N S E A D V I S O R Y, I N C.Copyright © 2006 by Common Sense Advisory, Inc.

Branding

– There is no brand if there is no brand awareness – Recent survey:

• 100 respondents – all buyers

• 289 companies mentioned

• Top 3: Lionbridge, SDL, and Moravia

– Translation has not had the Keynesian roll-up– Professional services tend to be balkanized

• Big accounting houses vs. many small ones

• Advertising

C O M M O N S E N S E A D V I S O R Y, I N C.Copyright © 2006 by Common Sense Advisory, Inc.

In the time it takes for a typical student to graduate from college…

Who’s Who in Localization Services?

1. Berlitz2. Bowne3. L&H4. Lionbridge5. ALPNET

2005

1. Lionbridge2. L-33. SDL4. TransPerfect5. RWS

2010

C O M M O N S E N S E A D V I S O R Y, I N C.Copyright © 2006 by Common Sense Advisory, Inc.

What do clients really want?

0% 10% 20% 30% 40% 50% 60% 70% 80%

Price

Perceived quality

Test or sample results

Previous relationship

References

Formal corporate criteria

Inherited

Other

Price Displaces Quality as the Main Criterion for Vendor SelectionQuestion: ”How do you choose your vendors/suppliers?” [multiple answers]Source: How to Avoid Getting Lost in Translation, Common Sense Advisory, Inc

C O M M O N S E N S E A D V I S O R Y, I N C.Copyright © 2006 by Common Sense Advisory, Inc.

Thank you.

Renato Beninattorenato@commonsenseadvisory.com+1.978.275.0500

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