Sizing the Language Industry During a Pandemic
For the first time since 2005, CSA Research did not release our 2020 Global Market Study sizing and forecasts when we ranked the largest LSPs in the world in June. We just published “Sizing the Language Industry in 2020 and Beyond,” our comprehensive data-based guidance for 2020 through 2025.
Why did it take us so long? Look around you and note that you’re probably not sitting in a cubicle surrounded by dozens or hundreds of your colleagues. Instead, your office has been closed since March and you have grown accustomed to working at home along with a bunch of family members or flat-mates, new behaviors, and altered expectations. So have we. And way back in April we began observing fundamental changes in business behaviors and the uncertainty that came with the coronavirus.
By May we decided that it would be irresponsible to forecast the size of the language market until there was more certainty in behaviors and performance. Why? Good forecasts have a logic that ties them to facts – and the blunt reality of the first months of COVID-19 was that economists, epidemiologists, and forecasters were operating on terra incognita with little prior experience to guide them. That sent us looking for facts. We stepped back from the pandemic precipice and studied the language market, past and present, in the context of the world economy. We reviewed the historical record, conducted multiple periodic surveys of industry participants, interviewed many others, collected more data, and substantially revised our forecasting methodology.
Uncertainty Remains, But the Data Is More Solid
Although the northern hemisphere’s autumn return to lockdowns underscores the epidemiological and economic uncertainty, it seems that businesses and governments have achieved a certain rhythm of response. We feel confident with our model and the reliability and consistency of the data we’ve collected and scrutinized to describe three market size scenarios from the many that we ran rather than give just a single 2020 number – as we have for each of the last 15 years.
This year our analysis started from our 2019 baseline market size of US$49.6 billion. CSA Research's revised-for-2020 model factors in macroeconomic indicators from a variety of sources, three sets of surveys between April and September – of our list of 193 ranked LSPs, freelance linguists, LSPs in China, and enterprise buyers of language services – and data on the performance of localization purchases from various industries.
Our 2020 sizing report analyzes three scenarios from the dozens of models that we ran: 1) slow growth through 2025, reflecting doom and gloom scenarios; 2) GDP-comparable growth, closely tracking the estimates of multilateral organizations such as the IMF and the World Bank, with a growth spike in 2021 followed by slower growth; and 3) our GDP+ model that reflects the language sector’s historical tendency to outperform the general economy.
Our model factored in how different sized language service providers have traditionally fared compared to the overall market. And we ran what-if analyses for the full range of recovery shapes for recessions, including V, U, W, L, K, as well as the feared chainsaw (multiple downturns and recoveries). We also considered in the impact of the recovery by company size, geography, and vertical (some industries will recover much more slowly) – as well as contributing factors such as government intervention, demand driven by digital transformation, and the likelihood of LSPs to move from traditional to next-generation digital services.
Which Scenario Will Play Out for You?
Our guidance range does give reason for cautious optimism. It also provides advice on how likely our CSA Research analysts find the options and the range we expect the industry to fall into. We also describe how technology trends are likely to affect growth and why LSPs must prepare for the major changes and disruption that the COVID-19 pandemic has accelerated.
How well your organization does will depend on your own circumstances, but guidance on the overall performance of the market during the pandemic is one factor that will help you weather the current situation, strategize outcomes, and develop a plan to emerge stronger.
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