Our Analysts' Insights

Two years ago, CSA Research determined that the language sector faced a perfect storm as industry players incrementally improved efficiency, innovated services and processes built on newer technology and streamlined practices, and confronted disruptive intrinsic and external changes that were transforming the market. These factors have converged to drive the sector as: 

• Language software changes how both language service providers and end-buyers manage business globalization. Augmented translation, neural machine translation, automated content enrichment, and lights-out project management benefit from mainstream information technology such as big data and artificial intelligence.
   
• Consolidation of suppliers proceeds. M&A activity is happening up and down CSA Research's list of the 100 largest companies – for verticals, intellectual capital and staff, and cross-border purchases that give LSPs sales and production footholds around the planet. As we predicted, aggressive acquirers led to the scarcity of desirable providers in verticals such as life sciences.
   
• Investors seek profitable opportunities in the language sector, with private equity groups(PEGs) acquiring leading suppliers over the last two years. We count at least nine PEGs with major holdings in our list of the largest 100 suppliers.
   
• Demand for language services has grown on multiple fronts, with requirements for new content types, on-demand services, platforms ranging from mobile to the Internet of Things, and pervasive spoken-language support.

How have these four forces affected the market for outsourced language services and technology? CSA Research just concluded its 13th consecutive comprehensive primary research of the sector, this year published as “The Language Services Market: 2017,” “Who’s Who in Language Services and Technology: 2017 Rankings,” and “Benchmarks for Language Service Providers.” First, the numbers: 

• The market continues to grow. The industry faces a gauntlet of challenges, but those are outweighed by an array of new opportunities. The sector will turn over US$43.08 billion in 2017, growing 6.97% over the previous year. Revenue grew for services ranging from translation to MT post-editing to on-site and over-the-phone interpreting.
   
• The activities of the 100 largest suppliers underscore a dynamic market. The five largest providers logged company-changing events in the last 18 months. There was some displacement among the 20 largest due to organic growth tied to new services and M&A. Two ties led to 102 companies qualifying for our annual list of the 100 largest, while 181 firms appeared on our nine regional lists. As a group, the top 100 grew an average of 11.46% in the last year. We saw stronger growth by companies in various tranches of our top 100, with some of those in the lower half of the list outpacing the pack with substantial gains.

The three reports complement these basic datapoints with 35 tables and 19 figures providing details on projected growth rates, global and regional breakdowns, the shape and size of the language services supply chain, the size of the market for individual language services and software, the impact of foreign exchange rates, and, of course, the rankings. 

In our analysis of this dataset and primary research from our other projects, we identified serious actions by the most ambitious LSPs to differentiate their offerings. They are branching out beyond language services to address the global content, marketing, and operational functions of enterprises. Their mission is to move higher in the automation chain with support for globalization, marketing communications, customer care, and the customer experience. Given their plan to deal with content in any form, both source and target, we coined the term “global content service providers” – or GCSPs – to describe this next generation of supplier that will help enterprises globalize their digital transformation. 

Why would enterprises rely on GCSPs to deliver these content management and enhancement functions? LSPs already handle massive volumes of business-critical content in multiple languages, from source to many targets. They manage technical information about how things work, adapt content as products are developed through clinical trials or advanced research, and deal with packaging, inserts, and marketing materials. If LSPs don’t move to this broader content play, they may find themselves outflanked by mainstream business process outsourcers, system integrators, consulting firms, and the professional services teams of large IT players. 

CSA Research’s quantitative and qualitative research with global enterprises demonstrate an increasing awareness of the competitive advantage of their content – and the daunting complexity of managing it across its life cycle, from source to all its target permutations. They need business process partners to help them identify, manage, and enhance the value of this content. GCSPs will ensure a continuing role for the most innovative LSPs in domains that will deliver much bigger total addressable markets than language per se. The full report describing the role of GCSPs – plus everything else about the market – is available as part of a research membership.