2020: A Year of Superlatives in the Language Industry
CSA Research recently released our list of the 100 largest LSPs and langtech providers, along with eight regional lists that add more than 80 firms. The rankings are based on our annual survey of more than 450 companies around the globe with revenue and business data supplied by the companies themselves and validated by their executives. Here’s a map of CSA Research’s 10 largest LSPs for 2021 – follow the lines to see the journeys of these companies over 17 years to their current positions. But keep in mind that there are another 176 service and tech providers in our lists and another 264 companies that shared in-depth data with us, each with its own voyage. The colored lines indicate LSPs that have been on the Top 10 list for 10 years or more.
In future posts and research, we’ll analyze the data from the 186 firms that made it to one of our rankings, and the more than 264 others that did not make the list. But for now let’s look at the 10 largest companies that illustrate major themes in the industry: consolidation, the use of money both possessed and borrowed, data for machine learning, global content, extended content value chains, geographic expansion, and a focus on sectors – such as e-commerce, technology, and life sciences – that prospered in 2020.
Companies up and down the industry are taking these actions with the goal of offering more scalable, capable services, regardless of the language. And multiple firms are intent on creating IPO-ready companies through organic growth and mergers to increase their market value.
Noteworthy Industry Events in 2020
Let’s move on to follow the money for better returns, scale, and meeting global language demand in a variety of places – and doing so with multinational companies:
- Biggest acquisition ever. RWS Holdings bought SDL, the biggest language sector purchase since Lionbridge more than doubled its size in 2005 by buying Bowne Global. Its combination with SDL puts RWS in the #1 spot, although TransPerfect is hot on RWS’s heels to regain the crown. As a publicly traded company, RWS can use its stock, free cash flow, and debt for M&A – an all-share transaction financed this acquisition. Further down our list, public company Straker Translations combined cash and shares to buy fellow New Zealander NZTC International.
- Most acquisitions in 2020. Keywords Studios was the most acquisitive company in our 2020 rankings, buying seven companies, including GNet, High Voltage Software, and Maverick Media to expand its overall marketing and development capability. Its M&A goal has been to acquire more services in support of the global gaming industry value chain. Also publicly traded, Keywords paid for its purchases with a mix of cash and shares.
- Biggest carve-out in years. Lionbridge sold it AI data unit to TELUS International for US$935 million in a 2020 deal that didn’t close until March 2021, so our list doesn’t yet reflect the 750 employees and more than US$200 million in revenue that shifted to TELUS’s balance sheet. This transaction underscores growth in the booming market for data and annotation – multilingual, text, voice, and image – that are used for machine learning. At least three of the 10 largest companies on our list – Appen, RWS, and Welocalize – as well as smaller firms like e2f and Pangeanic provide the rich data flow needed for both big and small AI.
This sale by Lionbridge to a company outside the language sector is the biggest carve-out since HPE spun off its ACG enterprise service unit in 2017 to form business process outsourcer DXC Technology in a partnership with CSC. TELUS paid the tab for Lionbridge’s AI unit with debt, stock, and private equity – private equity (PE) is always lurking at the threshold. This carve-out moves the data business from Lionbridge and puts it in the hands of a company, TELUS, that made its initial public offering in February 2021. It will compete with data-selling LSPs and other globalization-aware data companies to support machine learning for multiple media.
Non-Industry Factors Affecting LSPs
The language industry serves organizations across the entire spectrum of commercial, governmental, NGO, religious, and other human activities. That means it’s affected by economic phenomena around the world. Here are two drivers in 2020:
- Most money sloshing around. In 2019, Technicis rebranded as Acolad Group and bought nine companies – Cogen, Arancho Doc, and TextMaster among them. It more than doubled its size in 2020 with its purchase of Amplexor. To get there, its management bought out its main private equity backers with the founder’s family money and a smaller PE partner. These transactions underscore the fact that many deals rely on private equity money, but this was also a case of family fortune seeking a more profitable place to park money than a savings and loan.
PE investment happens up and down the lists, highlighting the global nature of the industry. In December, Summa Linguae – a Polish LSP that in 2018 had merged with India-based Mayflower – sold a majority stake to its V4C investment fund and acquired two companies in North America to enter the U.S. and Canadian markets.
- Biggest pivot. AMN Healthcare acquired Stratus Video in early 2020 to add its video remote interpreting capabilities and workforce to improve patient care – supporting domestic language needs is a business imperative in healthcare. It drew on a line of credit and cash to pay for the US$475 million transaction. Back in 2016, Teleperformance paid US$1.5 billion to the private equity owners of LanguageLine Solutions so it could add over-the-phone and remote interpreting in a similar bid to support its omnichannel customer experience business.
Along these lines, another remote interpreting company, Cloudbreak, recently became part of a healthcare company with the first SPAC in the language sector – that is, a special purpose acquisition company formed to raise capital for singular purpose of identifying private companies to give them access to public markets. We expect to see more SPACs as investors look for higher returns. Also on the horizon is the purchase and integration of spoken and written language services in a broader array of mainstream B2B and B2C services.
More Participation from Some Regions
Further down the list we find the langtech company most confident in its product – Japanese MT provider Rozetta made the gutsiest wager on its own product earlier this year when it banned employees from using any language other than Japanese because it says that its MT is good enough for doing business. We are always impressed by software vendors that take to heart the “eat your own dog food” philosophy. We’d also award Rozetta our MTV award for “Best video mission statement by an MT vendor,” which still resonates five years after its 2016 debut.
This year, many more Chinese companies participated in our study, largely due to adding a few thousand Chinese LSPs to our database and translating the survey into Chinese. That led us to conclude that “can’t read, won’t take the survey.”
But wait – there’s more. These bullets represent just the top of the list and there’s a lot more happening among the 186 companies in our sample and the hundreds more that participated but chose not to be ranked or weren’t quite there yet. Despite their size, they all manifest one or more of these themes of consolidation, the importance of data and annotation, global content rather than just localization, the need to diversify with more services, the mandate for geographic expansion, and a focus on growing verticals.
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