CSA Research’s ongoing industry analysis shows that the language services sector has undergone a transformative shift. Over the past decade, the industry has grown consistently on a wave of demand for translation and interpreting services. However, a recent report by CSA Research shows a pause in the growth of these traditional language services outside the broader strategic requirements of global content and digital transformation.
Decline of Traditional Localization Can Deliver Major Gains for LSPs
LSP revenues declined from US$52.01 to US$51.85 billion from 2022 to 2023, an eventual occurrence that CSA Research forecast in 2020. By contrast, organizations are purchasing increasing amounts of services that use machine translation (MT) in some form and other automations to meet the growing demands of digital transformation to process ever bigger volumes and translate more languages onto ever more device types. This anticipated change signifies the beginning of what the market research firm defines as the "post-localization era."
In their report, "The Post-Localization Era," the market research firm delves deeply into the transition from traditional language services to a broader spectrum of international content services, marking the decline of human-driven translation and localization. In its place, CSA Research sees a more strategic approach centered around transforming global content for any language and use case. As enablers of global digital transformation, in-house localization teams take on a business-critical role, and capable LSPs working with them will reimagine themselves as Global Content Service Providers (GCSPs). The report synthesizes research conducted by CSA since 2017 when they identified the shift from LSPs to GCSPs during the firm's CEO Leadership Council Summit in Boston.
Adds Dr. Donald A. DePalma, Chief Research Officer at CSA Research, "Leaders of enterprise language services groups and LSP executives are facing a period of profound transformation and unprecedented change. This report and previous research will help them understand the evolving market dynamics that will force them to rethink their offerings and pivot away from the traditional business of simply translating or interpreting content from one language to another. It will guide them in refining their value proposition and services to support broader global enterprise digital transformation goals."
The Shift to the Post-Localization Era
CSA Research identifies 2023 as the year of "peak localization," marking the onset of the post-localization era dominated by global content services.
Three primary factors have contributed to the decline in traditional localization services and the shift to the new era:
- Improved natural language processing (NLP) quality, especially in neural MT and the promise of Generative AI, offering viable alternatives for low-risk scenarios
- MT services' competitive pricing, which, while attractive to buyers, has led to reduced revenues
- The inability of market expansion to counterbalance the shift in unit prices, with buyer concerns of a 2023 recession causing slowdowns, layoffs, and revised strategies
Guidance for a Period of Profound Transformation
This is a period of profound transformation for LSP executives and enterprise language service leaders. Future growth in the sector will stem from areas that transcend organizational boundaries, requiring LSPs to be technologically adept and deliver value across various functional areas. Translation and interpreting, enhanced with more NLP insight and by more powerful computers, will become core services for a wider range of international content operations.
As the language sector transitions to the post-localization era, all stakeholders, including enterprise localization teams, LSPs, technology developers, and freelancers, must adapt to the rapidly changing landscape. CSA Research's "The Post-Localization Era" provides clear recommendations and strategies to address the challenges and opportunities this shift presents.
For more information, visit csa-research.com.
About CSA Research
CSA Research, formerly Common Sense Advisory, is the leading independent market research company helping global companies profitably grow their global businesses and gain access to new markets and new customers. Its focus is to provide its clients with reliable market research and verified data to operationalize, benchmark, optimize, and innovate industry best practices in globalization, internationalization, localization, interpreting, and translation. http://www.csa-research.com | @CSA_Research