(BOSTON) September 6, 2024 — The language services and technology industry, a sector long-driven by traditional human-powered translation and interpreting services, experienced a significant revenue decline in 2023. According to CSA Research's latest market sizing update, the industry generated $49.68 billion in 2023, a notable decrease from $52.01 billion in 2022. This 4.5% drop reflects the effects of inflation, economic instability, and the rise of generative AI, which continues to disrupt the industry.

However, despite this contraction, CSA Research maintains that the market holds substantial opportunities for those prepared to innovate and expand beyond traditional services. Language Service Providers (LSPs) are now being urged to pivot toward becoming Global Content Service Providers (GCSPs), offering enhanced value-added services that capitalize on the ever-growing volume of content generated globally in the post-localization era.

Inflation Erodes Revenue

Since 2021, inflation has had a pervasive effect on many industries, and the language services market is no exception. While businesses across sectors delayed spending, waiting for economic conditions to stabilize, the language services sector bore the brunt of these delays. Combined with high interest rates, enterprises have cut back on traditional services and postponed investment in localization technologies. As a result, the inflation-adjusted industry size for 2023 represents a 16.3% decline from its 2019 peak.

Generative AI Disrupts the Market  

Generative AI has further compounded this economic uncertainty. The rise of AI-first strategies at major enterprises, which include shifting language needs from human services to neural machine translation (NMT) and large language models (LLMs), has been a key driver in declining revenues from traditional services. While translation volumes have remained steady, prices per word have dropped, and demand for lower-cost services is rising. This trend has caused additional revenue loss as organizations reallocate their budgets toward AI-driven solutions that sit outside the traditional language service ecosystem.

Despite these pressures, generative AI also represents a significant growth opportunity for LSPs, provided they adapt quickly. Adds CSA Research analyst Dr. Arle Lommel, “Machine translation alone will not be enough to sustain the industry in the long run. Many LSPs that pivot solely toward MT may find themselves with stagnant or decreasing revenues unless they can offer services that incorporate both AI and human expertise, unlocking new value for their clients.”

A Shift to Value-Added Services

The ongoing downward spiral in traditional services has underscored the need for LSPs to redefine their value propositions. According to CSA Research, simply providing “high-quality translation and interpreting” is no longer a sustainable business model. Instead, companies need to focus on offering services that help enterprises achieve their broader international goals, whether that be through more sophisticated localization strategies, content management solutions, or global content service provision.

There remains a massive opportunity for LSPs to capture more of the global content market. Today, only a small fraction of the content produced daily is translated. Even if just 0.1% of all global content were deemed worth translating, this would represent an enormous potential revenue source. Meeting this demand will require innovation in how services are delivered, with LSPs integrating more deeply into content generation systems and using AI tools that augment, rather than replace, human linguists, an approach CSA Research calls “human at the core.”

Recommendations for LSPs and Buyers

The report concludes with several recommendations to guide LSPs and enterprise buyers as they navigate the changing landscape:

• For LSPs: The most pressing need for LSPs is to innovate by offering value-added services that go beyond traditional translation. As generative AI drives down the cost of basic translation, LSPs must redefine their value, focusing on what they enable for their clients rather than simply the quality of their translation services. Developing solutions that combine technology with human expertise will be essential to long-term success.
• For buyers of language services: Buyers of language services must recognize the pressures facing their LSPs and work closely with them to define the next generation of services. Technology alone will not solve the challenges of multilingual content delivery. Therefore, it is critical that enterprises collaborate with their providers to develop strategies that meet their needs in cost-effective, innovative ways.

Looking Ahead: A Sector in Transition

While the near-term outlook for the language services industry remains uncertain, CSA Research is optimistic about the potential for growth. The demand for multilingual content will only increase as global enterprises expand, and LSPs that can pivot to meet these needs with new offerings will be well-positioned to thrive.

Adds Lommel, “As the report highlights, the opportunity is huge. The future of the language services industry will depend on the ability of LSPs to innovate, collaborate with clients, and embrace technology while maintaining the human touch that adds crucial value to content creation and global communication.”

For more information on this market update, contact CSA Research at media@csa-research.com.

About CSA Research 

CSA Research is a leading independent market research firm that focuses on business practices, services, and technologies for translation, localization, and interpreting. Its research provides valuable insights to help global businesses and language service providers navigate the evolving landscape of multilingual content delivery.

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