Business Confidence Survey Points to Continuing Growth in the Language Sector
In "The Language Services Market: 2017," CSA Research estimated that the language services and technology sector would turn over US$43 billion for the year, growing 6.97% over 2016. We also forecast that the market would continue its growth over the next four years, driven by increasing demands for multilingual information in written and spoken form, app and product localization, and emerging content services.
In November and December 2017, we checked the pulse of the market by surveying the CEOs of the 100 largest LSPs on CSA Research's list of global providers. In preparation for the annual Global Market Survey 2018, we asked those business leaders about their revenue growth and volume of client-side demand for the last two quarters of 2017 and for the year overall. We also probed their hiring plans for the past two quarters, for 2017, and for the first three months of 2018. While most LSPs were not able at the time of the survey to provide exact percentages for either business or legal reasons before they had closed their books for the year, the great majority had a positive outlook.
Our business confidence survey aggregates the input of 85 CEOs of the top 100 LSPs. Each question is tied to specific performance measures that indicate whether the market is growing in terms of revenue and volume, and if LSPs are responding to growth or declines with more or less hiring. In this post, we share top-level business confidence survey results to give an early indicator of how 2017 turned out for the largest providers in the space.
Revenue increased for most of the top 100. For the full 2017, 75% of respondents reported that their revenue was up over the preceding year. It was unchanged for 18% of the CEOs, and down for just 7% of them. The survey results also confirm the seasonality of the market – our research shows that a growing amount of revenue in successive quarters was back-loaded to the fourth quarter. In this survey, we found that revenue increased in the third quarter (Q3) for 65% of respondents, and for 73% in the fourth (Q4).
What the revenue data means: Most leading LSPs in our sample saw their revenue grow in 2017, a good indication that the market will continue its upward climb in 2018. These numbers are indicative of the overall market – 67% of our 2017 Global Market Survey sample, companies of all sizes, increased their revenue from 2016.
Demand for services continues to rise. For the full year, 80% of CEOs told us that the volume of work their companies did had increased, compared to 16% who reported that it had stayed the same. Just 3% of them experienced lower demand compared to the previous year. Seasonality was at play here as well, with 65% seeing growth in Q3 but spiking to 76% of respondents that saw increased growth in Q4.
What the growth in volume means: Our research shows continuing and growing demand for services and technology, in commercial, government, and non-governmental organization sectors. In this very competitive and often commoditized sector, successful LSPs must increase the volume of traditional services while creating new businesses involving content, voice, and technical services.
Employment does not march in lock step with revenue/demand growth. Companies have options besides hiring more people – improved technology and processes allow LSPs to scale to bigger volumes with the same number of employees. Thus, 59% of the sample said that employment was up for the year, unchanged at 25%, and down at 16%. Just as with revenue, employment shows quarterly seasonality in the last two quarters – 47% in Q3 and 57% in Q4.
What the change in employment numbers means: As we have long noted, language is a human-delivered service that is augmented by substantial amounts of technology and outsourcing that allow LSPs to expand capacity more rapidly than headcount. Our research has shown that automation allows LSPs to meet increasing demand without scaling human resources such as project managers in lockstep with volume growth. Planners carefully track technology trends, such as artificial intelligence, which help them automate repetitive tasks and re-distribute resources to activities where humans add distinct value to the process.
In summary, this business confidence survey provides insight into the current state of the industry in advance of our upcoming 2018 research. The lion's share of top 100 LSPs report that they did well in 2017. This is a leading indicator for the industry 2018 global market forecast, especially when we consider the explosive growth of multilingual content we witness in our research with the global 3000 enterprises and the emergence of global content service providers (GCSPs).
This survey gauged top CEO confidence in the language industry. Follow-on analysis will incorporate qualitative CEO input on plans and strategic issues, and data cuts and correlations by region, size, and related datapoints from CSA Research's annual market analysis.
Finally, keep an eye out for our 14th annual Global Market Survey. If you completed last year's survey, you will receive a personalized benchmark.
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