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Our Analysts' Insights

30Jun

Budget Cuts Versus the Four Rs

With no country’s economy able to predict accurately whether it’s entering a recession or cautiously rebounding, you might expect companies to be cutting back their translation and localization budgets. However, that doesn’t match our analysis based on virtual group meetings with Leadership Councils, interviews, and the results of a survey of 63 global enterprises in 19 countries that CSA Research conducted in mid-April 2020. 

At least for now, firms in sectors that have experienced less of a negative hit from the health emergency are instructing teams to renegotiate, reallocate, reprioritize, or redeploy funds – the four Rs – rather than cut them. Localization teams report receiving transfers from other budgets to run more localized marketing promotions, support large virtual events, and deliver additional languages.

How are localization teams approaching budget discussions?

Moving more content and services online is helping to break down language barriers and encourage more globalization. It’s also elevating budget and prioritization discussions with senior management by refocusing attention on options such as producing less source content and then shifting investment to delivering more high-quality content that is critical for local markets.

  • Localization managers deal with increased scrutiny, but experience no big cuts yet. Many firms anticipate an eventual slowdown that will impact budgets negatively enterprise-wide – especially as the pandemic drags on. However, this doesn’t mean that localization will necessarily be targeted specifically; rather, all teams might be asked to reprioritize based on a 20% decrease, for example. In the meantime, senior management is instructing all groups to be smart about their expenses, ensure that they’re using the right vendors, and prepare to tighten their belts in the not-too-distant future. 
     
  • They ramp up plans for increased automation. As hiring freezes continue and demand increases for interpreting and expanded language coverage, automation in the form of machine translation/interpreting and small AI projects will look more attractive to senior management. Localization teams are banking on this option to show that they know how to do much more with less. Companies report reevaluating MT – even for marketing content – as they review various options more granularly, language by language. There’s also less pushback now with more stringent budgeting – after all, “something is better than nothing.”
     
  • Language teams also step up to lead. Are product planners wrestling with which markets to add or delete? Is the events team overloaded with keynotes and videos to localize for an in-person conference that has all of a sudden morphed into a virtual online mega-production? Are engineers rapidly building algorithms and chatbots that will be monolingual? These scenarios represent opportunities for localization teams to take the lead in making decisions while collaborating with other teams to help them meet their international KPIs.
     
  • Groups gear up to produce remote-friendly content. This may take the form of overhauling support offerings to be self-serve or beefing up e-commerce options, as well as building the infrastructure for multilingual virtual events. Localization teams are enlisting and leading internal colleagues, language partners, and skilled third parties to smoothly deliver on these new requirements.

How are firms implementing the four R’s?

Depending on an organization’s vertical market and its corporate culture, there are several ways to reapportion localization budgets. Here are three of the most common approaches that we’ve documented since the beginning of the pandemic.

  • Scenario planning. Teams are anticipating cuts. Prepare budget scenarios based on various global expansion or pullback possibilities – before anyone requests them. Outline the potential impact to your brand, revenue potential, competitive positioning, and market share over the medium term based on any proposed cut or reallocation. The impact on local markets – especially if in-country offices or partners have scaled back or closed altogether – must be taken into account as firms reallocate people and budgets. Don’t take unnecessary risk – use the Global Revenue Forecaster™ from CSA Research to ensure that you and your executive team make decisions based on ROI calculations backed up by hard data.
     
  • Enterprise-wide holding patterns. Several firms report pivoting across the company to reallocate and implement holds, rather than cuts, to funding. This often involves back-up plans for projects, resourcing, and budgets – all the more reason to work out your negotiating strategy and budget reprioritization strategies before anyone requests your input.
     
  • (Temporary) budget transfers. Our recent survey results indicate that it’s not uncommon for localization teams to benefit from transfers from other groups. Though these transfers may not evolve into permanent allocations in the medium to long term, teams can still use them for funding projects that have been on hold or to extend coverage to new stakeholders, content categories, or languages. Some teams are negotiating with other departments to help bear the cost for new projects that were unforeseen prior to the pandemic.

How can you prepare for a four Rs discussion?

CSA Research recommends that you prepare for renegotiating your budget by considering the following issues:

  • Ask yourself some basic questions. What’s the current lay of the land? Are managers being instructed to cut / increase / not touch their budgets? How is the redeployment of funds being presented? As 1) a percentage across the board; 2) a list of people to furlough or lay off; 3) specific projects to be reviewed; 4) only a travel and hiring freeze; or 5) as other options?

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  • Perform a content audit. It can be a surgical one – don’t assume that such an audit always requires an in-depth review of all content enterprise-wide. Select the areas that are the most bloated, but valuable for local market consumption. You can accomplish this by Identifying the translation projects that are the most expensive or the most wordy. Employ tools such as mobile and website analytics to determine which content garners the most/least engagement. Your goals should include producing less content and code, while improving world-readiness. It’s also a chance to evolve the format of how you’re delivering content. For example, an audit may reveal that it’s time to switch more assets to multimedia delivery channels.
     
  • Prep executives to regard your funds as an investment they should review twice before cutting. Present the anticipated consequences of reductions in comparison to the investment required for future customers. If the company cuts US$500,000 now, what will be the impact to the brand, revenue potential, competitive positioning, and market share over the medium term? If there are opportunities to expand support, make sure that you’re adding the right code and content in the right languages.

Don’t reinvent the wheel. Contact CSA Research for data and benchmarking tools to help you prepare for budget negotiations, organize multilingual online events, or revamp your automation roadmap.

About the Author

Rebecca Ray

Rebecca Ray

Director of Buyers Service

Focuses on global digital transformation, enterprise globalization, localization maturity, social media, global product development, crowdsourcing, transcreation, and internationalization

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