The COVID-19 pandemic has had an impact on almost all industries, and the translation and localization sector is no exception. Nevertheless, the worst-case scenarios anticipated by many industry representatives at the very beginning of the pandemic turned out to be highly exaggerated. For example, according to research company Nimdzi, while 2020 is generally considered to be a year that the whole world would rather forget, for the language industry, it may still be one to remember.
Periods of economic crisis can influence the translation and localization industry in two ways, since translation companies work with businesses from a variety of sectors. Some of these may experience explosive growth during a particular crisis, while others endure a serious recession. During the crisis caused by the COVID-19 pandemic a number of industries, such as tourism, aviation and HoReCa, found themselves in a critical situation. At the same time, the healthcare, pharmaceuticals, online learning and e-commerce sectors saw growth. Overall, the translation and localization industry has grown during 2020, despite the economic instability.
Let’s take a look at the data published by Nimdzi.
The authors of the 2021 Nimdzi 100 rating noticed that the 100 largest language services providers (LSPs) did see a slowdown in annual growth, which stood at 6.8% between 2019 and 2020 (as opposed to 11.5% for the previous period). The market was worth $55 billion in 2020 and is expected to reach $58.3 billion in 2021 and $73.6 billion by 2025.
Although there is a continuing trend toward consolidation, the industry remains very fragmented. The 100 largest translation companies in the world as listed by Nimdzi account for just 15% of language market players.
It is also worth noting that LSPs often provide not only linguistic, but also related services. For example, 71.5% of companies offer machine translation and post-editing services, 68.4% – subtitling, 61.4% – desktop publishing and graphic design, 58.2% – copywriting, transcreation, content creation and transcription, 54.4% – interpreting and dubbing, 46.2% – remote interpreting, and 41.1% – linguistic testing and quality control. Relatively “new” services provided by translation companies include cross-cultural marketing (offered by 15.2% companies), video production (13.9%), and publishing (8.9%).
The highest demand for translation and localization services comes from companies in the following sectors: information technologies and software (72% of companies), healthcare and pharmaceuticals (67.7%), finance and law (66.5%), marketing (63.4%), education and e-learning (62.7%), and manufacturing (61.5%). The results show that regulated industries still “manage” a significant part of the linguistic industry business, but it is clear that more and more companies from different sectors also need linguistic services.
Mergers and takeovers are still a frequent occurrence in the market, but now they increasingly have quite a different purpose. In the past, they were largely driven by a desire to expand a company’s geographical reach, range of services or presence in new tiers, but now they are mainly about competition between relatively large companies striving to attract new clients and retain their market positions.
Key industry trends include the development of a strong technological component within LSPs, an expansion of the services offered, a shift beyond exclusively linguistic services, and the growing popularity of remote video interpreting.
The effect of the pandemic on the localization industry cannot be ignored. Nimdzi’s data show that for 76.5% companies, the pandemic resulted in a transition to working from home. For 60.8% it led to a reduction or loss of existing business, and for 33.3%, to the suspension or termination of working relationships with clients. On the other hand, 28.4% grew their business and 27.5% managed to reduce costs.
Data published by the Translation Rating research agency sheds some light on the situation in the Russian market. The cumulative turnover of the largest Russian translation companies listed in the rating, which reviewed data on 91 companies, was 11 billion rubles. The crisis caused by the pandemic has had very little impact on the Russian translation and localization industry: revenues have remained stable and, by some estimates, even risen. This is mainly thanks to the successful materialization of deferred demand in the second half of 2020 and reduced expenditure on business travel, supporting office spaces and organizing events.
The key trends that have emerged in the Russian market share many similarities with those seen globally and include the development of proprietary products and technological solutions, further diversification of the translation business and the growing popularity of remote video interpreting. There has also been significant growth in translation volumes for the healthcare, pharmaceuticals, and games localization industries.
Translation companies are actively looking for opportunities to broaden their offer with non-linguistic services, such as international marketing and business consulting, copywriting, testing, graphic design, and more.
Overall, the impact of the pandemic on the Russian market is similar to the global situation. For example, almost all companies switched to working remotely at the height of the pandemic and still have not fully returned to offices. Moreover, 31% of the companies listed in the rating have downsized their teams and outsourced staff.
To sum up, it is evident that the industry has passed the test of the pandemic, showing its resilience and ability to adapt to new, challenging conditions and instantly identify new opportunities for development. We hope that this year, 2021, will be a favorable one for the industry, offering opportunities to bring to fruition the plans that had to be put off in 2020 and to breathe life into new products.