Economic Picture Brightens for GALA Members WorldwideMarch 21, 2011
GALA’s Member Pulse Survey, Q1 2011: The Economic Picture Brightens in the First Quarter
The last quarter of 2010 was truly a mixed bag. It was unclear whether growth would stick. In fact, in almost every area there was a flattening of the numbers, with anticipated growth and actual revenue growth stalling. Not so in the first quarter of 2011. Several of the major indicators in our quarterly economic survey of language service providers are pointing up again. This makes the overall economic picture much rosier than last quarter. Will 2011 be a solid year of growth for the language services industry?
Demand for Services and Products
For the first time since the end of 2008, more than 50 percent of respondents reported an increase in demand for their services (51 percent). Demand, having almost touched 50 percent in the second quarter of 2010, dipped in the third quarter last year and slightly recovered in the fourth quarter. Importantly, at the beginning of this year, there was also a clear drop in those who reported reduced demand: This figure went down to 26 percent, the lowest number since the beginning of 2009.
Figure 1: Responses to the survey question “In the last three months, have you noticed a difference in demand for your language services or language tools that you can attribute to the economy?”
Regionally, North American members continued to perform well, with 62 percent reporting increased demand. In Asia demand shot up: while only 33 percent of respondents reported an increase in demand in the previous quarter, 71 percent indicated such a rise in this quarter. Meanwhile, Europe had the most total respondents with decreased demand (36 percent); this was actually an increase over the previous quarter. South America had a strong reversal in demand with only 20 percent reporting a decrease (down from 38 percent), and 50 percent reporting an increase.
Optimism for the next three months grew substantially. For the first time since we began asking members about their anticipated growth, those who believed demand would decrease dipped below 10 percent (only 7 percent). That was a steep decline from 21 percent in the last quarter. Likewise, those respondents who anticipate an increase in demand ticked up sharply after declining in the past two quarters. Worldwide, 64 percent of GALA members responding to the survey expect growth in the upcoming quarter.
Figure 2: Responses to the survey question “What demand do you anticipate in the next three months compared to the last three months?”
Regionally the numbers were strong, with only European member companies anticipating some decline (11 percent expected ‘somewhat reduced’ demand). But even in Europe respondents expecting growth far outweigh others. That is especially true in Asia (where 86 percent planned on ‘somewhat increased’ demand), in the Middle East & Africa (where 100 percent anticipated growth), and in North America (where 77 percent expected growth).
Hiring and Layoffs
Hiring continued to track slightly higher. Globally hiring figures were up several percentage points from the previous quarter, with 58 percent of respondents reporting new staff (against 54 percent in the fourth quarter of 2010). As in the past quarter, hiring was strongest in North America, with 77 percent of responding member companies reporting hiring, which was on par with 75 percent in the fourth quarter. Asia also had a big jump in hiring, with 71 percent hiring, a 21 percentage point jump from the previous quarter.
Meanwhile, layoffs came back down. While last quarter 10 percent of respondents reported layoffs, this quarter that figure ticked down to 4 percent.
The report on revenue growth rounds out the good news from the first quarter. Last quarter revenues were depressed, with the first dip in revenues that has occurred in the past seven quarters. But this quarter there was a decisive shift upwards. Worldwide, 46 percent of respondents reported an increase in revenues, 35 percent reported no change, and 20 percent reported a decrease. While still below half, the number of respondents reporting an increase is the highest since we began asking this question almost two years ago. (Only 19 percent of respondents reported an increase in the second quarter of 2009). Likewise, the percentage of those experiencing a decline was at its lowest.
Responses to the survey question “In the last three months, my revenues have increased, decreased, or stayed the same.”
Regionally, South America and Asia shifted the most relative to last quarter. Only 10 percent in South America reported lesser revenues, down from 50 percent last quarter. The picture was similar in Asia, where 14 percent had a decrease in revenue, down 44 percentage points from last quarter. North America continued to have the strongest revenue numbers, with 62 percent reporting an increase. Hopefully next quarter we can report more than half of GALA members surveyed experiencing revenue growth.
The GALA quarterly economic survey is given to members each quarter. This quarter approximately 36 percent of our membership of 256 companies completed the survey.
Members may download the complete results at this link.