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Examining an Unexamined Industry: Gauging the Business Confidence of Language Services

By: Don DePalma (Common Sense Advisory)

28 June 2005

Every day you can find mountains of information about the business performance of airlines, clothing imports, films, and cloning in the mainstream media. Every quarter you can read the summary of what happened in the preceding quarter and what industry participants think will happen in the next three to six months. Everyone waits for the business or consumer confidence numbers to determine how they should invest in their companies, in other firms, or in the economy in general.

But the language industry rarely rates a mention except for the daily use of the phrase “lost in translation” to headline some linguistic faux pas or tragedy of inappropriate language. Coverage in the business press is limited. Business or consumer confidence tends toward the anecdotal. Explaining the industry to non-participants, I frequently think about Socrates’ comment about personal introspection, paraphrasing it to “an unexamined industry is not worth investing in.”

We aim to change that – and we think that GALA, its members, and their customers and associates can help. We will have a brief report on the most recent surveys in each of the GALA newsletters.

Quarterly Surveys of Business Confidence
In July 2004 we began conducting quarterly surveys into business confidence of language industry service and technology suppliers, adopting a methodology created by the Organisation of Economic Co-operation and Development. In January 2005 we added a second survey to gauge the attitude of buyers of these services and tools.

What is important about this kind of survey is this: We are not looking for “precise information on levels of output, sales, investment or employment…,” but such surveys “can be used to predict changes in these aggregates and, for that reason, they are particularly useful for analyzing the business cycle” (OECD, "Business Tendency Surveys: A Handbook," 2003). As we conduct more such surveys over time, it will increase our ability to forecast changes in the market.

Executives at supply-side firms and on the buying side can use this insight about changes in the marketplace to make their own informed decisions. They can figure out whether they are alone in their ecstasy or misery. For example, Figure 1 plots demand for language services against vendor employment levels over the four surveys we have done thus far. Figure 2 shows business confidence and access to credit over that same period.

What We Ask in the Surveys
Each quarter we pose a standard set of a ten questions to vendors and buyers in separate surveys. Our in-house statistician crunches the numbers every quarter and we issue a report or Quick Take analyzing the results. Participants receive immediate access to the previous survey results when they complete the survey; we notify them of when the results of the survey they answered are available for download.

  • Demographic data. We ask for the survey respondent’s role in the company and where the company is located. This information lets us determine whether location affects any of the other data we collect.
  • Business tendencies. Here we look for information about what’s been happening with their business and what the respondents think will happen in the coming months. Specifically, we ask about the volume of translation and localization they saw (vendors) or required (buyers) for the past three months and the next three months. We inquire about the level of employment for that same period.
  • Business situation. Next we pose several questions about the business in general. We ask what factors limit their ability to improve business, how they would characterize the state of their business now and in six months, and how their companies’ financial situation looks.
  • Optional questions. So that we can get a more detailed view of the industry and its demand, we offer respondents several opt-in questions: how many people are in their company, their market sector (mainly for buyers), and the opportunity to become a regular member of our quarterly survey panel

Quarterly Updates Available to Participants
When we crunch the numbers, we see whether business confidence is up, down, or unchanged. We also compare the data we collect with other sources. For example, shortly after we completed our fourth-quarter 2004 surveys, the U.S. Department of Commerce issued its analysis of the business climate in the last three months of the year. Our finding that the demand for services dipped matched the Commerce Department’s finding that the general economy had dipped. E-mail me at [email protected] for a copy of that Quick Take.

For future surveys, we are considering the possibility of adding several opt-in questions to capture key performance metrics (KPMs) for the language services industry – things like revenue for translated words; product and service offerings by language; translation volumes by type (documentation, websites, etc.); staffing breakdowns; location and number of sales offices; location and number of production sites; and internal versus external staffing. If you’re interested in being part of the panel for this survey, please let me know. What we will do for this detailed information is limit distribution only to the panelists and to legitimate media outlets interested in covering the industry.

Finally, I ask you to respond to the supplier’s survey and to let your clients know about the buy-side survey. Visit our site – the surveys run every quarter, typically from the last few days of the quarter until the middle of the next month. It’s only through sharing experiences and information that we can formalize coverage of our the business.

Figure 1: Vendor View of Demand and Corresponding Employment During that Period Source: Common Sense Advisory, Inc.

Figure 2: Summary of Business Situation versus Financial Credit Availability Source: Common Sense Advisory, Inc.

Don DePalma is president of Common Sense Advisory, a research and consulting firm committed to improving the quality of international business and the efficiency of the online and offline operations that support it. You can reach him at [email protected].com or read more about this research at www.commonsenseadvisory.com/en/research/research.htm.