GALA's Member Pulse Survey, Fourth Quarter 2009
01 December 2009
For the seventh straight quarter, we asked GALA members about the economy and its impact on business, allowing the association to draw a picture of the effect the recession has had on the language and localization industry. We also asked members to give us insight into their satisfaction as members of the association, allowing us to make sure we are providing the value our members expect.
The Economic Picture
When we began tracking the impact of the recession on the industry in the second quarter of 2008, the economic downturn was not yet called a recession and was generally limited to North America. At that time, our members were growing significantly, sales were steady and outlooks were overwhelmingly positive. That view continued throughout 2008 and then took a dramatic turn down in the first quarter of this year. Overall, our surveys indicate that 2009 has been a very difficult year for the language services industry, but that 2010 will be a year of growth.
As in quarters past, we asked members, “Is your business directly impacted by the current global financial crisis?” This quarter the response was again affirmative with 72 percent of respondents reporting a direct impact This number continues to decrease ever so slightly—75 percent reported a direct impact in the third quarter compared to 78 percent in the second quarter.
Regionally the results were mixed. While the impact in Asia and South America continues to decrease (Asia: from a high of 85 percent in the second quarter, to 62 percent in the third quarter and 57 percent in the fourth quarter; South America from 67 percent in the second quarter, up to 80 percent in the third quarter and then down to 57 percent in the fourth quarter), the impact on members in Europe is just about the same as the third quarter (75 percent), and the impact is actually higher in North America (up three percentage points from the third quarter to 78 percent). Respondents from the Middle East and Africa have not seen a decrease in impact yet either, with all respondents from that region reporting that they continue to experience direct impact.
There was, however, a positive indicator in the demand for language services and tools. Despite almost half of respondents reporting reduced demand in the past three months, that number is significantly lower than the past two quarters (a 30 point drop from the peak in the second quarter and a 16 point drop from the third quarter). Meanwhile there was a significant jump in demand. A full 39 percent of respondents reported somewhat or greatly increased demand, more than double the number in the third quarter (18 percent) and more than four times greater than the second quarter (nine percent). Regionally, demand was up the most in South America (43 percent reported an increase) and the Middle East/Africa (75 percent increase), while North American respondents still report relatively low demand (78 percent reported somewhat reduced or greatly reduced demand).
All regions anticipate an increase in demand in the next three months. Worldwide, more than 65 percent expect somewhat or greatly increased demand. More than 70 percent of respondents from all regions except Europe expect an increase in demand. European respondents were a bit gloomier. Sixty-two percent expect an increase in demand, but a full 25 percent in that region expect reduced demand—much higher than any other region.
Layoffs do continue to plague the industry. Nineteen percent of respondents reported layoffs in the last three months. That number is up significantly from the third quarter when layoffs had dipped to 13 percent after reaching 18 percent in the second quarter.
Yet employment figures also show signs of improving. While 47 percent of respondents to last quarter’s survey said they planned to hire in the next three months, 55 percent of respondents this quarter said they actually did hire new workers. That is a steady increase from previous quarters this year. And employment growth in the next three months looks more positive with 58 percent of respondents planning to hire in the coming quarter. The most hiring is anticipated in Asia, with a full 93 percent of respondents reporting goals to bring on new workers. Hiring still is off from a year ago when a staggering 78 percent of member respondents reported expanding their workforce in the past year.
The most encouraging news from the survey was the enormous increase in optimism. Two quarters ago, 44 percent of respondents were optimistic about the next six to 12 months, and 41 percent were uncertain. Last quarter there was a shift toward optimism with 66 percent feeling optimistic. But this quarter that number is even more solid with 71 percent of respondents feeling positive about the future of the business.
GALA also surveyed the membership on their satisfaction with GALA as an association and the value of membership. Overall we received positive feedback on programs and activities, with ratings of “very satisfied” or “somewhat satisfied” in all of the programs that we listed. GALA programs that received particularly high ratings were GALA’s online presence and networking opportunities available through the association. In addition, 55 percent agreed that they have gained new business or met new business partners through GALA, and 78 percent agreed that they have had opportunities to discuss industry issues with their peers. This feedback, as well as other member comments published in the full survey results, provide GALA with valuable information regarding member wishes and association direction.
The fourth quarter survey was completed by 96 GALA member companies. Respondents were spread across all geographical regions with the most coming from Europe. The association began conducting quarterly surveys of its members last year in an attempt to increase the overall industry knowledge base, and it will continue to focus surveys on information our members want to know.