GALA's Member Pulse Survey Q2 2010
08 June 2010
The GALA quarterly survey on economic indicators has become a valuable tool for members to gauge overall industry trends and to measure their own business's metrics against those of peer companies. This was the ninth straight quarter that GALA has asked members to measure their growth in a number of key areas, allowing the association to create a picture of the broader economy's impact on the language and localization industry.
The impetus to create a quarterly economic snapshot for our members was the worldwide recession; when we began there was already a general downturn in North America. Since then, we have complied a wealth of quarterly data, and we will continue to use the questionnaire as an indicator of industry growth or decline.
Last quarter showed some growth globally, though it was quite tepid regionally, especially in Europe. The traditional economic measurements we use—increase in demand, revenue growth and hiring—continued to show mixed results, mirroring those same indicators in the broader business community. Certainly there was some recovery, but it was modest.
Approaching this quarter, we predicted that growth would pick up a bit more. Indeed, the survey results do finally show improvement in demand and revenue growth, but overall, the recovery continues at a slow pace.
This quarter there was a significant shift toward increased demand. For the first time since the end of 2008, significantly more respondents reported an increase in demand for language services or language tools in the last three months rather than a decrease in demand. In fact, just shy of 50 percent of respondents (49.5%) reported an increase in demand with the greatest upticks occurring in Asia (64%) and North America, where a full 75 percent saw better demand. Europe lagged behind with 46 percent reporting greater demand.
Figure 1: Actual demand in the last three months (worldwide) in response to, “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?”
Anticipated demand for the next three months continued to climb. Worldwide, 77 percent expect somewhat or greatly increased demand in the next six months. Members in South America were most optimistic, with 89 percent expecting an increase. Other regions were not far behind, but 25 percent in North America did sound a cautionary note that they may experience reduced demand, as did 16 percent in Europe and 9 percent in Asia.
Figure 2: LSPs’ anticipated demand in the next three months (worldwide) in response to, “What demand do you anticipate in the next three months compared to the last three months?”
Globally, hiring was consistent with last quarter’s numbers, with 51 percent bringing in new workers, but regionally there was a marked disparity. The biggest change was in Asia, where a full 73 percent of respondents reported new staff, up considerably from 50 percent last quarter (and close to the 80 percent who anticipated hiring in last quarter’s survey). But new hire numbers fell drastically in North America, down almost 30 percentage points (from 67 percent last quarter to 38 percent this quarter). Numbers were also down slightly in South America (44 percent compared to 50 percent last quarter), and Europe (48 percent rather than 52 percent last quarter).
However, those regional numbers should improve significantly next quarter. Three quarters of North American respondents expect to hire in the next quarter, as do 78 percent in South America, 64 percent in Asia and 56 percent in Europe. If those predictions prove accurate, the industry will start to approach the hiring numbers from two years ago (Q2 2008) when a staggering 78 percent of member respondents reported having expanded their workforces.
Probably the most significant change this quarter is in revenue growth. For the first time since 2008, the percentage of respondents reporting an increase in sales in the last three months outnumbered those who saw a decrease. A full 39 percent of respondents reported an increase in sales—more than double the number who did so one year ago. Meanwhile, 25 percent of respondents reported a decrease in revenues. While that number is still significant, it is much lower than one year ago when 54 percent had lower sales. Thirty-six percent of this quarter’s respondents indicated that revenues were more or less the same as the preceding quarter.
Hot Topics for GALA 2010 Prague
This quarter’s survey also featured a special topic focus on nine “Hot Topics” that impact language service providers and buyers. The questions were submitted by speakers presenting at the GALA 2010 conference in Prague. With topics ranging from internal resistance faced by client companies to management of localization budgets, the questions yielded interesting data that enriched speakers’ presentations at the conference. Of note, 41% of respondents reported that they have not tried machine translation. Also of interest, more than 30% of respondents report using LinkedIn as a tool to find prospective customers, to stay in touch with customers, and to market their company’s products and services.
The Q2 2010 survey was completed by 88 GALA member companies. Respondents were spread across all geographical regions with the most coming from Europe. GALA began conducting quarterly surveys of its members in 2008 in an attempt to expand the overall industry knowledge base, and it will continue to focus surveys on information useful to its member companies.
Members may download the complete results of the survey here.