Recovery or Not? GALA Member Pulse Survey Q4 2010
06 December 2010
In the United States, there is much speculation that the recovery from the worldwide recession will be ‘jobless.’ That is, though companies are rebounding, they are not hiring at the same pace, and, in many cases, appear to be doing more with smaller staffs. While there was general optimism that numbers would improve at the end of this year, recent news has been mixed. In our quarterly economic survey of language companies, we also found a flattening in the recovery. While growth and optimism started to rise in the second quarter of this year, the last two quarters have been fairly flat. The story is a little of the same, and a little of the worse.
Demand for Services and Products
In general, demand for language services appears to be flat. In the last seven quarters, there was a steady increase in demand for services – from a paltry 9.5 percent reporting greater demand in the second quarter 2009, to 50 percent who reported an increase one year later, in second quarter 2010. However, growth since then has stagnated. In the third quarter only 42 percent reported an increase in demand; in this past quarter it crept up to 47 percent. Meanwhile, the reduction in demand also ticked up, from 27 percent to 29 percent.
Figure 1: “What demand do you anticipate in the next three months compared to the last three months?”
There was a notable discrepancy in demand by region. North American respondents far outpaced the other regions in demand over the last three months—the only region where more than half of the respondents reported an increase in requests for their products and services (69 percent). Companies in Asia and South America reported the lowest percentage of increased demand (33 percent and 38 percent respectively).
More troubling is the lack of optimism for the upcoming three months. Two quarters ago, more than 75 percent of respondents anticipated increased demand in the next three months (though the actual increase the following quarter did not meet those hopes). In fact, from the fourth quarter of 2008 to the second quarter of 2010, anticipated demand grew from 7.5 percent to a very bullish 77 percent. However, in the past two quarters, that number has decreased significantly worldwide across GALA member companies. In third quarter 2010, 68 percent anticipated an increase in demand; this quarter that number dipped to 54 percent.
Figure 2: 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 the numbers were mixed with South American respondents showing the most skepticism for upcoming demand (63 percent expecting reduced demand), and respondents from the Middle East/Africa and North American regions being decidedly more positive (80 percent and 62 percent anticipating an increase, respectively).
Hiring and Layoffs
Hiring continued to track slightly higher. Globally, hiring figures were up one percentage point from the previous quarter with 54 percent of respondents reporting new staff. But the regional differences were significant. Three quarters of all North American respondents hired, which continued a hiring spree that started in that region last quarter (68 percent reported hiring). However, only 54 percent of those in Europe reported hiring and only 50 percent in Asia. There was not any hiring reported in South America, but that may be due to employee growth in that region last quarter (68 percent).
Meanwhile, layoffs, which had dipped to six percent last quarter, ticked back up to 10 percent. Some comments from respondents indicated that the layoffs were not related to the economic situation. However, others mentioned that project managers were ‘not very busy,’ which may speak to how language services technology is playing a bigger role at LSPs and how some jobs may not return even as the economic situation improves. In fact, anticipated layoffs were also surprisingly high. In total, 11 percent of respondents expect to lay off workers in the next three months. No region is immune; layoffs are anticipated across the globe.
Revenue growth is, of course, another important economic measurement, and the picture painted by the respondents in this latest survey is not pretty. Last quarter we reported that, “Slowly but surely, the revenue trajectory is headed upward.” That upward trend ended this quarter. For the first time in seven quarters, there was a dip in the number of respondents reporting increased revenue (to 39 percent from 42 percent in third quarter), and the number of respondents indicating that revenues dropped grew to 26 percent (from 21 percent in the third quarter). However, a steady third of GALA member companies have reported that revenues have stayed the same throughout the year, indicating a certain consistency among a core of companies.
Figure 3: In the last three months, my revenues have increased, decreased, or stayed the same.
Interestingly, not a single respondent from North America reported a decline in revenue, but in Asia and in South America, the decrease in revenues far outpaced the reported increases. In Asia, 58 percent of respondents saw a decrease in revenues; in South America 50 percent reported less revenue. Throughout the metrics in this latest survey, the regions of South America and Asia seem to be struggling the most, but next quarter may show a different picture.
This feedback, as well as other member comments published in the full survey results, provides GALA with valuable information regarding member wishes and association direction.
The Q4 2010 survey was completed by 104 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 in 2008 in an attempt to increase the overall industry knowledge base, and it will continue to focus surveys on information our members want to know.
Members may download the complete results, including data segmented by region, at this link.