This post deals with and elaborates on some of the topics previously introduced with Hic et nunc, If I had a hammer, and Surviving the crap(s), and follows a long-established vision of the translation industry. Consistently with this vision, this post might be considered alarmist, in some ways even apocalyptic, while only a few will perhaps take it for what it is, the result of a disenchanted, disillusioned, realistic approach, with the sole purpose of alerting about the risk of pretending, of closing the eyes and ignoring facts.
As his daughter recalled, Walt Disney was used to say, “When things are going good I’m afraid something’s going to crack under me any minute. A kick in the pants can be the best thing in the world for you.”
On the other hand, however accurate they may be, catastrophic forecasts are never trusted, as the story of Cassandra and the Trojan horse tells (and, more recently, climate change and global warming).
Therefore, it should come as no surprise that Edward Smith ignored all the six warnings of sea ice received the day before the RMS Titanic sunk and that he had been appointed to be in command of the ship as one of the world’s most experienced sea captains despite a recent trouble.
The RMS Titanic and the translation industry
In many traits, today’s translation industry resembles the RMS Titanic.
The musicians of the RMS Titanic kept on playing to calm the passengers, and all went down with the ship. Maybe this is where the legend comes from that some passengers were possibly dancing during sinking.
Just like the RMS Titanic was called unsinkable, the translation industry coryphaei keep singing their paeans telling that the industry has been growing steadily, well beyond the rate of any other industry, against and despite any crisis, that it will keep growing indefinitely, that machines will never take over, that human translators will always be necessary and irreplaceable, etc. True, not everyone follows the same scores and intones the same choirs, but this is trifling.
The sinking of the RMS Titanic resulted in the death of over 67% of the people on board. 54% of casualties were third-class passengers. Tragically, and somehow ironically, beyond having had to make their own fun during navigation, the greatest loss of lives that hit third-class passengers was due to three major causes: the lockage of deck gates, the distance from lifeboats, the inability of most people to understand English. It was perhaps no coincidence that Irish immigrants were disproportionately represented among the steerage passengers who survived.
As the RMS Titanic was called unsinkable, it only carried enough lifeboats for one third of its total capacity and about half the people on board, and crew and passengers were ill-prepared for an evacuation in case of sinking.
Similarly, most translation industry players have no exit strategy or contingency plan in place. Most businesses are run as if they were convenience stores, but without the hassles connected with foodstuffs, stocks, promissory notes, etc. In fact, business risks are close to zero as operational risks are shared with/dumped to vendors—who hopefully get paid when their customers get paid. At the same time, the capital required to start a translation business is negligible and strategic risks, especially those related to the introduction of technologies, can be absorbed quickly. This minimizes financial exposure and the need for loans, and the risk of foreclosure and the possibility of bankruptcy are in fact non-existent.
All that glitters is not all gold
The virtual absence of barriers to entry is balanced with the ease of exit. And yet, mostly for the very same reasons above, selling a translation business might prove really hard while exit benefit is derisory.
Another major issue for a translation business to stay afloat is growth. In fact, the growth of the translation industry over the last decade or more is usually presented as linear, steady and unceasing, but it is expressed with revenues only. If volumes or profits are taken into account, things might be greatly different. In fact, volumes have most definitely been growing way more than revenues, while profits might have been plunging. As any real industry ‘veteran’ with an ungarbled memory can tell, in the last twenty-five years, IT has made volumes increase by at least a 10x factor while productivity has, at most, tripled, prices have been undergoing an increasing pressure and compensations have remained, at best, unchanged, i.e. in real terms they have halved.
Therefore, although the demand for translation may be growing and will possibly keep growing in the coming years, revenues are definitely not the best metric to measure growth. And yet, the mantra of many acclaimed industry experts is all on sales. No one really knows how to sell, has the killer sale strategy, and can teach any universal selling technique, though. On the other hand, it could not be otherwise, or no one would have any reason to complain about how customers are hard to find and convince, about plunging prices, about technologies ruining the market and so on and so forth.
Also, a sustainable growth rate can be very hard to attain and maintain for the huge variety of customers. To meet the expectations and demands of very large, possibly high-tech customers, it is virtually impossible to dodge investing in technology, that could prove heavy for the usual cashflow, thus requiring to expand financial leverage or look for outside financing, i.e. loans. And this requires a clear strategy with well-defined financial frame conditions and limitations.
This partly explains why most translation businesses have no growth plan and maybe also the revival of the M&A frenzy: Organic growth is getting harder and harder, more and more investments are required to keep businesses profitable, and consolidation is the easiest way to grow and the only profitable exit strategy for small businesses struggling for not being ingurgitated and disappearing.
In the same way, it should not be surprising that consolidation occurs mostly at the top of the industry, as only a bunch of language companies have the financial leverage to invest in acquisitions and organic growth.
Don’t get fooled by the number of translation businesses starting out in the UK in 2018; we should wait and see the real impact of Brexit on them and how long any possible positive effects might last. Research conducted so far show inflation rose by 1.7% while the economic costs of Brexit are already 1.3% of GDP and are expected to grow to more than 2.1% of GDP by 2018. In this framework, the language service market in the UK might be a low-cost one. Maybe the first real zero-marginal-cost market, but who will pay for it?
Here is another analogy with the RMS Titanic where classes reflected social rank maybe more than wealth. Third-class tickets costed the equivalent to £ 700 for adult and £ 259 for children, for a five-day voyage, roughly one tenth of the average first-class fare. Although very simple and one-course only, third-class meals were succulent compared to what passengers might be familiar with on land. Affordable fares, then, comparable to very low entry barriers, with a window to an uncertain future, regardless of the sinking.
The consolidation wave
Mostly the same has been happening elsewhere, e.g. in France, with LBOs of language service companies. France is a very good example of how aggressive financial institutions have been taking advantage of QE-based ECB’s expansionary monetary policy.
Interestingly, in this case, consolidations are meant to allow larger companies to grow by buying out smaller ones, without increasing the overall market wealth, though. On the other hand, with no growth strategies and plans in place, small business would hardly grow. In fact, organic growth rates are typically modest in mature market, like the translation one(s).
Things may get worse as those industries that are traditionally more accustomed to language services will increasingly go for MT, especially for the most common language combinations, namely FIGS that still constitutes roughly 90% of the market.
Also, acquisitions mainly involve service companies. In fact, when acquiring a translation company, a buyer typically aims at its intangible assets, human resources, clients, technologies.
Unfortunately, translation industry players mostly share the same human resources, especially in niche language combinations. Also, a small or mid-sized company in the translation industry is a micro-company in nearly every other industry, so its client base might be interesting as long as it might provide a constant flow of assignments. As per technology, it is still one of the most important requirements for growth, but translation industry players generally fare fairly poor in terms of technological innovation and growth. Actually, the translation industry is still striving for technological innovation.
Also, translation technology companies are either directly or indirectly publicly funded or are verticals, meaning that they live on the licenses sold to other industry players, namely translation businesses and translation professionals.
In fact, in the last thirty years, i.e. since the dawn of the industry, all major technological innovations have come from outsiders, and today translation has become just another playfield for the usual tech giants. Just recently, Google announced that users can now use their own data to train Google’s NMT engine and improve its Translation API output. This will likely put pressure on MT providers, whose USP revolves around engine customization. Not surprisingly, some of the top translation industry players decided to partner with tech giants rather than investing in their own technologies.
The last three decades of the 20th century were very rewarding for highly specialized translators, especially for early starters who could offer their services to direct customers. The birth of the translation industry spurring the spate of intermediaries has produced an irreversible mutation that is still unfinished.
Quality is another perfect example of how the translation industry resembles the RMS Titanic, at least for the strict, as unassuming, compliance with outdated maritime safety regulations. Traditionally, quality has always been the life vest of the whole translation industry, a magical mystery word that instantly explains everything and forbids further questioning. While the sinking of the RMS Titanic resulted in substantial changes in maritime policy, though, translation quality evaluation models have essentially remained unchanged for centuries. In this respect, the definition of insanity formulated by Narcotics Anonymous in 1981 perfectly fits: repeating the same mistakes and expecting different results. Some insanity must indeed exist in the repetition compulsion with the same models that have proved largely inefficient and ineffective for centuries.
‘Deckchair rearrangers’ continue to rely on superseded, confusing and inefficient error-catching models that are hard to grasp, thus unreliable and frustrating for everyone, especially customers. When tangling with translation quality assessment articulating through error categories, weights, and stuff, and the actual impossibility of achieving a unique and clear evaluation, any customer who is not translation savvy gets frustrated and his/her mind goes to maturity and reliability of quality assurance and control procedures in the manufacturing industry, to first-choice, second-choice, flawed, and yet marketable products and discarded items. And the difference, for example, between first-choice and second-choice garment is clear and evident to most of them—a loose or twisted stitching, a stain, a rip, etc.
Translation is not likely to vanish; the translation industry is. At least this industry. And insisting in the same old path will not bring back the good old days. The same goes for those trombones that keep fostering outdated models or solutions that were not good for everyone even in the golden age.
So, ‘language lovers’ should better seek a career outside translation and interpreting. On the other hand, neither activity really has anything to do with languages (plural, generic).
Language lovers might devote themselves to studying languages, not literatures or translation. The wrong assumption that a linguist is also a translator will live forever, while the opposite is ill-fated and will die soon.
So, enjoy the music, dance your nights away, eat and love, pretending everything is going to be fine till the end of time. And keep hiring and paying ‘deckchair rearrangers’ to comfort you. Or stay close to the promenade and the lifeboats and prepare for the worst. As the wise man says, bankrupt comes in two ways. Gradually. Then, suddenly.
After all, the technological disruption that is just around the corner might also carry potential business opportunities, for language data brokers and many different kinds of assessors.