Economic historians generally agree that globalization began with the fall of the Berlin Wall in 1989 and the resulting acceleration of the free movement of capital, people and goods that started with the end of WWII.
The 1980’s was also the decade of the final unleash of market forces and the hallowing of trickle-down economics and also when the booming began of the tech explosion triggered with space programs that made it possible for new organizations to enter the global business scene.
Until then, translation had been a strictly local business-supporting trade. The translation sector—far from being a global industry, although it is not anything of such still today—consisted mostly of micro-businesses operating at a regional level, with enormously varying trading conditions, even between bordering areas.
Cutting Out the Middleman
Even then, intermediaries—i.e. translation agencies—played a major role, and even then, almost every day, translators complained about their intrusive presence and looked for a way to cut them out or at least to force them to pay more and faster. Indeed, at the time, it was much easier for freelancers to compete directly with local intermediaries, the main advertising vehicle being the yellow pages and the investment for a mid-size box being definitely within the reach of anyone. Aquarius came only in 1995 and ProZ.com in 1999, and both, unlike many other Craiglist-like websites, were unknown to most potential customers.
This cut-out-the-middleman approach persists still today. It has possibly gotten even stronger, based on the assumption that going direct is always better, faster, easier and, of course, cheaper.
Intermediaries should help reduce transaction costs, such as that of vetting and hiring resources, negotiating fees, and coordinating them; in other words, setting up and running a project, which is essentially what is in the ‘S’ of LSP. Of course, not all intermediaries are good in this respect. In fact, some are really miserable. Also, many intermediaries, especially the smaller ones, may have to endure relentless and ruthless pressures on price from ever-demanding customers, thus squeezing out profits from wherever they can. And, given their cumbersome and overhead-burdened processes, this means that vendors end paying for it.
So, when you hear some industry pundit saying that the first concern of translation buyers is quality, not price, never forget that everybody lies, so be wary and grin. It might also be true, as more and more often end customers receive substandard products and services, but this is just the effect of the Gresham’s Law they themselves have triggered.
The increasing demand for language services should in fact require a corresponding increase of budgets, which get, conversely, tighter and tighter. The resulting wars on prices see no winner, because a race to the bottom only makes customers unhappy with the products and services they receive and providers incapable of finding qualified resources who are increasingly often and reasonably opting for leaving the industry. Unfortunately, the replacements that universities should guarantee are at least insufficient and inadequate: Teachers are obsolete or have long quitted the profession and cannot transfer any actual, valuable or current real-life experience to their students. But, more importantly, translators education still not encompass any basic training in real project management, business administration, sales management, negotiation, and IT to have students develop the basic skills to navigate the industry ocean, at least by sailing on sight and orientating with the stars or possibly with GPS. What is worse is that these teachers, focused as they are only on their academic careers, on protecting their rent, end up taking no interest in the future of their students, who, incidentally, are the one and only base for their careers.
A Downward Spiral
The ultimate effect is that LSPs cannot but use poorly trained—and relatively inexpensive—people, just to avoid the heavy burden of training them themselves, rather than using the relevant resources to compensate the plummeting profits and putting at risk their boats, sports cars, fancy shoes (however ugly), cellars and cigar stocks, or the budget for those social events that they keep pretending are industry events.
On the other hand, the same would-be ‘socialites’ attending those events keep vocalizing the need for better and greater attention to sales. As if procurement and sales, the two faces of the same coin, had not been driving the industry since inception, thus making pricing the major issue.
In fact, selling translation is a hard job, extremely hard in certain markets. In an industry where competition has always been based on price, lowering prices is the easiest way to win a customer and beat the competition, but it always leads to a downward spiral. Also, as long as industry players cannot find a way to reduce overhead, enhance process efficiency and effectiveness and increase productivity to improve competitiveness, they will not foster a positive perception in customers and stimulate demand.
All this explains, at least partially, the obsession for measuring revenues instead of profits and the erratic but uninterrupted M&A frenzy.
M&A in the Path to Growth
Recently, during a public interview, Nobel-Prize-winning economist Joseph Stiglitz reminded that the first reason for acquisitions is to get rid of rivals. The second reason is growth, especially when organic growth proves no longer possible for market limitations or insufficient sales. The optimization of resources with the consequent cutback of overhead comes much later, strange as it may seem, together with the lightening of the tax burden through the acquisition of loss-making companies.
It may be true that, in most companies, many executives and managers have a misled idea of how to run the international side of their companies’ business, but it is also true that most LSPs cannot build a comprehensive case for language services when meeting a manager or even an executive who seems to understand that translation must be part of a general strategy involving customer experience and support, training and marketing, etc. These people would most possibly like to do it right, but they cannot find an adequate response from those who should provide them with guidance.
A Feeble Perception of a Pathetic Outlook
Therefore, it should come as no surprise why translation is still not taken seriously, but, to provide further evidence, if necessary, a recent job posting came from the “company that seeks to be Earth’s most customer-centric company” looking for an experienced Senior Localization Manager to mature and scale its localization capabilities, and ultimately to bring customers the right experience in their native language, defining and deploying mechanisms to raise the bar on the localized experiences, serving as a liaison between customers, the global and international product/tech organizations, and external vendors. That’s because the company “is fascinated by cultures, languages, and how they impact buying and selling”. Hopefully, the new hire is going to be adequately remunerated to tackle all those challenges. Hopefully…
Another hunch come or should come from the many articles comparing MT to Star Trek’s Universal Translators, where everyone seems to forget that the series is set in the 23rd century and that no one in it ever gives any hint about when the device in question was developed and successfully deployed. Also, as usual in the typical US-centric approach of filmmakers, everyone from the fleet speaks English, and only English, regardless of the planet of origin, sometimes even with an accent. Finally, given the technological capacity, it comes as no surprise that if starships can travel at light speed, with no consequences whatsoever for human beings, the Universal Translator can be regarded as a minor achievement. Of course, apparel should suggest some more thinking, but the suspension of disbelief is there to prevent any. And it is perfectly right: It’s fiction, isn’t it?
On the other hand, the recent, desperate and botched resort to MT, after decades of stubborn refusal, alongside with the proliferation of relevant market reports, testifies to the unreliability of players and the poor perception of the industry as a whole.
The AI Hype
Therefore, Arvind Narayanan’s question about why there is so much AI snake oil is quite rhetorical. At the same time, cunning LSPs are exploiting hype, and confusion, and slap an AI label on whatever they are selling as the solution to all problems, with a little help from credulous, when not accomplice, media and consulting firms.
This AI hype goes alongside with forecasts of full automation being around the corner. Of course, it is going to affect all jobs but translation-related ones.
On the contrary, AI experts estimate that Artificial General Intelligence is about 50 years away, even though experts tend historically to be wildly optimistic. Also, so far blue-collar and front-line service jobs have been those supposed to be in the greatest danger, being rote tasks for lower-wage, lower-education roles. Yet, a recent Brookings Institution analysis shows AI will instead greatly affect better-educated, higher-paid workers.
Back to Disintermediation
As with AI and human jobs, the main threat of disintermediation is in the loss of some services that intermediaries would provide, such as counseling for buyers and promotion for manufacturers.
Disintermediation is either buyer-driven or provider-driven. In the first case, it comes from a need for transparency, to escape information asymmetry. Buyers implement their own platforms and run their localization projects directly and in real time, through crowdsourcing, thus assessing costs and benefits in their actual value. When provider-driven, disintermediation occurs through a combination of solutions from different technology providers. Customers can access a portal to buy and run their projects directly, with the support of the LSP for staffing, if necessary.
However, the translation community is lagging terribly behind in a technology perspective and cannot see further than machine translation as a conceivable future, while the next big thing in translation might be aggregators.
The most interesting recent developments that LSPs could help with or exploit are respectively bots and payment services. For example, Revolut, Monzo, and N26 to name a few will most possibly open the road for new payment service providers and boost disintermediation.
This will not be enough, of course. Market transparency, in both the financial and business perspective, is pivotal for real disintermediation in the translation supply chain to allow customers to be aware of supply conditions (e.g. pricing) and find a viable and sound alternative to traditional channels.
Disintermediation would most possibly lead to another sharp drop of prices, but if translation should become a zero-marginal cost industry, it will no longer be interesting for anyone but the reckless champions of rampant capitalism and the gig economy.
The renewed M&A frenzy could lead to the formation of a small bunch of larger LSPs with a substantial mass, which will not even close, though, to the critical mass necessary to generate a global business impact. At least as long as they will predictably keep the same old model as ever. In fact, not to be displaced and reset by disintermediation and ‘utilityzation’ of translation services, LSPs should first be anticipating them, by reshaping the old business models and processes, rather than striving to integrate off-the-shelf tools into obsolete systems.
Disintermediation is increasingly going to be in the spotlight if, as SiriusDecisions reports in the State of B2B Content Study, 53% of organizations already have a centralized localization function. This refers, of course, to US, but this trend is on the rise and obviously contemplates cutting out the middlemen.
Today, anthropologists and primate experts agree that the use of tools was indeed one of the causes of the existence of our species, rather than a consequence. Of course, implements have changed since the development of the opposable thumb and, in a knowledge economy, they are quite different from bone maces or stone cleavers, scrapers, and hand-axes. And yet, when you hear or read of post-capitalism, be wary and grin again because 10,000 years after the end of stone age, the industry around the second oldest job in the world has not found yet any implement to uniquely, automatically and economically spot, assess, count, measure and fix mistakes, on a par with the other implements of its time, maybe because exposing a peer on pillory for making mistakes is still the favorite sport in translation.
Looking back, though, capitalism broadly found that to survive it had to lavish much of the new wealth on the laborers themselves, so maybe we are well beyond post-capitalism.