Amid the tech slowdown of the past few years, the largest so-called "localization" firms have started adapting non-tech products for foreign markets and helping a range of corporations with services such as putting company policies and other content into local languages.
SDL International, for example, translates stockbroker reports from Morgan Stanley from English into many languages several times a week. Lionbridge Technologies, meanwhile, helps life sciences companies localize content such as clinical trial materials, Web content and packaging text.
The shift away from tech-product translation comes as a result of two divergent trends. First, localization firms need to find new streams of revenue and,, they are applying established skills for new customers.
Additionally, U.S. companies are expanding globally. Localization provider Bowne Global Solutions recently studied revenue trends at Fortune Global 500 corporations and found that 45 percent of sales came from international markets. Retail outlets are also increasingly hopping oceans.
"The demand for these types of services going forward is going to remain," said Kevin Bolen, director of marketing for Bowne Global Solutions, a Parsippany, N.J.-based unit of printing and business services company Bowne.
Research firm IDC expects "globalization services" to grow by 7.2 percent this year to $5.33 billion, according to analyst Alex Motsenigos. IDC defines globalization services to include software localization, content translation, interpretation, customization of computer translation applications and software internationalization. Software internationalization involves changing the underlying engineering of software code so the application can handle multiple languages.
The globalization services market should climb to $8.95 billion by 2007, IDC says. IDC's healthy growth estimates for this year and the next few years contrast with a meager 3 percent expansion from 2001 to 2002, when IDC says software localization spending actually declined.
Of course, there's still a need to prepare software for international markets. For example, aincludes enhanced support for creating versions in languages other than English, including languages that read text from right to left or from bottom to top. Still, additional work is needed to produce a localized version of the software.
Localization began as a cottage industry, sprouting up to help tech companies translate their products into other languages. The tech boom of the 1990s allowed localization providers to grow rapidly.
England-based SDL, for example, saw its revenue climb by about 40 percent per year in the 1990s, said Hedley Rees-Evans, the company's marketing director. In 1999, both SDL and Lionbridge went public.
In the past few years, the number of major localization players has shrunk to three due to consolidation. SDL bought a few companies, including Alpnet, and now has about 1,100 employees. Bowne Global Solutions has snapped up both Mendez and Berlitz Globalnet, and now boasts about 2,000 employees.
Waltham, Mass.-based Lionbridge, with about 1,100 employees, also has made some acquisitions, but it has mostly focused on testing companies. It bought VeriTest, a company that provides technology testing services such as comparing computer performance and assessing Web site usability. Lionbridge says its testing arm allows it to serve as a one-stop shop for companies with global product releases, since it can handle both quality assurance testing and software localization.
From products to services
Even so, Lionbridge's business mix is shifting rapidly away from products. Two years ago, 85 to 90 percent of the company's localization business came from handling technology products, with the remaining portion being content changes. Today, 30 to 40 percent of the localization business is in content.
In one recent contract, a global retail chain hired Lionbridge to help its workers create a consistent customer experience worldwide. Lionbridge is responsible for translating documents such as company policies, work rules and information about new products. Lionbridge also has clients in the automotive and financial services sectors.
"As you can imagine, language is very pervasive in all global business," said company spokeswoman Sara Buda. "And language is our business."
Although they're high-tech in origin, localization companies still rely on human translators either in-house or as contractors. That's because computer translation technologies have not improved to the point of providing consistent, high-quality translations, said Robin Lloyd, Lionbridge's vice president of marketing.
"They are not there yet," he said. "They don't replace a human native language translator."
IDC's Motsenigos said thatwill come to the market slowly, one language pair and domain at a time. But he said it has the potential to be a "disruptive technology." "The higher level of (machine translation) quality will allow higher levels of operational efficiency in localization firms, ultimately changing the pricing structure," he has written.
Already, localization companies use some technology that helps them get the job done. Translation memory, for example, allows a localization company to keep track of previously translated material, which can speed the process along.
The companies also face price competition from small outfits that may focus on translating into one language, or from people with personal ties to corporations. Companies continue to farm out work to such individuals, but are learning that a more sophisticated provider may be a wiser choice, said Rees-Evans.
"It's somebody's granny working above some shop in Nuremberg," he said. "Then they realize that there are actually economies of scale to be realized and questions of quality."
The bigger localization players have project management skills, and are in a position to simplify business for customers, Motsenigos said. "An SDL or Bowne can certainly step up to the plate and say, 'Let us integrate better with you. We'll assume responsibilities for some of your other vendors.'" Motsenigos said. "It's a better model at the end of the day."
Rees-Evans thinks the global debate over Iraq also may give his industry a boost. "People have become more sensitized to the fact that there are a lot of different cultures," he said. "And if you want to engage with them effectively, you need to speak their languages."