Supply market research tips for procurement professionals
If you’re a procurement professional responsible for sourcing Professional Services, Corporate Services or Marketing Services, there’s a good chance that you’ll get involved in sourcing language translation services sooner or later.
The industry has experienced significant growth over the past few decades, fuelled by globalisation and enabled by technology. But, it’s a supply market with its own quirks and pitfalls. And it’s easy to get the wrong end of the stick if you don’t take the time to get to know the industry properly.
In this article, I share my top tips for researching the language services supply market in a focused, thorough, yet time-effective manner.
I’ve always had an affinity towards languages, and have even tried my hand as a freelance translator before starting my journey as a procurement professional. So, when I got the opportunity to lead a global procurement initiative to transform translation solutions for a global blue-chip organisation, it wasn’t just another sourcing project to me. It was a project I threw myself into with even more passion and interest than usual.
As a result, I spent considerable time researching the language services supply market and uncovered some deep insights, which I know will be helpful to you if you are planning to source these types of services.
Why language translation services matter
Globalisation is upon us like never before, and the world population is becoming more interconnected than ever. Language Services Providers (LSPs) are capitalising on these trends big time – and for good reason! Explosions in both global trade and digital content are the primary drivers for the sustained growth the language services industry has experienced for the last few decades. And the growth is showing no sign of easing off.
But, the LSP supply market can be complex and confusing for procurement professionals to navigate. The extent of the content explosion alone is hard to get your head around. 2.5 QUINTILLION bytes of data are being created every single day (that’s 2,500,000,000,000,000,000 bytes in figures). 90% of the world’s data has been created during the last 2 years alone. And, a sizable portion of that data is text and other content, which then needs to be translated.
Tip 1: Take the time to research the language services supply market properly
So, if you are part of a Professional Services, Corporate Services or Marketing Services procurement team, chances are that you will, sooner or later, be leading or supporting a translation sourcing project. This isn’t a service most procurement professionals are accustomed to buying and the supply market has its own characteristics, dynamics, opportunities and challenges.
For that reason, focusing extra time and attention on researching the supply market is imperative, if you want your sourcing project to truly succeed.
Here is an industry quirk that fascinates me. Did you know that consolidation in the LSP industry drives further industry fragmentation? What?! It sounds nonsensical and contradictory, but it’s nevertheless true. Here are the details of how that paradox works:
Except for the space that truly global LSPs play in, the barriers to entry are relatively low. At the smallest end of the scale, it takes little more than some language skill, a laptop and internet connectivity to set up a translation agency.
So, when LSPs merge, a number of disgruntled employees tend to resign (or get pushed out) only to set up their own translation agencies. When two entities merge, you could, therefore, have e.g., 5 new entities pop up shortly thereafter. That’s how industry fragmentation happens as a direct result of consolidation. The implication for procurement professionals is that it takes extra effort to stay on top of this ever-changing supply market.
Tip 2: Get clued up on the opportunities and limitations of translation technologies
The advancement of technology impacts all industries to varying degrees. For the language services industry the impact has been profound – and there’s more to come. Technology has made translators productive beyond what was imaginable only a decade ago.
These are the technologies you currently need to be clued up on:
- Nural Machine Translation
- Machine Translation
- Statistical Machine Translation
- Human-In-The-Loop
- Translations Memories
- Term Bases
- Machine Translation Post Editing
The above technologies represent a variety of opportunities for delivering enhanced quality quicker at lower total costs, but they each also have their limitations.
Tip 3: Don’t get hung up on the per word rate – it’s largely irrelevant
Costs are always of importance to us procurement professionals. But, the per word rate often provided by translation agencies is only one price element. There are so many other pricing components you need to be aware of.
So, when you obtain pricing information from suppliers, don’t forget about additional fees related to:
- Formatting
- Minimum volume
- Out-of-hours work
- Project management
- Proofreading and editing
- Transcreation
- Security clearance for translators
- Source language – when different from English
- Specialised content
- Urgency
Another reason why the per-word rate is not that important, is that the appropriate application of technology often generates much higher savings than what can be achieved by negotiating the per-word rate down. I’m not saying “don’t negotiate the per word rate”. I am saying that leveraging technology matters much more.
Tip 4: Understand what insights you should be looking for when doing your supply market research
You will want to be able to put together a convincing business case for your sourcing project and to gather enough information for putting the RFP documentation together. So, your research must give you a good view of:
- Key industry players and areas of specialisation
- Opportunities and limitations of translation technology
- How to ensure quality and the implications of failure to do so
- Industry and company growth
- Supplier financial performance vs industry financial performance
- Innovations in the translation space
- Key information to include in the RFP documentation
Tip 5: Save time by using the right resources when researching the language services supply market
There are many online resources you can use to research the language services supply market. The ones I would recommend as the first ports of call would be consultancies that follow the industry, such as Slator and Nimdzi. Both of these publish very informative content on their websites. Some of it is freely available, though some is behind a paywall.
If you don’t have a clue about Neural Machine Translation, this article called A Gentle Introduction to Neural Machine Translation is a good starting point. Annual reports of listed LSPs are also a wealth of information. Not that many LSPs are publicly listed, but the annual reports available don’t just provide information about the companies themselves, but also about the industry in general.
If you really want to save time, you could get someone else (i.e. me) to do the research for you for free. As a fellow procurement professional, I know that leading any sourcing project is a lot of work.
So, I’d like to give you a hand by sending you my language services industry insights and analyses absolutely free. I’ll send you one email every day for 7 days. In one week, you’ll be up to speed on the language services industry. By day 7 you will know:
- Who the key players are and how the supply market is segmented
- What Machine Translation, Nural Machine Translation and Human-In-The-Loop is all about, and what that means for Procurement
- Shocking examples of why quality matters
- The levels of profit LSPs make and how quickly some of these companies are growing
- Examples of the latest innovations
- What to include in your RFP documentation
Click to effortlessly get to know the language services industry in 7 days.
