The Slator 2020 Indian Language Service Provider (LSP) survey was conducted by Slator in collaboration with Indias language industry association, CITLoB (Confederation of Interpreting, Translation and Localisation Businesses).
The survey was conducted between August 6, 2020 and September 3, 2020, eliciting 52 responses in total, and focused on business context, translation and localization customers, and market drivers.
Key findings were compiled by Slator. Commentary on key findings was provided by the following language industry professionals based in India:
The majority of survey respondents are from small LSPs, with revenues of less than USD 1m. Most have fewer than 10 employees. Some 2025% are slightly larger with a headcount of 1050 employees and are forecasting revenues of USD 18m in 2020.
Sandeep Nulkar, President of Indian language industry association, CITLoB, shared his thoughts on the typical size of LSPs in India: USD 1m converted into INR is a significant amount of money, he said. I would imagine that there will not be more than a few purely Indian and purely translation- and allied-service-centric LSPs doing that kind of revenue.
Many LSPs are based in Pune, Delhi, and Bangalore. Delhi is the top location for the clients of LSPs, 69% of which have clients based there.
The top two business challenges for Indian LSPs right now are sales / growth and the availability of suitable linguistic resources. A little more than half are seeing a decline in rates, while most believe that the dominant pricing model for written translation services will be hybrid by 2022.
CITLoBs Nulkar offered some advice for LSPs looking to increase sales and business growth: Prospecting and building sales funnels is an art, and one needs to hire professional sales people to do that. Most [small to mid-size] LSPs cannot afford it. If they form the majority of our respondents, then clearly they would say that sales and growth is a challenge; but then I would imagine that is from an inability-to-sell point of view rather than any fundamental issue with demand. My advice is just that. Leave selling to the experts. If you happen to be one and also run an LSP, fine. If not, accept it and hire the best you can within your budget. India has a huge workforce and a lot of hungry salespeople. You will find the right person if you are hungry enough.
My advice is leave selling to the experts. If you happen to be one and also run an LSP, fine. If not, accept it and hire the best you can within your budget. India has a huge workforce and a lot of hungry salespeople. You will find the right person if you are hungry enough Sandeep Nulkar, President, CITLoB; Founder, Chairman, and Managing Director, BITS Pvt Ltd
Looking beyond 2020, many LSPs have a very positive outlook for 2021. Most report little or no negative impact from Covid-19, while around a fifth said the negative impact from Covid-19 had been significant.
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Regarding most LSPs not seeing an impact on business as a result of Covid-19, Nulkar commented that all major players I know have been severely affected [by Covid]. He added that some LSPs may be in denial about the impact on their revenues. He offered another explanation: some LSPs may derive their business from very few sources, which were lucky enough not to be affected that much.
Several survey questions focused on the use of and attitudes toward machine translation (MT) and language technology.
MT integration is relatively not advanced among the LSPs represented in the survey. More than 20% have not started the process of integrating MT into their production workflow, and only a handful have fully-implemented and scalable MT capabilities. Most are early- to mid-integration, while nearly 20% have almost completed the journey. MT topped the list as the greatest external threat to Indian LSPs and the biggest industry megatrend.
Compared to the responses in Slators survey of 50 globally-located LSPs, published in May 2020, those in Slators Indian LSP survey show less advanced implementation of MT: the number of respondents in the global LSP survey who said MT was fully implemented and scalable in their production workflow was 2.5 times that of the Indian LSP survey.
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The area of AI / automation / technology closely follows MT as the second greatest external threat to LSPs. Meanwhile, popular megatrends for Indian LSPs include improvements in translation productivity products (CAT), advancements in language technology other than MT, and improvement in translation management products (TMS).
When it comes to translation productivity tools (CAT and TMS), more than three-quarters of Indian LSPs use third-party software. Notably, the majority only use third-party translation tools (with no proprietary technology).
The LSPs said they used 18 different third-party tools overall. By far the most popular third-party tool is SDL Trados, used by nearly 40% of LSPs. The next most popular tools cited by respondents included memoQ and Memsource, followed by Rian (a translation software provider based in India), Smartcat, and Wordfast.
Discussing the level of MT integration within Indian LSPs, CITLoBs Nulkar said, Again, it is a money issue. If your revenue is not significant enough, then your idea of MT is Google. Investing in MT is costly and especially in INR (Indian rupee) because generic engines wont work. You would need language pair- and domain-specific ones so that would be a lot of money if an LSP offers even a few language pairs.
He added: Whether [or not] it is a matter of time would depend on how MT companies are able to think wholesale prices specific to India. India is a price sensitive market even fancy cars sell at a fraction of their EU prices. Unless MT vendors are able to [offer] India pricing, they can forget about achieving scale. But if they do, I am sure they will make most of their money here.
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Nulkar characterized the general attitude of Indian LSPs toward MT as being one of suspicion: In their head it is equal to Google Translate and, therefore, equal to more work, although Google Translate is getting better even with some Indian languages. It was the same attitude when CAT tools arrived on the scene. CAT Tools [meant] I will now not get paid for everything. Its not a growth mindset.
When it comes to the widespread use of third-party translation technology among Indian LSPs, Nulkar, who is Founder, Chairman, and Managing Director of LSP BITS in addition to his role at CITLoB, said it was a question of cost, revenue, and prioritization. He cited his own company as an example: BITS built its own client relationship management (CRM) system and then used it for 10 years before deciding to switch to a third-party CRM.
Nulkar said this was because we wanted our IT team to build the Vernac platform (and earn us money), not service a CRM (and save us money); and because we were not rich enough as a company to do both. (Vernac is a crowdsourced translation and localization solution.) He added, For someone with even lesser revenue building their own tools, CRM or any other, it probably does not even cross their mind.
On the whole, interpreting is not big business for LSPs in India: nearly 90% derive less than 10% or none of their revenues from interpreting.
Other than the core services of translation and localization, LSPs also offer a range of non-core services, such as subtitling, voiceover / dubbing, language training / teaching, and transcription, which emerged as the most popular ancillary services.
The top ancillary services for LSPs broadly overlap with those that LSPs identify as offering the biggest growth opportunities: subtitling, AI-related services, voiceover / dubbing, MT-related services, and language training.
The LSPs represented in the survey are mainly multi-sector, working across an average of 5.3 end-customer verticals. The top customer segments for LSPs are Technology, which is serviced by nearly 80% of all LSPs; Professional Services, which includes sectors such as edutech, e-learning, market research, and legal; and Engineering & Manufacturing.
Sudeip Kummar, Founder at White Globe Pvt Ltd, said that the Indian market is not as evolved and mature compared to Asia, Europe, and the Americas. This means that, currently, customers give more importance to language skills compared to industry specialization and all LSPs work across multiple sectors, he added, predicting that specialization would happen as the market matures.
Currently, customers give more importance to language skills compared to industry specialization and all LSPs work across multiple sectors Sudeip Kummar, Founder at White Globe Pvt Ltd
Kummar also explained the importance of Indias technology and IT sector to the economy, saying that the IT Sector in India is renowned for its capabilities, has a multinational presence, [and makes] a large contribution to the national economy.
On the role of language services within the technology sector, he said, Most of these organizations need language support for their MNC customers across the globe; from sales support to delivery and post-sales. The headquarters are located in India and there is easier access for Indian LSPs. Most of the LSPs in India have a significant [revenue] share from this segment.
Madhu Sundaramurthy, Managing Director APAC for Summa Linguae Technologies, agreed with this assessment. She said, India is a hub for IT companies like Infosys, Accenture, Wipro, and Cognizant. These companies provide IT software and services to customers across the globe and translation is a part of [it]. This is why most LSPs in India work with IT and technology companies.
Commenting on the multi-sector nature of most LSPs, Sundaramurthy said, It is imperative that LSPs are ready to work in all domains, [because] technology companies work with different clients from different domains. Very few LSPs specialize in one domain like medical or pharma.
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A reflection of the diversity of serviced verticals, LSPs were divided on which segment represents the biggest opportunity for their business; although Life Sciences, Professional Services, Technology, and Media & Gaming emerged as the marginal frontrunners.
More than 50% of LSPs work across the Media, Finance, and Life Sciences segments; but less than 20% currently work in Gaming.
Only a third of LSPs said they subcontract from larger LSPs, indicating that most work directly with end-customers or other types of middlemen.
Sundaramurthy and Kummar both observed that subcontracting from larger LSPs is not very common in India. According to Sundaramurthy, In India, very few LSPs subcontract to smaller LSPs, but there are some LSPs that only work with other LSPs in India and outside.
Kummar confirmed that most LSPs work directly with clients. However, there are specific segments where LSPs also work with partners like marketing agencies, etc. He said some LSPs subcontract from larger LSPs, but this is not particularly prevalent.
LSPs mainly work with customers based across India and internationally. A fourth work with customers throughout India but not international customers, while relatively few primarily work with customers local to the region where they are based.
The biggest international market for Indian LSPs is Asia and then Europe, both of which are serviced by the majority of LSPs represented in the survey; 35% of LSPs work with customers based in North America.
White Globes Kummar said that the proportion of LSPs working for customers in North America is low primarily because of the lack of presence in international markets for most of the Indian LSPs.
However, he believes that, as the market matures in India and consolidation happens, a few of the leading players will definitely have a global presence. This will allow LSPs to increase the percentage of revenues and absolute amount they derive from these regions, Kummar said.
Sundaramurthy also commented on these findings, saying that Indian LSPs relative lack of a customer base in North America is connected with the IT and technology companies. She explained: Many international companies like Microsoft, Google, Adobe have offices in India and outsource work to Indian companies. So it may seem that we are working with only Asian clients but it is the APAC office of international clients.
Direct projects with clients in the US are bound to increase with all the mergers and acquisitions between Indian and international LSPs Madhu Sundaramurthy, Managing Director APAC for Summa Linguae Technologies
Like Kumamar, Sundaramurthy also believes that market consolidation will lead to LSPs working with more North American customers directly. He said, Direct projects with clients in the US are bound to increase with all the mergers and acquisitions between Indian and international LSPs.
More than two-thirds of LSPs pegged Hindi as the most important target language based on volumes requested. Out of Indias 22 official languages, 14 were not selected by any LSP as representing the biggest demand.
More than half the LSPs said there was significant growth in demand for Indian languages from both domestic and international customers. Another third said there was a slight increase from Indian customers, while 29% said there was a slight increase from international customers.
The biggest demand driver for LSPs is their clients desire to reach more end-customers or expand the business. As the second most populous country in the world after China, India is an attractive market for commerce and trade and, by localizing content into more Indian languages, companies can hope to reach a bigger audience and additional customers across the country.
Sunil Kulkarni, CEO of Fidel Softech Pvt Ltd, explained some of the factors driving LSPs end-customer interest in Indias economy: Within the huge population, there are multiple Indias with different economic criteria. So for companies, too, it becomes a sizable market for expansion with different price points and different products or services.
According to Kulkarni, India also serves as a testing ground and an export hub for other comparable markets: The same market is also useful for companies to sample or try out new product development and then launch it in similar emerging markets (e.g., Asean, Africa, or the Middle East).
Kulkarni cited the Nissan plant in Chennai, where hardly 10% is manufactured for the Indian market, with the rest being exported to the Middle Eastern and African markets. Hence India is not [only] being seen for its population, but also from a product development / R&D / logistics / labor perspective as well.
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LSPs also identify content creation and streaming platforms as important factors in driving demand from international customers, more so than from domestic customers. The same is true of the governments Make in India initiative, which is designed to attract foreign capital and encourage international companies to do business in India.
On a sector basis, LSPs believe e-learning to be the most important driver of demand for their services. More than 90% of respondents rated e-learning a four or five (out of five) in terms of importance for their business. E-commerce is the second most important sector-driver of demand.
On the lower end of the scale are the drivers of domestic fintech and regulatory changes, which were rated four or five by 60% of respondents. The sector drivers of big tech firms, domestic tech firms, OTT / streaming, and smartphone use emerged somewhere in the middle.
Several questions focused on the experiences of LSPs within specific sectors, and LSPs were asked to identify emerging trends in the sectors of e-commerce, OTT, and e-learning.
E-commerce: Many LSPs said that demand for e-commerce localization is increasing. LSPs also identify the following trends:
Fidel Techs Kulkarni said that e-commerce is indeed one of the biggest growth areas for LSPs: With the proliferation of smartphones and the cheapening of Internet data packages, rural and semi-urban area consumers also demand or expect equal services from their urban counterparts.
Given Indians multilingualism, delivering e-commerce for India means more than a hefty translation demand. It also requires companies to put in place a localized e-commerce experience. Kulkarni explained: E-commerce for such a diverse set of consumers means localizing of UI in local languages as well as usage of voice technologies for search, SEO-ing for a range of words as well as allowing searches in local languages on the website. This also means that the logistics and last-mile applications are also localized as the local delivery boy needs to identify the customer and the correct address.
E-commerce for such a diverse set of consumers means localizing of UI in local languages as well as usage of voice technologies for search, SEO-ing for a range of words as well as allowing searches in local languages on the website. This also means that the logistics and last-mile applications are also localized as the local delivery boy needs to identify the customer and the correct address Sunil Kulkarni, CEO of Fidel Softech Pvt Ltd
OTT: While more than half of LSPs service customers in the Media segment, just over a quarter of LSPs currently work with streaming services or OTT providers; 14% said Media is the top growth segment for their business.
Kulkarni said that some OTT platforms outsource content creation services to third-party companies, meaning that LSPs may receive work destined for OTT platforms via a middleman. He said, OTT streaming customers are offloading some parts of content creation (e.g., voiceover, subtitling, mobile app creation, or hosting infrastructure) to some media firms. In some cases, media companies are leasing their studios to OTT players and, hence, some contracts are seen through direct OTT players and some through media firms. The media customers include advertising agencies, voice studio firms, video and mobile technology firms.
Subtitling, dubbing, and voiceover are all important non-core services for LSPs, but their application is not strictly limited to OTT or streaming and Media customers. E-learning, the biggest sectoral demand driver for localization in India, also calls for audio-visual localization services.
E-learning: Most LSPs said that demand for e-learning localization is increasing. LSPs also made several specific observations, crediting growth to a variety of factors, such as Covid-19, online language learning, professional training, and higher education. Other trends identified in e-learning include its increasing prevalence in remote parts of India, the demand for more vernacular languages, and bite-sized learning.
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According to Kulkarni, a specific niche of e-learning, edutech, is surging in India. Edutech is seeing a huge growth, especially in these pandemic times. Explaining the opportunity for LSPs, he said edutech involves content development [and the] convergence of voice and video technologies as well. LSPs can forge partnerships or develop in-house capabilities in any or few of these areas to capture the market.
Kulkarni believes that there is a long-term opportunity for LSPs in this niche, resulting from ongoing development requirements as the amount of content and the size of the market increase.
Edutech is not only concerned with childhood education; it also includes adult education and training. For example, Kulkarni said, under the JanDhan scheme, the Indian government [enabled] marginalized people in society to open bank accounts. But then they needed to be taught about bank transfer or ATM usage and so on. Here, local language UI-based educational content for digital payments, fintech, or insurance were sought and huge opportunities were created.
Respondents are located throughout India, with the popular locations being Pune (18), Delhi (10), Bangalore (8), Chennai (5), and Mumbai (4). Two survey respondents said their businesses are located outside India, in Europe.
The vast majority of respondents hold a Masters degree or equivalent as their highest academic qualification (77%), while some hold an undergraduate degree or equivalent (17%).
Some 44% of respondents hold at least one academic qualification related to translation, interpreting or languages, while 56% have no language-related academic qualifications.
Respondents represent LSPs of various sizes. Around 60% work in an LSP with less than 10 employees; 21% work in an LSP with 1050 employees; 12% with 50200 employees; and 8% with more than 200 employees.
Of the 33 respondents who answered the question relating to company revenues, most work for a Boutique LSP, with annual revenues of USD 8m or less. More than 60% expect to generate less than USD 1m in 2020 a similar proportion to those who said they work in LSPs with less than 10 employees and another quarter expect 2020 revenues of USD 18m.
Respondents estimates on the size of their LSPs addressable market varied greatly, although the majority of respondents placed their addressable market size at less than USD 100m (82%).
More than half of all respondents said that unit rates were declining, while 38% said they were stable. Only 10% said they are seeing an increase in unit rates.
More than half of all respondents expect the dominant pricing model for written translation services to be Hybrid by 2022, while more than a third believe the Per word model will remain dominant.
Respondents identified accelerating progress in machine translation (MT) as the most important megatrend in the global language industry in 2020/1 (42%). The next most important megatrends were identified as improving translation productivity products (15%) and accelerating progress in language technologies other than MT (12%).
Interpretation is not a big business for survey respondents; nearly 90% said they do not do any interpreting or generate less than 10% of their business from interpretation.
Respondents were positive overall in terms of their outlook for the language industry for 2021. Nearly 90% felt very or somewhat positively about the future. A further 13% were neutral, but none were somewhat or very negative.
Most respondents reported no or minimal impact from Covid-19. More than 80% said the impact had been slight (in either direction) or nonexistent; 19% reported a significant negative impact, while no respondents reported a very positive impact. Most respondents said their gross margin target for 2020 is 1039% (61%).
Slator grouped respondents answers to this free-text question into categories to capture the nature of the threats identified. The most significant type of external threat for respondents was machine translation (MT), closely followed by a related category, that of AI / automation / technology.
Within the category of Competitive landscape, which emerged as the third biggest type of threat identified, respondents cited concerns such as undercutting of prices by competitors and new market entrants, the role of big tech in the language industry, and independent middlemen.
Price pressure and the availability of suitable resources were also identified as threats, although by significantly fewer respondents than the top three threats.
There were also a number of other threats identified by respondents that only received one mention (not displayed above). These included Covid-19, the increasing prevalence of English as a global language, and politically-motivated trade restrictions. A handful of respondents did not identify any external threats, while some provided multiple responses.
Respondents were invited to list their current top three business challenges. Slator then grouped respondents answers to this free-text question into categories to capture the nature of the challenges identified. The biggest challenge for respondents was related to sales and business growth, closely followed by the availability of suitable linguistic resources.
Price pressure, MT, and the challenge of educating or managing clients emerged as the third, fourth, and fifth biggest business challenges, respectively.
Outside of these five categories, respondents also said that people / talent management (17%), the competitive landscape (15%), and technology (12%) currently represented challenges to their business. Covid-19, deadlines, marketing, and remote working were each mentioned as challenges by 6% of respondents.
Nearly 60% of respondents exclusively use third-party TMS and CAT tools, while 17% use a mix of proprietary and third-party tools. A small percentage (7%) said that they only use proprietary language tools, while a further 17% said they use no TMS or CAT tools or did not provide a response.
Respondents were invited to specify which translation tools they use. By far, the most popular third-party tool for respondents is SDL Trados, used by 38% of all respondents. Other SDL products were used by 6% of respondents. The next most popular tools include memoQ (12%) and Memsource (10%). Rian, an India-based translation software, Smartcat, and Wordfast are used by 8%, 6%, and 6% of respondents, respectively. Meanwhile, 6% said they use non-translation specific tools (e.g., Odoo, ExaVault).
Relatively few respondents (5.8%) have completed the process of fully integrating machine translation (MT) into their production workflow. A greater number, more than 20%, have not started MT integration. A similar number (19.2%) have mostly completed the process of implementation (7/10 9/10), while 38% are mid-implementation (4/10 6/10). A further 15% are in the early stages of implementation (2/10 3/10).
Over time, one would expect the bar chart to trend to the right as companies currently reporting lower levels of integration progress toward higher levels of MT integration.
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The Translation and Localization Industry in India: Survey Results Released - Slator