Global language services industry trends

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Introduction

The global language services industry has long been on the rise, doubling its size over the last ten years.

One of the best-known surveys is the Annual Review of the Services and Technology Industry That Supports Translation, Localization and Interpreting published by CSA Research.

The 2018 Language Services Market Review reported a global market turnover of 47 billion USD, forecasting a further growth at high rates to reach 56 billion USD by 2021, growing 9.72 billion USD more by 2024 to reach 112.52 billion USD by 2026.

This growth rate represents a CAGR (compound annual growth rate) of 5.53% from 2019 to 2026.

This trend directly relates to the increasing demand for language services because of globalization, growing global e-commerce, increasing online and offline content volume, and the intensification of global trade.

Most of the translation agencies are small firms providing translation or interpreting services, whereas many of the larger language service providers (LSP) are considered “full-service” providers, offering not only translation and interpreting services but also specific services such as machine translation (MT), subtitling and dubbing, transcreation, localization, voice-over, desktop publishing (DTP), language technology tools development, language teaching, language consultancy, narration for video and audio content, and more.

With the help of the thriving R&D sector, the global language services industry sees a boost in language technology and software solutions, which translates into a healthy and growing industry. 

This leads to increased investment in technology as volumes increase, customers require lower prices and quicker turnaround times, so technology will play an important role in the years to come.

Specifically, the language services industry is experiencing a rising demand for localization of video and audio content, and the need of corporate organizations for conveying visual and audio content to their target audiences.

Also, the global language services industry undergoes a steady growth of the life sciences, legal and finance, as well as significant growth in media and gaming.

Life Sciences industry is seeing steady growth and profitability, and with an aging population and the rising life expectancy, public and private sectors need to invest heavily in the years to come. 

The main sectors by revenue are pharmaceuticals, medical devices, and biotechnology.

According to the market research and international consulting US company Nimdzi, the two main challenges language services companies will face as of 2020 are scalability and capability.

In 2020, growth figures for the language services industry by geographical distribution show similar trends for Europe and Asia (16.0% and 16.5% respectively), followed by North America (10%) and Australia and New Zealand (5.8%).

As Nimdzi recently stated, the language services industry growth has no end in sight and companies require insights to stay at the forefront.

Market size, sectors, and fragmentation

The language services market is fragmented, with the top 100 companies accounting for about 15% of industry revenue in 2019.

If we look into the main services, translation is the most dominant (36.2%), followed by localization (20.8%), interpreting (20.1%), transcreation (2.6%), and subtitling (2.1%).

In terms of revenue, 18.9% comes from Life Sciences, legal, finance, and patents, whereas 17.8% of the revenue came from media and entertainment, followed by IT and software with a 13.2%.

Regarding the top LSPs, Nimdzi identified 44.0% are European, 38.7% North American, 14.0% Asian, and 3.3% Australian and New Zealanders.

Location of the biggest LSPs
Global location of the biggest LSPs. Source: Nimdzi.com

If we look at where the money comes from, i.e. where the clients are, a survey conducted by Nimdzi showed that 54.3% of revenues come from Europe, 29.9% of customers are in North America, 10.6% in Asia, and 2.2% in Australia and New Zealand.

Booming media and game localization

With global estimated revenues of 522.2 billion USD in 2019, media and gaming industries are thriving, where the business will see a minimum annual growth of 8% according to Nimdzi.

The video game industry has taken over the global entertainment market boosted by a rapidly growing demand.

The gaming market spreads out onto three platforms: PC gaming, console gaming, and mobile gaming, but this last is gaining tremendous momentum in recent years.

However, these industries are facing important challenges derived from their fast-growing pace, which translates into a need for improved scalability and capacity. 

Over-the-top (OTT) companies’ revenues will surpass 200 billion USD in 2023, estimates show. 

This disrupting market has redefined the distribution operations of buyers, with an increased content offer to be localized.

Legal and finance: still a big niche

Despite the hype around media and gaming, legal and finance industries are still a big portion of the translation industry pie.

In 2019, the legal industry was a 925 billion USD market worldwide and is expected to exceed one trillion USD in 2021.

In Europe, Brexit does not just have a political impact but also affected the localization industry, and it is seen as an opportunity by some as it will lead to a temporary spike in document translation because of the many legal changes that will affect trade, work contracts, finance, etc.

The specific jargon used in the legal and financial sectors leads to high adoption of machine translation (MT), ensuring consistency with industry-specific terminology, lowering the costs and reducing turnaround times.

The United States accounts for about half of the revenues, followed by Europe with a quarter of revenues generated in this industry.

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