Why Globalize?

The Localization Industry Standards Association (LISA – www.lisa.org) and its members are committed to a positive approach to globalization. This means that its members focus on responding to local needs, languages and cultures to deliver a variety of high quality good and services, thus offering consumers around the world more choices and better quality. An examination of the revenues of just those 2006 Global Fortune 500 companies that LISA knows to be actively localizing their products or services yields annual total revenues of approximately $5.9 trillion (with profits of $365 billion). If only 10% of their total revenues are derived from international sales dependent upon localization (i.e., sales that would not have been made were products or services not localized), this means that $590 billion of their revenues would not have been achieved without localization. Their net 2006 profits would have been reduced to -$225 billion. For these companies, localization is not an option, it is an imperative. (Note that the portion of revenues from international markets estimated above is likely to be quite low. In 1998 David Brooks of Microsoft reported that:

In [Fiscal Year] 1998 more than 60% of Microsoft’s revenues came from markets outside of the United States. The majority of these revenues come from non-English speaking markets, and a key component of Microsoft’s international strategy has been to lead the industry in the delivery of localized products to these markets. In [Fiscal Year] 1998, Microsoft revenue from localized product exceeded $5 billion. Only five years ago, these figures were a fraction of what they are today, and as revenues have grown, so has Microsoft’s investment in localization.

With some LISA members’ international revenues hovering around 70%, it is clear that localization is a key component of their business strategies. Without localization, they could not maintain positions of world leadership.) Based on interviews with LISA members and other companies, globalization experts, and companies just beginning to engage in international business, LISA believes that industry size is only half of the picture, and that any complete view of the globalization industry needs to examine the revenues unlocked through globalization. In 2001, LISA members reported that, on average, they achieved $10 of additional revenue for every $1 spent on localization. Since that time, LISA members have almost universally reported 15–25% annual productivity increases on their localization spending. This means that today companies are receiving approximately $25 of additional revenue for every $1 spent on localization, placing the annual spending of the International Fortune 500 on globalization-related services at a minimum of approximately $24 billion. When other companies (as well as governmental bodies, NGOs, and non-profits) are added in, the market is even larger, and it continues to grow every time a new product, service or technology is created, or a language reaches “official status.”

To learn more about the business rationale and market opportunities behind globalization, download The Globalization Industry Primer.