An emerging industry

Localization is slowly becoming an industry, showing all the signs of emergence, such as:

• the proliferation of uncoordinated professional bodies,
• the appearance of fragmented surveys,
• the development of early standards,
• the running of limited benchmarks,
• the definition of partial metrics,
• the consolidation of early players,
• the identification of areas for new investments,
• the coordination of localization-related training and development, and even
• an elementary level of worldwide competition.

An enviable industry

Localization has the rare privilege of still growing at a steady rate of well over 10% (probably closer to 30% a year), and is reaching a fair size. The overall software localization market is nearing $3 billion in 1998 and estimates suggest that it will reach $5bn to $6bn by the end of 2000.

Apart from the emergence of a large brokering network, this will certainly lead major consultants to start looking at this industry once they are over the humps of the Year 2000 bug and euro conversion. They will then have available resources to shift to promising new areas. The entrance of large players, such as EDS or the consulting firms from the big eight accounting companies, onto this market could shake out the industry and result in a completely different business and operations model.

Industry interests

Large investments have been made in creating long term relationships on both the client and the supplier side. This is an industry with an increasing level of loyalty, mostly coming from the software publisher side. For publishers, the fact that a given supplier knows its products and processes goes a long way to ensure predictable quality for the resulting product.

Due to this level of investment in relationships, and even if today’s business model is not yet mature, it would seem that dynamic evolution away from the existing situation is in both parties interests. Any revolutionary shake-out or conflict of interests would result in the need for sizable new investments in relationships with their associated learning curve and surprises.

The positive points about a shake-out will be the coming of critical mass: for credibility in addressing large customers, the access to new technology investments and the availability of management depth, which is not always perceived as a requirement in this technically driven field.

Strategies for dynamic evolution

The very dynamic IT industry provides the localization industry with most of its key requirements. In a nutshell, these are:

• simultaneous shipment and the ability to deliver the ever increasing number of products faster,
• increased consistency of product quality through new technology,
• transparency and open dialog on costs.

The strategies aimed at ensuring dynamic evolution have to address these requirements. I can think of several, including:

• providing the industry overall with better knowledge of best practices,
• ensuring on-going open exchanges between publishers (the clients) and localizers (the suppliers), and
• coordinating professional information in order to increase industry visibility among prospective clients.

Need for unified, solid professional representation

The strategies listed above, which are not exclusive, point to the need for a solid professional representation which is able to coordinate actions on a worldwide basis, at a low cost to the entire industry. There are many professional bodies involved in spreading the localization message today. Their motivations vary, ranging from the direct sale of their own services to the impartial and global development of the industry.

The net budget needed to run a professional body impartially representing the industry amounts to around $400,000. Any additional expenses are compensated by specific income from the paying services provided. Any increase in the net funding will result in an expanded portfolio of free services.

How many of these professional bodies can we afford? Let us assume a population of 200 to 300 potential paying members and an average annual fee of around $2,000 (including individuals and academics). We might estimate that potential fees could amount to between $400,000 and $600,000, thus resulting in the theoretical ability to afford only one professional body. Another important issue is how this structure could become focused on local or industry specific interests.

How to organize representation?

The existence of one professional body is compatible with specific attention being paid to local or industry-specific interests. The interesting facts about the localization industry are that:

• the line between demand and supply is forever changing and therefore an attention split along these lines is difficult,
• the geographic distribution shows major sources of services in the USA (West coast) and in Europe (Ireland), with secondary sources of services spread all over the world. This offers a potential split.
• the demand side is mostly concentrated around the IT software business.

The only clear partitioning of representation by “interest groups” is the geographical one. At present, it seems that chapters or interest groups should exist in both Silicon Valley and Ireland to cater to local interests, while still contributing to the worldwide development of the industry.

Conclusion

We have the privilege of leading this industry in a continued growth path. This will best happen with unified professional representation which allows local chapters to take care of specific interests while contributing to the worldwide expansion of the industry.

I suggest open dialog between all parties representing the industry in order to achieve a higher level of maturity in the professional representation we require. Any fragmentation of this representation will divide our energies and open the door to change that may result in disruption.