What is globalization?

Writing in Newsweek (January 29, 1999), Carla Power points out that "Globalization is a lot like sex: nearly everyone's doing it, but few can articulate what makes it work well."

An essentially similar, but more sober, view is taken by international professional services firm Deloitte Touche Tohmatsu (DTT) in its continuing study of globalization entitled The Innovative Leaders in Globalization Program.[1] DTT points out that there is "a lack of clarity in the current globalization lexicon that allows for manipulation of terms—every executive can argue that his or her company is truly global while competitors are not." However, this DTT program has managed to arrive at an initial definition of corporate globalization "as the process by which businesses create value by leveraging their resources and capabilities across borders."

This brings up an important point: it's not industries that are global, but companies. It may well be in a handful of cases that the number of leading companies in an industry is very small, and that the majority of these companies are global players (e.g. the automotive industry); here it could well be legitimate to use the term "global industry", but this is by no means the rule.

What is the "language industry"?

The language industry in this context refers to text translation, interpretation and the language-related components of localization. Some analysts also like to include "language technology" researchers and developers under the umbrella industry term. However, as an economic sector still largely composed of full-time or part-time self-employed individuals, the industry is fragmented, often to the point of atomization. The creation of international—far less global—standards is still in its infancy, and the only truly international body (apart from LISA)—FIT—does not appear to see itself as any sort of an "industry" body.

Is it global?

Hardly, judged by the standards outlined above. There are plumbers and taxi drivers in every country, but that doesn't mean that plumbing or the taxi business are global businesses. The same is true of the language industry: with hundreds of thousands of freelance translators (and interpreters), agencies and full-service companies scattered around the world, as well as technology researchers and developers in both the private and public sectors, the notional scope of the industry may be worldwide, but there is little or no sense of any form of homogeneity.

Despite this, there are still some language services vendors that operate internationally. Where do they fit in?

Although there are quite a few "straight" translation companies with cross-border operations, they tend to be restricted to specific regions and/or to particular market segments, for example sector-specific translations or mass-market, low-quality work.

However, there are two areas where the boundaries between translation and other value drivers are becomingly increasingly blurred: localization and technical documentation. In these (related) areas, mergers and acquisitions have seen the emergence of multinational groups of companies, mostly offering one-stop localization and multilingual documentation services.

Are they global players?

Not yet, at any rate. The extent to which these companies may succeed in becoming global depends largely on several factors; firstly, the level of sustainable demand on a global scale for their products and services; secondly, the ability of these companies to embrace an uncompromising shift towards "globality"—to globalize each and every aspect of their business, structures, management and resources, while tailoring their offerings to meet local requirements; thirdly, the degree to which their products and/or services have or will become commoditized; and fourthly, following on from this, their ability to minimize—or even eliminate—their dependence on vast numbers of outside contractors to actually produce many of their products and/or services.

Demand for language services of all kinds is booming across the world. Doesn't that favor these companies?

Not necessarily. The key issue here is whether these companies can—in the words of the DTT program—overcome "the historical structures, systems and perspectives that have become ingrained in the global ‘genetics' of a business."

Too often, international language services vendors like to give the impression that because they have offices in several—or even many—countries, linked by advanced communications systems, and because they are often coat-tailing the truly global players in a limited number of industries (e.g. IT, telecoms, automotive), they are themselves necessarily "global". Often, however, they fail to make the distinction between being truly global and simply being all over the place.

"Globality"? Sounds like yet another fatuous buzzword.

The term "globality" was coined—apparently with some reluctance—by Daniel Yergin, co-author of the globalization bestseller The Commanding Heights. Writing in Newsweek (February 3, 1999), he says that the aim "was not to coin a new buzzword for managementspeak. Rather it was to find some respite from a gnawing dissatisfaction with the word globalization… We were trying to convey… not a process, but the results of a process."

DTT's "Globalization Diagnostic" is a handy tool for corporate executives to assess the "globality" of their organization. Among the points on the globalization compass are:

• Global vision & strategy
• Global planning
• Global partnerships
• Local market development
• Global product organization
• Global innovative capacity
• Local responsiveness
• and many others.

Based on even this small subset, it should be quite evident—to localization industry insiders at least—that although their client multinationals may be well on the way to "globality", language service vendors often have a long way to go. In fact, a number of them have yet to progress past the global partnerships stage. This should not be read as a criticism—after all, it took the corporate giants that are today's real global players many decades to reach where they are today, and they're still evolving. But—behind the veil of adspeak and headline-hitting corporate presentations—the language services vendors have a long way to go.

Commoditization? What next—the "translation hamburger"?

Precisely that. But before we look at the "fast translation" business, let's take a step back and look at the market and its segmentation.

The two sectors already mentioned—localization and technical documentation—probably offer the best prospects for a language services vendor aiming to go global, because the rapidly maturing processes and workflows in these areas allow a high degree of consistent control over input, throughput and output. What this means is that the material to be processed is generally restricted in terms of vocabulary and style, and covers a defined subject area (input). This in turn enables maximum reusability of existing text components and terminologies, substantially reducing human intervention and the consequent error potential (throughput). Finally, the translated/localized product is produced in a defined output format.

But this is something any vendor can do. What are the particular advantages to the international services providers?

Firstly, economies of scale across all operating units in all countries, together with the ability to devise and implement binding international technical and quality standards. Secondly, these companies can then start developing a global process, human resources and product management culture to match their planned global operations. Taken together, these factors could go a long way towards meeting many of the criteria in DTT's "Globalization Diagnostic", for example:

• Global product organization
• Global operational effectiveness
• Global cost efficiency
• Global technology integration
• Global process integration.

In addition to language-related services, many international services providers are now moving up and down the value chain, offering services such as multilingual authoring and fulfillment. This sort of vertical diversification can only be implemented cost-effectively once a certain volume threshold has been reached. Again, this tends to favor the internationally operating vendors.

And the "translation burger"?

Apart from the vertical integration mentioned above, some of the services providers on the way to becoming global are starting to look at an area that has traditionally been the province of non-specialist freelances and the myriad of "envelope-switching" translation agencies: the mass market.

This segment of the translation market is characterized by low-grade documents containing a blend of general language and semi-specialized terminology. In effect, translation here has become a commodity—a good that is of similar price and quality, irrespective of the source. If the top end of the translation market is the equivalent of 3-star restaurants (often with several outlets), and the localization/technical documentation segment is dominated by high-class international hotel and catering chains, then the mass market is very much the linguistic equivalent of the ubiquitous fast food industry.

In the same way that the mass catering industry has come to be dominated by a number of global players, the technology spend by the international language services providers in recent years could enable them to introduce new techniques and processes to service the low end of the translation market. Many of these will be spin-offs from their research and development activities. Apart from standardized process management and technical integration, the key is likely to be held by advances in machine translation (MT).

The ability of semi-intelligent MT systems to deliver reasonably good translations at a knock-down price, coupled with the spread of Internet access as a standard consumer service, could prove to be a most attractive proposition to international/global vendors seeking to maximize capacity utilization and return on investment.

Meaning fast, affordable translations as a feature of everyday life?

Very likely. The translation product will be standardized, and will meet defined quality criteria known in advance to the customer. In other words, "What You Get is What You Pay For." Consumers will be able to order a translation in much the same way as they buy a hamburger at a drive-through outlet or order a pizza from a home-delivery service. You wouldn't want to subsist on them alone, but they are convenient, relatively cheap—and you know what you're getting every time.

And this is linked to globalization?

This is a two-way process. At the same time as globalizing language services providers will have to resort increasingly to technology to help deliver their products, advances in technology will, in turn, drive the move towards globalization.

What is happening to the translators?

Two things are happening. At the lower end of the market, non- or semi-specialized translators are beginning to face increasing competition from the language technologies deployed by the international vendors. Initially, they may benefit from the overall greater demand for translation services that is being triggered by the "fast translation" industry—even from the large international vendors themselves—but within a relatively short time, they will find themselves unable to compete on either price or delivery. With the globalizing vendors finding that technology is a satisfactory and cheaper substitute, many of these human translators simply won't be able to find remunerative work any longer.

This is one of the paradoxes of globalization—as demand for language services increases, the number of people involved in providing these services will actually fall. The globalization of parts of the language industry may benefit some of the companies involved—and by making translation an easily affordable retail product, it will certainly benefit consumers. However, there will also be an inevitable human toll among the ranks of freelance translators. Such a development is hardly likely to be welcomed in the translator community, and international service vendors offering mass market translation will have to tread very carefully to avoid a potentially damaging backlash, including calls for protectionist measures.

The impact of the globalization trends outlined above is likely to be felt less at the high end of the market, where the ability to manage growing volumes of highly specialized knowledge efficiently is increasingly viewed as a critical success factor. There will be some changes, certainly—the average service provider unit size will tend to rise as freelances merge to form formal partnerships or more informal joint ventures, and the trend towards larger segment-oriented vendors (either geographically or based around client industries) through both mergers and acquisitions and internal growth is also likely to continue.

With success at this end of the market increasingly driven by the ability to gather and process ever growing amounts of specialist expertise, the entry threshold is being steadily raised. By and large, the globalizing international vendors would have to radically restructure their organizations and processes to cope with the demands posed by this market. However, doing so would damage their ability to compete in the global markets for localization, technical documentation and consumer translations.

Won't translation technology make a difference?

Machine translation development seems to be cyclical, and by all accounts we are currently on the upside of a cycle. The combination of increased computing power and genuine advances in the technologies underlying MT are the factors that will drive the development of reasonable quality MT output for the consumer market, as outlined above.

However, we are still a long way off from the type of near-human quality MT for specialized, high-end translation currently being promoted by a number of software gurus. For example, Victor Zue of MIT's Computer Science Laboratory is quoted in the German daily newspaper Die Welt (February 4, 1999) as saying that machines will be able to translate as well as humans within ten years. This soundbite doesn't give any indication as to the sort of texts Mr. Zue is referring to, but it does echo comments made by Bob Kutnick, Chief Technology Officer at Lernout & Hauspie, at the LISA Forum in Madrid in the summer of 1998.
Nevertheless, language services providers working at the high end of the market will have to keep a close eye on developments in MT to avoid any unexpected shocks.

To sum up, the impact of globalization seems to be more far-reaching than might be the case at first sight. Is globalization relevant for the language industry? Most definitely—it is an irreversible process, but it is impossible to predict today the full extent of its consequences for the language industry. And is the language industry a relevant factor in globalization? That is something that only the language industry itself can decide. What is certainly the case is that certain sectors—in particular localization and multilingual technical documentation—are making the running. Other parts of the industry may be able to catch up with them, but others will be left behind to wither away.

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[1] Information on Deloitte Touche Tohmatsu's Innovative Leaders in Globalization Program is available online at http://www.deloitte.com/davos/global.html.