Language will soon be identified with blockbuster revenues.

A few weeks ago, the Loetschberg Tunnel opened in Switzerland, further easing interaction between the countries of the EU (European Union). While geography may no longer be a hurdle to overcome, language still presents a challenge to both government and business, not only in Europe, but around the globe. Critics argue that supporting multiple languages will only lead to an incoherent Tower of Babel; however, those with a longer view will recognize the opportunities. Language is commonly identified with nationality and culture. Going forward, it will be associated with blockbuster revenues.

Editor’s Note: Blockbuster usually refers to something, e.g., a book or a movie, which is a huge success and generates a lot of money.

The eleven most widely spoken languages worldwide are as follows, in order of priority by number of native speakers:

Mandarin Chinese, Hindi, Spanish, English, Bengali, Arabic, Portuguese, Russian, Japanese, German and French

Intuitively, companies can correlate potential markets to native speaker concentrations. What is not as obvious is the necessity for tailoring their content to specific populations. The opportunity for language services companies is to partner with content management (CM) companies, cutting overhead costs for both B2B (business-to-business) and B2C (business-to-consumer) companies looking to penetrate foreign markets.

CM applications + language tools = a solid ROI for companies entering new markets.

To understand the opportunity, language services companies must first understand that content management refers to software that builds, organizes, manages and stores collections of digital works in various mediums and formats. This umbrella covers content management, electronic records management, imaging, archiving, document management, digital or media asset management, and Web content management. Given this broad definition, language services companies have available a magnitude of opportunities across various content management applications.

Content management systems are important to organizations looking to reproduce and push information and marketing collateral to satellite offices, websites and departments. Content management products can save organizations from re-creating existing work, reduce the time spent searching for stored assets, improve customer interactions and serve as invaluable internal analysis tools. As more companies turn their focus to selling their products globally, they are forced to realize the expense of localizing content. However, if a typical CM system is combined with a translation/globalization tool, it can become a powerful solution with a solid ROI for companies entering new and lucrative markets.

E-commerce = a $7 trillion dollar market by 2007, supported by 1 billion Internet users.

If the idea of penetrating virgin markets is not enough to entice B2C or B2B companies to adopt these tools, the sheer size of the markets should be. The e-commerce market will grow to almost $7 trillion dollars by 2007, fueled by over a billion internet users. In 2004, Western Europeans spent $63 billion dollars, and the Chinese market contributed $45 billion dollars to the global total. Future growth will be buoyed by the trend of Internet users converting to buyers. Companies that do not tap into these consumers globally will miss out on an enormous opportunity.

Language services companies should target companies who need to manage their global brand.

In the B2C space, language services companies should target companies who need to manage their brand globally. The current worldwide B2C e-commerce market is estimated at roughly $300 billion dollars, but promises tremendous growth in the next three years. Maintaining a localized presence, processing both marketing materials and corporate content, and shortening turnaround times across markets and languages at a reduced cost will translate into tremendous selling advantages. A strong Go-To-Market offering will be a CM system that accesses a standardized glossary of commonly used terms, followed by translation services which will quality control the remaining unknown phrases. This workflow facilitates the rapid population of global websites and other communications materials with the correct language and context.

The potential for sales to non-English speakers in the U.S. alone = $13 billion.

The global market is sizeable, but the North American opportunity to localize content is just as significant. 17.9% of the U.S. population, or approximately 52 million people, do not speak English as their first language at home. Calculating the opportunity for market size, based on these numbers, the potential for sales to non-English speakers in the U.S. alone becomes a whopping $13 billion dollars. For U.S. companies that have not begun to attack international sales, creating content in other languages for their home market would be a wise place to begin a pilot of their globalization/translation efforts. The most common spoken languages in the U.S. are as follows (source: U.S. Census 2000):

Spanish, Chinese, French, German, Tagalog, Vietnamese, Italian, Korean, Russian, Polish and Arabic

While this list does not mirror the global language rankings, there is enough commonality to re-purpose a significant portion of the North American localized content abroad.

IDC estimates the value of online B2B commerce in 2005 to be approximately $2.2 trillion dollars.

An even greater opportunity exists for language services companies in the B2B space. IDC estimates the value of online B2B commerce in 2005 to be approximately $2.2 trillion dollars. This figure validates the growing importance of online international commerce to the overall global economy which, according to the CIA World Fact Book, is $55 trillion dollars. More simply stated, e-commerce accounts for 4% of current world commerce, reaching 12% by 2007. Interestingly, these numbers will not be achieved solely through the traditional large global players, but through a significant contribution by small- to mid-sized enterprises (SMEs).

The newly recognized clout of SMEs, coupled with the unrestrained reach of online commerce, hints at a potential for international growth previously restricted to organizations with "feet on the street" in foreign markets. With the ability to support the localization of web sites, forms, customer communications and other related content, even the smallest of organizations now has the opportunity to go global.

IDC has seen a great deal of interest in the purchasing of proven, out-of-the-box technologies by the SME sector recently, particularly in the content management sector. Several CM vendors are now selling to the department/workgroup level and are experiencing double-digit growth. This new focus is not a recent development, however, as most organizations do not standardize their CM systems across the enterprise.

The trend for CM systems to adhere to new XML standards also makes them easier to integrate with other systems. Language services companies would do well to adopt these standards, making their systems easy to integrate as well with the variety of CM systems that exist. Out-of-the-box technologies are essential in the SME market, and this ease-of-use also applies to any globalization/translation solution.

Language services companies should form alliances to generate as many CM deals as possible.

Being user friendly is also a critical requirement for language services and CM companies to recognize when planning their future sales strategy. SME buying patterns differ from those of their larger counterparts, and thus require new distribution channels, pricing and upfront education by the sales force. Additionally, while prospects may be interested in globalization/translation systems, the market is still in its early days. This means that this functionality is often considered as a nice-to-have feature, rather than as a mission critical function. For the near future, language services companies should consider forming several partnerships and alliances to generate as many content management deals as possible.

Additionally, when looking to partner with CM vendors, language services companies should consider developing vertical knowledge and terminology capabilities. Sectors such as banking, manufacturing and pharmaceuticals will require specific content to be translated on a recurring basis. Developing a deep understanding of industry-specific terms will become a differentiator for language services companies looking for CM partners. CM vendors with traction in vertical markets can promote their language services partners as a way of winning deals.

Language services companies must be willing to be part of larger and more integrated solutions.

Globalization and localization/translation software has seen its ups and downs over the past several years, and is now enjoying a surge in demand. It is still early, though, and adoption is still trailing the overall software market, but IDC estimates that growth for this sector will be approximately 9% through 2007. Market trends include greater consolidation, characterized by larger companies buying smaller ones, medium-sized language services companies growing or being pushed down market, and small firms going out of business. In order to survive this period, language services companies must be proactive in the deals they seek, progressive in their use and understanding of technology, and willing to become a part of a larger and more integrated software/services solution.

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Alison Crawford is a Research Analyst for IDC’s Content Management and Retrieval Solutions group (including globalization and localization). Prior to joining IDC, Crawford worked for the U.S. Government as a management analyst specializing in business process re-engineering. She has also worked for the Korean Government, assisting Korean high-tech companies entering the North American market. You can reach her at acrawford@idc.com.