Ranking of Top 30 Language Services Companies

byRenatoS.BeninattoandNatalyKelly
CommonSenseAdvisoryhaspublishedanannuallistofthelargestlanguage serviceproviders(LSPs)since2005.Increasedmarketvisibilityandtransparency haveledustoincreasethenumberofvendorswecoverinthisyearsreport.

Industry Experiences Continued Growth, Slight Slowdown in 2008

Therevenuedatarevealsthat2008wasastrongyearformanysuppliersinthe languageservicesindustry.AmongtheTop25playersthatappearedinour2007 ranking,theaverageyearoveryeargrowthratewas19.7percent,aslightdecrease fromthepreviousyear,inwhichtheaveragewas26.68percent.Thechangerelates inparttorevenuefromalargescalemilitarylinguistcontractthatshiftedfromL3 CommunicationstoGlobalLinguistSolutions,thenewnumberonecompanyin ourranking.ExcludingL3s42percentdecreaseinrevenue,theaverageis22.3 percent,closertothepreviousyearsnumbers. TakingintoaccountthesomewhatlessaggressivegrowthreportedbyLSPsin2008 comparedwith2007,weadjustedourmarketsizeprojections(seeTable1).We predictthatthemarketwillreachUS$22.5billionby2012,slightlylessthanour priorestimateofUS$24billion.Thatgrowthequatestoacompoundannual growthrate(CAGR)of10.76percentoverthenextfiveyears.
Region Europe U.S. Asia ROW Growth Totals Market Share 43% 40% 12% 5% 100% 2009 US$ M 6,468 6,074 1,735 722 15,000 2010 US$ M 7,331 6,884 1,965 818 17,000 2011 US$ M 8,409 7,896 2,255 939 19,500 2012 US$ M 9,703 9,111 2,601 1,083 22,500 2013 US$ M 10,781 10,123 2,891 1,203 25,000

Table1:ProjectedLanguageServicesRevenuesfor20092013inU.S.MillionsofDollars Source:CommonSenseAdvisory,Inc.

How We Ranked the Companies

Asalways,CommonSenseAdvisorysrankingincludescompaniesordivisionsof companiesthatmakemostoftheirrevenuebyprovidinglanguageservices,beitin
Copyright 2009 by Common Sense Advisory, Inc. Unauthorized Reproduction & Distribution Prohibited 15 May 2009

Ranking of Top 30 Language Services Companies

writtenorverbalform,onpaper,overtheweb,inperson,viavideo,inside softwareapplicationsanywherearoundtheglobe.Thelistincludesbothpublic andprivatecompanies.However,notmanypubliclytradedcompaniesworkin thelanguagearena,sothisrankingalwaysinvolvesalotmorelegworkthan producingasimilarregisterfortheautomotiveortelecommunicationsindustries. Publiccompanies.Aboutathirdofthecompaniesinourrankingarepublic. Formostofthesefirms,wehavetheluxuryofreviewingannualreportsand officialfilings.However,someofthesearelargecorporationswithspecialized businessunitsforwhichtheydonotbreakoutnumbers.Inthosecases,we consideredonlytherevenuefromtheunitprovidinglanguageservices. Gettingthesenumberscanbeachallenge. Privatelyheldcompanies.Thesefirmsconsumemostofourtime,becausewe approach100pluscandidatecompaniestocomeupwithourlistof30.Wecall theirexecutivestofindoutwhattheyearnedintheprecedingyear,probefor themagicnumber,andthenaskthemforfinancialstatementstoconfirmtheir data.Privatefirmsinsomecountriesarenotobligatedtoreleaseanydata,so wecanonlychecktheirfinancialstotheextentthattheyallowus. Eachyear,newcompaniesqualifyforaspotinourranking.Videointerpreting providerPurpleCommunicationscatapultedontothisyearslistduetothemerger ofseveralcompanies.NewcomersCrestec,(Japan),CBGKonsult(Sweden), SEPROTEC(Spain),andTelelingua(Belgium)alsodebutonthisyearstable. Varioussuppliersinthegovernmentandmilitarycontractingspacesuchas AllworldLanguageConsultants,CACI,CALNET,McNeilTechnologies,Mission EssentialPersonnel,MPRI,SMConsulting,TCSTranslations,andTRWhavealso receivedlanguageservicescontractslargeenoughforthemtobecontendersfor theranking.However,notallcompaniesareforthcomingabouttherevenue derivedfromlanguageservices,makingitdifficulttouncoverexactnumbers.

The Top 30 List Remains Global in Nature

Ourlistfor2008includessuppliersfrom15countriesacrosstheglobe:theU.S.(9), U.K.(4),Belgium(2),Japan(2),Sweden(2),Switzerland(2)andChina,Czech Republic,Finland,France,Ireland,Italy,Luxembourg,Netherlands,andSpain (oneeach).WhileAmericanandBritishcompaniesstilldominatetherankings, AsiacontinuestoexpanditsshareofdominantplayerswithatotalofthreeLSPs fromChinaandJapan.

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Ranking of Top 30 Language Services Companies

Figure1:GeographicDistributionTop30LanguageServicesProvidersinTotalRevenuesEarned inU.S.Dollars Source:CommonSenseAdvisory,Inc.

GiventhatthecompaniesonourTop30listreportrevenueinanarrayof currencies,weconvertthemintoabaselineunittheU.S.dollartoallowfora directcomparison.FornonU.S.companiesoutsidetheUnitedStates,wedivide revenueinlocalcurrencybytheaverageexchangerateforthe365daysofthe firmsfiscalyear.Thus,theaverageexchangeratefortwelfthrankedRWS HoldingswasUS$1.9731perpoundsterling(GBP)forthefiscalyearendedon30 September2008.FourthrankedSDL,reportingitsresultsonacalendaryear,is affectedbythedevaluationofthepoundagainstthedollarforthebalanceof2008, withthepoundquotedatUS$1.8551.

Three Tiers of Language Services Suppliers Comprise the Top 30

Themarketfortranslation,localization,andinterpretingservicesisorganizedinto threemajortiers(seeTable2).Thesixhighestrankedcompaniesonthelistreport annualrevenueinexcessofUS$200million.Thesecondtierincludesseven companiesintheUS$106166millionrange.Thebottomhalfofthelistincludes companiesthatreportUS$2060millioninrevenue.
Copyright 2009 by Common Sense Advisory, Inc. Unauthorized Reproduction & Distribution Prohibited 15 May 2009 www.commonsenseadvisory.com

Ranking of Top 30 Language Services Companies

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Company Global Linguist Solutions, LLC* Lionbridge Technologies L-3 Communications (LOTS) SDL International Language Line Holdings TransPerfect / Translations.com STAR Group* SDI Media Group Purple Communications, Inc. euroscript international S.A. Xerox Global Services* RWS Holdings PLC CLS Communication Manpower Business Solutions Semantix A/B Logos Group thebigword Group Welocalize, Inc. AAC Global Corporation Moravia Worldwide Honyaku Center Inc. Jonckers Translation & Engineering s.a. hiSoft Technology International Ltd. HP ACG Merrill-Brink International Crestec, Inc. CBG Konsult AB VistaTEC Ltd. Telelingua Group SEPROTEC Translations

HQ Country US US US UK US US CH US US LU UK UK CH NL SE IT UK US FI CZ JP BE ZH FR US JP SE IE BE ES

Revenue in US$M 691.00 461.00 434.59 294.54 212.64 204.77 164.83 140.00 130.08 129.03 113.74 106.76 57.62 55.91 53.26 50.22 49.90 49.86 48.99 42.80 42.68 37.21 35.10 30.06 30.02 28.56 28.54 27.23 21.98 20.12

Employees 6500 4500 1049 1981 4719 1115 910 800 577 1267 506 451 360 150 160 135 270 402 304 446 193 280 926 150 100 511 180 102 135 358

Offices

Status

6 Private 40 Public 1 Public 55 Public 7 Private 56 Private 42 Private 1 Private 5 Public 32 Private 9 Public 12 Public 14 Private 7 Private 10 Private 17 Private 9 Private 12 Private 14 Public 12 Private 7 Public 13 Private 16 Private 9 Public 4 Private 22 Private 9 Private 5 Private 5 Private 15 Private

Table2:Top30LanguageServiceProvidersWorldwidefor2008(*estimated) Source:CitedCompaniesandCommonSenseAdvisory,Inc.

The Market for Language Services Remains Fragmented

Inpreviousresearch,wevenotedhowlittleoftheoveralllanguagerevenueis earnedbythelargestlanguageserviceproviders.Thistrendremainedconsistentin 2008,withthetop30bookingjust26.6percentofthemarkettotal(seeFigure2).

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Ranking of Top 30 Language Services Companies

Figure2:Top30AggregateRevenuefor2008asaPercentageofTotalLanguageServicesMarketSize inU.S.Dollars Source:CommonSenseAdvisory,Inc.

Finally,todeterminewhetherthisfragmentationisgettingworseorconsolidation increasingtoomuch,weapplytheHerfindahlHirschmanIndex(HHI)togauge industryconcentrationandcompetitioninthemarketplace.TheHHIcalculatesa weightedaveragemarketshare(whichisrepresentedbythesumofthesquaresof themarketsharesofeachindividualfirm).Thescoresrangefrom0to10,000.Low numbersindicateaverylargeamountofverysmallfirms,whilealargenumber correlatestoasingle,monopolisticproducer. ThelanguageservicesindustryhasanextremelylowHHIconcentration.Although theconsolidationhasincreasedslightlysincelastyear,itremainsonthelowerend oftheHHIscale.Infact,evenifthe10biggestcompaniesintheindustrymergedto formaUS$3billioncompany,itisunlikelythatitwouldbechallengedbyanti trustauthoritiesintheUnitedStates.

Most Large Providers Exceed Ten Percent Revenue Growth

AcquisitionscontinuedtofuelthegrowthofcompanieslikeAACGlobal,SDL,and Welocalize.However,mostcompaniesreportsignificantorganicgrowthfromthe increaseddemandfortheirlanguageservices.L3slanguageservicesdivision reportednegativegrowthduetothelossofacontracttoprovidelinguistsupport incombatzonesfortheUnitedStatesmilitary.ThenumberforLCJEEIG(now
Copyright 2009 by Common Sense Advisory, Inc. Unauthorized Reproduction & Distribution Prohibited 15 May 2009 www.commonsenseadvisory.com

Ranking of Top 30 Language Services Companies

Jonckers)shrankafterthemergerofthreemembercompaniesduetothefactthatit nolongerreportsrevenueforLogoscript.
Company Revenue Growth (Reduction) from 2007 to 2008
59.5% 54.7% 51.1% 48.0% 44.0% 31.3% 30.7% 25.3% 24.9% 21.8% 17.6% 17.4% 17.1% 16.9% 16.1% 15.0% 12.0% 8.0% 6.7% 3.8% 2.0% 1.9% (2.2%) (42.3%)

hiSoft Technology International Ltd. AAC Global Group thebigword Group Welocalize, Inc. Manpower Business Solutions TransPerfect / Translations.com Hewlett-Packard ACG SDL International VistaTEC Semantix Honyaku Centre RWS Group CLS Communication SDI Media Group Language Line Holdings Xerox Global Services Moravia Worldwide Logos Group euroscript International S.A. Amesto Translation Holding A/S Lionbridge Technologies STAR Group Jonckers Translation & Engineering s.a. L-3 Communications Linguist Operations & Technical Support Division

Table3:RevenueGrowth(Reduction)byCompanyfrom2007to2008 Source:CommonSenseAdvisory,Inc.

The Biggest LSPs Trail in Revenue per Employee

Revenueperemployeeisameasureofhowefficientlyaparticularcompanyis usingitsworkers.Ingeneral,risingrevenueperemployeeshowsthatthecompany isusingitsworkersmoreefficiently.Someofthecompanieswiththemost employeessuchasGlobalLinguistSolutions,LanguageLine,andLionbridge areamongtheleastefficient(seeTable4).L3Communications,ontheotherhand,
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Ranking of Top 30 Language Services Companies

madereductionstoitsworkforce,boostingitsefficiencytoclaimthetopspot.The topprovidersshowedamarkedimprovementinaverageefficiencythisyear (US$184,731.45)comparedtothepreviousyear(US$162,914.48).

Ranking by Revenue per Employee 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Ranking by Number of Employees 7 25 27 24 30 29 14 11 13 22 26 21 6 9 10 28 19 17 23 4 20 16 1 3 5 15 18 12 2 8 Company Number of Employees 1049 150 135 160 100 102 451 577 506 193 150 270 1115 910 800 135 304 360 180 1981 280 402 6500 4500 1267 446 358 511 4719 926 984.5 Revenue by Employee in USD 414,289.80 372,729.33 371,966.44 332,903.13 300,200.00 266,911.76 236,728.25 225,443.67 224,772.73 221,139.90 200,400.00 184,822.93 183,650.22 181,131.56 175,000.00 162,845.66 161,165.43 160,061.33 158,553.33 148,684.25 132,889.92 124,029.85 106,307.69 102,444.44 101,841.37 95,964.13 56,209.41 55,890.60 45,061.24 37,904.97 184,731.45

L-3 Communications (LOTS) Manpower Business Solutions Logos Group Semantix A/B Merril-Brink VistaTEC Ltd. RWS Holdings PLC Purple Communications, Inc. Xerox Global Services* Honyaku Center Inc. HP ACG thebigword Group Transperfect / Translations.com STAR Group* SDI Media Group Telelingua Group AAC Global Corporation CLS Communication CBG Konsult AB SDL International Jonckers Translation & Engineering s.a. Welocalize, Inc. Global Linguist Solutions, LLC* Lionbridge Technologies euroscript international S.A. Moravia Worldwide SEPROTEC Translations Crestec, Inc. LanguageLine Holdings hiSoft Technology International Ltd.

Average of Top 30 Companies

Table4:Top30LanguageServicesCompaniesRankedbyRevenueperEmployee Source:CommonSenseAdvisory,Inc.

Copyright 2009 by Common Sense Advisory, Inc. Unauthorized Reproduction & Distribution Prohibited 15 May 2009 www.commonsenseadvisory.com