Should Language Service Providers Rethink Their Offerings?

Translation Agency Business Model

In early January 2024, when many in the language industry were likely pondering how to eventually incorporate AI into their offerings or processes, OpenAI announced its GPT Store. Back then, a few translation GPTs could be found, including one built by Phrase called “Phrase Expert.”

By the time OpenAI launched the store to the general public, there were already more than three million GPTs done by pre-release testers. After the kind of hype seen in late 2022 with ChatGPT and all the drama surrounding the company’s CEO and Board in 2023, the store launch was also a popular subject in the news and on social media. 

Then, the announcement of the company’s text-to-video generator, Sora, arrived in February 2024, lest people get OpenAI out of their minds for too long. 

In March 2024, we asked readers if they had ever used Custom GPTs since the store was launched, and over two-thirds of respondents (64.6%) said No. Over a combined quarter of readers said they tested GPTs a bit after launch (14.6%) or from time to time (12.5%), and a very small percentage said they have been using them daily (8.3%).

More from the AI Storefronts

The 2024 edition of Slator’s 50 Under 50 came out in March. The list includes 50 noteworthy AI-enabled language technology companies less than 50 months old at the time of publication. 

A trend identified in the latest edition is companies building an array of AI language capabilities in a unified platform. Some of the product/service categories that emerged were AI multilingual video and audio, AI content creation, real-time speech translation, AI transcription, localization tech, and AI stack.

These are not pre-Gen Z software companies needing to update and upgrade code. Instead, these companies are innovating on top of tested large language model (LLM) capabilities. The question now is how wide the adoption of their products will be.

So, we asked readers how many new language AI products they had signed up for in the past 12 months. Over a third (40.9%) had not signed up for any. A little over a third (34.1%) of respondents had signed up for one to four products, less than a quarter (18.2%) had signed up for more than 10, and the smallest percentage (6.8%) had signed up for five to nine AI products. 

Bazaar or Niche Boutique?

During SlatorCon Remote in March 2024, Slator’s Florian Faes shared with attendees a few facts revealed by research, including data collected and analyzed for the 2024 Language Service Provider Index (LSPI).

Faes told attendees that in 2023 some LSPs remained stable, others (a few) had some growth, and nearly 40% of those included in the LSPI reported negative growth, the highest so far since the ranking was first published in 2018. “We see that undifferentiated providers are really struggling ... If you're undifferentiated and you're maybe a little bit further down in the supply chain, maybe you even do some subcontracting for some big super agencies … now you're really struggling,” commented Faes. 

Boutique agencies (LSPs with revenues between USD 1m and USD 8m) have in their midst both the generalist bazaar type firms as well as specialized companies, and we wanted to know if readers thought boutique LSPs should increase their offerings or instead double down on their core expertise. Over two-thirds of respondents (79.6%) believe that boutique LSPs should stick to their core expertise. The rest (20.4%) think they should go broad.

See You Tomorrow, Yes?

There is no single formula for business permanence, especially not one that makes any industry disruption- (or fool-) proof. While it is rare for an LSP to go bankrupt, given the possibility to scale up or down as the market fluctuates, it is now happening. 

In an example of how permanence is not necessarily a matter of embracing new technology or innovating, Germany’s Lengoo filed for bankruptcy in March 2024. The promising AI-enabled LSP raised USD 34m by 2021. And before that, the Dutch WCS Group had filed for bankruptcy in December 2023 (and was bought or taken over by French-based Powerling). 

Time will tell what else might be at play as the language industry transforms, but we still asked readers to dust off their crystal balls and forecast whether we will see more and larger LSP bankruptcies in 2024. Call it realistic or pessimistic, but the prediction of more than half (52.1%) of respondents is that this will definitely be the case. 

A little over a third of readers think (31.1%) more bankruptcies will probably happen, and a smaller group 13.4% said it may be so. The smallest percentage (3.4%) of respondents think this is unlikely.