Which Role Prepares You Best to Lead a Language Service Provider?

Translation and Language AI Reader Poll March 2024

Multiple factors played a role in financial results for the language services industry in 2023, including AI and a mostly conservative global economy. With Slator’s Language Service Provider Index (LSPI) now published, data from the representative sample of nearly 250 companies confirms that it was a challenging year for many smaller (Boutique) language services providers (LSPs).

However, close to half of the largest language companies in the sample had some growth. These Super Agencies, i.e. the companies in the LSPI with revenues greater than USD 200m, fared well. TransPerfect topped the list, growing revenues by 3% in 2023 to USD 1.16bn, a significant gain even if it’s a smaller increase than in previous years. 

TransPerfect’s Co-CEO Phil Shawe told Slator that the company expects “that Generative AI and Large Language Models (LLMs) will continue to reshape the industry, and our R&D spend and company focus is high in this area.”

That is the general context for the largest LSPs, but we wanted to know which LSP segment in the LSPI readers thought will do best in 2024. Most respondents (43.1%) said that Super Agencies will indeed fare better. Over a third of respondents (37.9%) chose Boutiques, the segment with revenues between USD 1m and USD 8m, as the one that will do best. The rest of the respondents were split between Challengers, companies with revenues between USD 8m and USD 25m (13.8%), and Leaders, companies with revenues greater than USD 25m (5.2%).

Better Prepared to Lead?

Most jobs in the language industry are changing as a result of automation — operations, finance, IT, etc. — either thanks to easily accessible AI technologies (e.g., orchestration) or house-grown solutions. Managing to scale any investment in these technologies goes hand in hand with convincing clients of the value LSPs still bring to them, and that takes leadership.

Good leaders know there is no substitute for experience and expertise, no matter how clever the humans or the bots. Many (if not most) LSPs were founded by linguists. Although it is well-known that lack of business acumen ends up hindering growth for many linguist-come-entrepreneurs, some do become leaders and learn on the job, are mentored by others, and take business courses. 

Two examples of these leaders are Anja Jones, Managing Director of the AJT agency, a guest at SlatorPod #200 who started her company as a linguist, and Jin Lee, now co-CEO of TransPerfect, who got his start as a project manager.

We asked readers which role prepares someone best for leading an LSP, and close to half of respondents (46.0%) picked project management, two equal-size groups chose sales (14.3%) and language expert (14.3%), and another two identical groups chose finance and admin (11.1%) and language ops (11.1%). The rest of the readers (3.2%) chose “other.”

Sweeping AI Legislation, v1.0 

The European Union has been working on creating AI legislation before the term “large language model” entered everyday discourse. The effort began circa 2020, and on February 14, 2024, the Chair of the Special Committee on AI at the European Parliament, Dragoș Tudorache, posted on X that Europe’s AI Act “is on track to become law.”

Not a quick read, the 892-page document discusses the use of AI from a perspective of risk, classifying AI systems as posing “low risk” (no special considerations), “limited risk” (including chatbots and requiring an AI disclaimer), to “high risk” (such as biometrics, requiring consent), and “unacceptable risk” (outright prohibiting the use of AI). Translation fits into a blurry range, from low to high risk, thus requiring careful evaluation by buyers and LSPs.

We asked readers what they think the EU AI Act’s impact is on language services demand, and opinions are split, about a third each, between net negative (34.8%), neutral (34.8%), and net positive (30.4%).

The End is Near! Of Q1 2024, That Is

March marches on, and with it, the end of the first quarter of 2024 gets closer. As the Language Service Provider Index (LSPI) reveals, there are indications of stability … for some companies. The Super Agencies managed to grow a bit.

The representative sample of 250 agencies may not tell the whole story, but it is an indication of how things may develop in 2024. The combined growth was 5.6% in 2023, but much of that growth can be attributed to M&A transactions. For more details, be sure to check the Slator LSPI.

Toward the end of February, we asked readers how their business year has been, and over a quarter (27.6%) answered it’s been great. Another quarter (25.9%) of respondents said it’s been good, and for the rest it has been flat (20.7%), not great (15.5%) or bad (10.3%).