Is quality under pressure? Or is translation?

TMT Conference 2013 Quality Under Pressure
© 2013 by Luigi Muzii. All rights reserved Is Quality Under Pressure? Or Is Translation? 1
Is Quality Under Pressure? Or Is
Translation?

Copyright statement
© 2013 by Luigi Muzii. All rights reserved. No part of this document may be reproduced or transmitted in
any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior
written permission of Luigi Muzii.

Contents
Copyright statement.........................................................................................................................................................................2
The magical mystery word............................................................................................................................................................5
Information asymmetry..................................................................................................................................................................7
Buy low, sell high...............................................................................................................................................................................8
Gresham’s law.....................................................................................................................................................................................9
Who’s the culprit? ..........................................................................................................................................................................10
Service is king..................................................................................................................................................................................13
Unbundling services......................................................................................................................................................................14
The future? Next exit.....................................................................................................................................................................16
The disintermediation bogey.....................................................................................................................................................17
Negotiation .......................................................................................................................................................................................19
The right screw to adjust.............................................................................................................................................................20
Changes ahead.................................................................................................................................................................................22
Business metrics........................................................................................................................................................................22

The magical mystery word
Quality is a most favorite topic in the translation industry, with translation entrepreneurs, linguists, and
buyers having quite different perceptions and positions.
Quality is the unique selling proposition of the whole translation industry, and could faultlessly be one of
Edward De Bono’s magic words that instantly explain everything and elude further questioning. All
players rely on it as passengers on a plane feeling confident knowing there is a life vest under their seats,
though they could hardly use it in the case of an accident just trusting on pre-flight instructions.
What do translation buyers care about? Do they really care about quality? Or only translators and LSPs
care about quality?
Quality is a feature, while buyers (and users) care about the benefits they receive as a result. This means
that quality largely depends on the buyer’s perspective, and is irrelevant in a sales perspective: it is a
prerequisite for existence on market.
Quality in a product or service is not what the supplier puts in it. It is what the customer gets out and is
willing to pay for, and customers pay only for what is of use to them and gives them value.
It takes money to buy things, and saving money can be a virtue, a requirement, or both. Virtually all
quality gurus have been saying for decades that marketing or advertising ratings and awards can have a
significant impact on the customer’s perception, but not necessarily on the customer’s preference: while
everyone theoretically believes in the importance of quality, most often the customer’s choice is based on
price. And quality is often synonymous with expensive.
Translation buyers are susceptible to translation quality to the extent that they perceive the translation
product as useful to their business goals, so they do not necessarily see value only in price, which goes
together with speed and gain.
In fact, faster, cheaper, better is an evergreen mantra. Today, speed and agility are the drivers and price
becomes truly important only when the other two requirements are met.
Speed is for volume, and agility is for content type, while quality is a prerequisite and is taken for
granted, even though different thresholds are commonly envisaged.
Value is in the competitive advantage a vendor could provide customers with.
In fact, translations are provided by translators, not by so-called LSPs, which are actually resellers. And
what value can a reseller add when purchasing a product from the producer to resell it to the buyer?
None. It only adds a mark-up to cover any operating costs and ensure a profit margin from the
transaction.
What could such a competitive advantage be? Selling benefits by being fluent in the business of prospects
and meeting expectations. Which are these? Increasing the value of their brand, helping them reaching
more customers in markets where they compete or new markets, helping them increase their overall
revenue and gain an edge over competitors. Surprisingly, in many cases, value could be seen also in
communicating with partners and keeping them motivated.
Therefore buyers are most interested in providers being ready and equipped to offer one-stop services,
especially the so-called value-added services. Let’s take, for example, the acclaimed European quality
standard EN 15038 especially developed for translation services providers to ensure the consistent

quality of the service. The non-exhaustive list of added-value services in Annex E consists of items
providing little or no added value, unless for the provider (e.g. legalization, notarization), or that are
bundled in the typical offering (e.g. localization, terminology data base creation and termbase
management, alignment of bilingual parallel texts, subtitling and post-editing — of machine translation).
A provider offering any added-value service should make every effort to apply the same level of quality
to those services as to the services covered by the standard, but EN 15038 only certifies the translation
service and not the process management as ISO 9001, that could make sense of this.

Information asymmetry
How then is translation quality to be understood by clients and users? Is the “I know it when I see it”
approach ever valid?
Quality is defined by compliance with requirements, and it is ultimately perceived and judged by
customers, who do not care about the vendor’s experiences, viewpoint, practices, and costs, and who
attribute value to and are thus willing to pay for what is of use to them and they can benefit and profit
from. Customers are not willing to pay for the vendor’s inefficiencies or non-value-added tasks.
However, the current paradigm in the translation industry is ‘active’ translation agents and ‘passive’ or
unknowable translation recipients. It is the typical information asymmetry of the translation industry:
buyers cannot accurately assess the value of the product/service through examination before sale is
made, while sellers can more accurately assess the value of the same product/service prior to sale.
In addition, an incentive exists for the seller to pass off a low quality product as a higher quality one;
decreasing profit margins are leading sellers to resort to lower resources, in an endless downward loop.
In this view, buyers are sufficiently pessimistic about the seller’s quality, and quality is not a reliable
purchase element for customers.
Since a typical translation buyer can’t assess a translation effort, offerings are usually compared on price.
And since happy users usually do not manifest any appreciation for a translation, taking it for granted,
the typical translation buyer can’t see why a translation should be that expensive.
Information asymmetry affects sales managers too. Most sellers seldom negotiate with prospects on the
basis of information they should have previously collected, e.g. customer’s turnover of the last three
years, customer’s procurement budget and expenditure capacity in similar supplies, local market
conditions, etc.
This leads to self-reference in negotiations that are therefore generally doomed to prove ineffective. You
must implement the same flexibility you demand on your vendors, and be ready to scale upward and
downward depending on convenience and needs.
All this explains why, although demand for translation services is up and on the rise, the average price
has been falling, over 30% since 2010 and over 40% since 2008.
The translation demand is increasing so fast as to make current prices unaffordable, especially for
durability and the general turnaround requirements.
No vendor will ever be capable of controlling each and every job in each and every language combination,
and no quality system will provide for a solution whatsoever.
And yet, most LSPs, not to mention the biggest ones, still play as one-man band: all jobs, in every
language combination, for all subjects.
Unfortunately, this is more and more reducing their actual competence and capacity to provide for the
best quality and finest results they promise.

Buy low, sell high
Therefore, with the increasing competition and falling prices, most LSPs can’t find no better way than
resorting to the typical business model: buy low, sell high.
To give you an example, I can mention a mid-sized Dutch manufacturing company willing to centralize
the purchase and co-ordination of translation services and outsource them to a single vendor. In the
company’s words, the primary goal was cutting costs, especially overhead, getting rid of a complex non-
core process to focus on value-added tasks. The company’s procurement officer also asked for the same
tone of voice for all languages, and for experienced professionals with specific subject-matter knowledge,
possibly retaining the resources that have worked for the company in the past.
The selected supplier has decided to set up a process focusing essentially on rising adequate profit
margins, requiring translators to buy the license for a specific software tool to be used as the translation
production environment, and setting a compensation range of one third of the previous standard fee.
The request of cutting costs from the customer was definitely not offset by the provider’s move on
compensations, but the customer would hardly reconsider its plans, at least in the short period. This
could happen when most of the translation professionals that worked for the company in the past will
not lend their expertise any longer and the company will start suffering in the very same area that
allowed it to cross the Dutch borders.
Does this method sound old, definitely not original, or creative? Does it not guarantee best quality and
finest results? Maybe, but it is really quite simple and has been the business model for an entire industry
to thrive so far. So why racking one’s own brains to look for any new model?
The most important novelty for LSPs in this model are vendor databases, to collect data from vendors
and have them automatically compete against each other, based on the rates they charge. It is a primary
headache-saving tool to deal with the promise of doing everything in every language.
The other core technology for LSPs is translation memories. It is a twenty-five-year-old technology and
LSPs seldom know how to handle translation memories, but customers often do not know either. This
offers the right to ask vendors for discounts for repetitions, full and fuzzy matches, that will be possibly
not passed on to customers; they will rather be used to recover from price wars with competitors and the
consequent margin squeeze.
Finally, it is not rare that, when customers require highly qualified and experienced translation
professionals to assign a contract, the vendor submit great résumés to the prospect, just to have the
actual work done by much less competent people at a very low price and secure a hefty profit.

Gresham’s law
Puzzled and misled by information asymmetry, instead of buying what they need, buyers have nothing
better to go on than price to select a provider — and so vendors end up engaging in a destructive price
competition.
Playing as one-man band cannot be but pure rubber stamping. As a matter of fact, the industry is
dominated by a large number of vendors who add little or no value to the services they buy from
linguists, competing only on price. It could not be otherwise: information asymmetry’s load falls on
buyers.
In this outsourcing and reselling approach, not money, data, or software, but human resources are the
most valuable assets.
Nevertheless, in most business, not only are staff the most important assets and key enablers of future
success, they often are the biggest expense.
Maybe this is why, paraphrasing Scott Adams’s Dilbert’s pointed-hair boss, like most assets, staff value
declines over time and it is extremely important to assess the value staff add to the business
performance.
And if competition for the best talent were as fierce as it generally is in most industries, attractive fees
are necessary to attract and retain talent.
Also, understanding how pays compare to those of competitors gives customers an insight into the
vendor’s business as a fair and competitive employer. And the average time to hire is an indicator of a
company’s attractiveness.
To survive and withstand price competition in the market, resellers who are unable to improve or
streamline their processes find they have no choice but to put pressure on the fees they pay to their
translators. This approach marginalizes the best translators who become increasingly unwilling to work
for such poor rewards and the net effect is that they are eventually squeezed out of the market.
As prices fall, vendors have little option but to seek cheaper — and usually lower quality — resources to
keep their businesses afloat. This triggers a downward price-quality spiral and we see Gresham’s law in
operation: bad translators driving out the good ones.
Will then LSPs soon be issuing certificates of depreciation for translators?
This process has begun to backfire on both the customers and the middlemen who perpetuate this
obsolete system. The unprecedented growth in demand for translation in tandem with the effect of
Gresham’s law will lead inexorably to a chronic shortfall of qualified language specialists.

Who’s the culprit?
Many translation agencies are even more guilty for ruining the industry than overreaching, handyman-
class, do-it-all freelance translators claiming expertise not only in all subjects but also in all languages, in
a mathematically impossible combination.
“How can I make more money?” is a question all company managers ask themselves. One they don’t ask
themselves enough is: “Have I missed out on a new development?”
In his first book, The Innovator’s Dilemma, Clayton Christensen articulated the theory of disruptive
innovation, and distinguished this from sustaining innovation, which does not create new markets or
value networks but rather only evolves existing ones. Christensen called ‘overshooting’ these progressing
improvements to successful products by managers having no idea why these products are so popular and
ignoring what customers really want in favor of adding yet more non-essential features.
Although translation is typically an isolated task, the translation industry is characterized by a form of
collective behavior. Like ants, translation industry players appear to be moving around completely
random, but, at a closer look, a pattern can be easily seen, in a typical swarm intelligence scheme.
Swarm intelligence has a ‘human’ side in group thinking. In homogeneous groups, opinions and
viewpoints can intensify and become cohesive very quickly. And if too many people are too sure of the
same thing, attitudes can become radical and actions rash.
Opinions on quality, rates, and pricing in the translation industry are a typical form of group thinking,
and this explains why, as usual, even — or maybe especially — in this case, change cannot be brought
about by the system but only by people.
On the other hand, the largely prevalent approach in the language industry, especially at LSPs, consists of
quickly assembling teams and tools to get a job done as it comes in, and since very few LSPs develop
some sort of domain specialization, every job is equally weighed. The best LSPs build a base of trusted
translators to work with on a regular basis, to rely on standard processes, minimize issues and errors,
and ensure “quality.”
The key value added is then in vendor and project management, in some cases in translation
management software.
This approach makes even large LSPs largely interchangeable, thus highly vulnerable to predatory
competition.
Today, more and more LSPs are sending very low quality MT output to post-editors to have it fixed for
lower than standard rates, following a traditionally destructive approach to technology and innovation.
There are still a small bunch of LSPs valuing vendors for their contribution to the business’s success, thus
creating a relationship of trust that could last for years. This bunch is growing thinner and thinner
everyday as valuing vendors no longer proves convenient, and even long-lasted relationships of trust are
severely disrupted in the downward price race.
There is not one culprit, unless we generically blame hypocrisy, that has been ruling the industry
unchallenged since the beginning. What else if not hypocrisy is publicly blaming others to work for
outrageous fees and then silently accept the same fees? Or pretending to be different, dynamic,
innovative, even ethical and then following the old rubber-stamping buy-low-sell-high model?

All the biggest MLVs — and actually most LSPs — are boasting their cheap translation services, typically
through some technological pseudo innovations, sometimes under the claims of being able to offer
varying degrees of quality for different prices. Seldom, as in fact it is, they admit the exploitation of
under-skilled and under-paid people, possibly in some new emerging economy. A semblance of ethics
must still be retained after all.
Most translators are taught and trained to think there is only one quality level: publication-ready, which
they call ‘professional’. In reality, if all professional translators were delivering only professional
publication-ready translations, there would nothing to talk about. No translation would be delivered with
no spelling errors, no terminology errors, no grammar errors, no mistranslations since the beginning. It
would be the accomplishment of Philip Crosby’s zero defects philosophy of total quality: doing right the
first time, every time.
In fact, as we all know, translation errors are innumerable. It is reasonable to assume that there is not a
single translated document that is not flawed with an oversight or even a blatant error. Sometimes, an
error can declare the end of a not necessarily careless or incompetent translator’s career. More often
than not, it is the subject of as thorough as nasty criticism of colleagues, maybe willing to overlook a
possible job to debate on how a passage or a word should be — or maybe have been — translated, while
dozens of morbid conferences are held every year on what is to be meant with quality.
Translation is not getting cheaper, for end customers. Reviewing, proofreading, and editing are
commonly offered by almost any LSP. The problem is in current business models that are not sustainable.
The hysterical obsession of LSPs over technology is driven by the constant and increasing demand of
their clients for savings.
But technology alone delivers no value: a clear strategy, lean processes, appropriate skills, and high-
quality data are required to effect the right technology and benefit from it.
The customer’s attempt to reduce purchasing costs is on prices, but, rather than simplify, streamline and
make their processes more efficient and reduce their costs, most LSPs exert the same — when not higher
— downward pressure to increase or keep their contribution margin safe.
According to CommonSense Advisory, on average, freelancers receive approximately two-thirds of their
income from translation agencies. More than one third have been victims of a translation agency failing
to pay them for work completed. Even more translators have turned down jobs from a translation agency
because colleagues had warned them about the agency’s reputation, and the vast majority has turned
down work because the agency’s rates are too low.
More recently, CommonSense Advisory’s Hélène Pielmeier wondered whether it is fair to request free
work from linguists beyond a short sample translation or having freelancers struggle with discounts that
aren’t warranted by no means.
Fair and ethical trade practices have much to do with information asymmetry.
Could this not be a good starting point for business model innovation? Name it sincerity, fairness,
righteousness, morality, reliability, professionalism or, simply, decency.
Something is wrong in the translation industry if a company with more than five employees is intended
as large or even mid-sized. Things are getting worse when considering that most LSPs can hardly even
know — and tell — the name of the people, translators, they owe their success, even when they have
been relying on them for years.

Not surprisingly, these very companies crowd vendor management workshops. And yet, the first and
foremost advice given in these workshops is to keep vendor databases up to date.
Nevertheless, a recent posting came as no surprise for a translation job on ProZ.com of an outsourcer
with a very high ‘likelihood-of-working-again’ Blue Board rating for a bulky ERP software documentation
TEP project from English to Ukrainian.
But if you look for translators with that combination and experience on ProZ, asking for Ukrainian
natives to test before hiring, you are probably a do-all-whatever vendor that took the bid without having
the right, necessary resources in your vendor database.
That’s more than flippant or unwitting, it’s idiotic, to both your customers and your vendors, as, first of
all, you will be wasting precious time for searching, testing, assessing, selecting, and hiring vendors for an
important project with a major, demanding client.
That’s exactly the sort of things that make this industry a minor, when not lesser, industry.

Service is king
The crisis affected the translation industry to the same extent as other economic sectors. Translation is
functional to the differentiation of offering for reaching global demands. The almost constant growth of
the last three decades has been essentially a side effect of an exponential growth of content, which is
definitely of a different kind from the one typically fueling the translation industry in the past.
This growth in content has not gone along with a growth in compensations. On the contrary, technology
advances and the digital nature of content have made translation easier and easier, while also fostering
the belief that it is trivial, manageable, and profitable. To meet the demand and sustain an increasingly
harsh competition, the largest translation companies helped spread this belief on the client side and
triggered a price war that is still being battled.
All this happened in less than a quarter of century, making translation evolve from a luxury to a
commodity, and soon to a utility.
Like the translation industry, open market and extreme competition are also typical of the NYC cab
system, with crappy cars and poor service, but very low fares. NYC cabs are much cheaper than London
cabs, which work in a somewhat regulated market, although unquestionably not a monopoly, and
generally offer a definitely better service. NYC cabs are really a public means of transport, and a fair
alternative to subway and buses, while London cabs are convenient only when the Tube stops running,
for a night ride back home, or to catch very early trains or planes: the Tube is generally more efficient,
cheaper, and faster, although quite filthy and crowded.
Just like public transportation, price and speed are primary requirements for translation. Almost any
professional translator knows and almost any LSP should know too that a 3,300-word legal text or a
10,728-word Life Sciences presentation for the medical community can’t be reliably translated — and
sworn, in the first case — in less than 24 or 72 hours respectively, by a single individual. Also almost any
LSP should know that no real professional translator is supposed to do such a job for US $ 0.10 per word.
Sending out a mass email to find a professional translator for this job is like launching a fishhook for
marlins and being ready to settle for sardines. And an inexperienced, ill-informed, unknowing, or simply
cunning customer could even trust this company and luckily get the job done.
There’s a general concern about commoditization and downward pricing pressures in the industry, as
most players wrongly assume that the two go hand-in-hand. In reality, the first is caused by
undifferentiated offer, and when customers perceive no difference in services, they will make price a
differentiator. The problem, then, is the industry’s slow or lack of response to this shift in the market.
To provide customers with actual value, and bring in a competitive advantage, a different approach is
required by wearing the customer’s shoes, shifting from ‘educating’ to ‘empowering’ the customer and
fitting in its business.
The best answer then is: differentiate and breakdown your prices, value your services — not your
(supposed) quality, — offer alternatives.
Buyers will always try to get the best deal. Prompt the customer to review all aspects of your offering by
choosing the services to remove from the quote. This will also give you the chance to explain the
implications of not having certain services in terms of the customer’s goals.

Unbundling services
According again to Common Sense Advisory’s Hélène Pielmeier, clients choose LSPs over freelancers
because of the added value they bring. Project management is the core of that added value. So, it’s not the
sales team that’s winning translation industry sales but project managers.
However, in the translation industry, the project manager profile never coincides with the one commonly
found elsewhere, and it is extremely unlikely that translation or localization project managers can sketch
a critical path or even a basic Gantt chart.
In the translation industry, a project manager is usually a clerk in charge of sorting files, sometimes a
coordinator, juggling in most cases with the hats of many different players.
There is added value also in vendor management that is pivotal for the proper selection of the best
resources available to ensure the happy outcome of a project, and is the real core business of an LSP. Not
surprisingly, it is the largest cost budget item for an LSP, and could be huge when it comes to large
vendor databases of hundreds or thousands entries. It also could prove uneconomical when sharing the
same pool of resources with other LSPs, and still going through testing vendors, which is expensive and
not reliable.
If a customer is not happy with the quality of the product received, the LSP could simply have used the
wrong translator, i.e. not one with the right specialty, possibly because of a limited budget, thus skipping
the creation of a glossary and/or a style guide and get it approved by the customer, or the review, editing,
and proofread steps, and so on. All these could also have been skipped because the language combination
and/or specialty were out of range.
Also, adding any new step to a process does not help to improve it and involves more people, thus
increasing the chance to introduce new errors and driving up the final cost.
Vendor managers, project managers, and linguists work in the back office. Account managers work in the
front desk, maintaining the company’s existing relationship with customers and identifying their needs
and working out how the company can best meet those requirements, so that the client does not decide
to place business elsewhere. This is service too, although its added value is not apparent to customers.
Vendor managers, project managers, account managers, and linguists make the translation industry a
people industry.
People and process, not technology, make the difference in the translation business, but, unfortunately,
buyers of translation services rarely question how their translations are produced.
And this brings us back to information asymmetry. For some products and services, the buyer is aware
— although rarely happy — of paying the intermediary a premium, being unable to assess its value, or to
evaluate the service provided.
By the way, in her keynote address at The Cracow Translation Days, popular Chris Durban asked: “How
much would you charge for translating this postcard into you language? We charged € 800 for about five
hours’ work. The clinchers were availability and expertise.”
I must admit I can hardly believe that, and wonder whether Mrs. Durban really expects us to believe that
without producing any evidence, e.g. an invoice or a bank receipt, after having boasted for years her

specialization in business and finance and preached on specialization. Anyway, if it’s true, more than a
blatant exploitation of information asymmetry, it’s a kind of Take the Money and Run.
Anyway, information asymmetry can also be faced from a different perspective, profiting from it without
harming the transaction or any stakeholders.
Rather than relying on the lack of transparency to peddle as a service a product made elsewhere by
someone else, possibly unmanaged, unmonitored, unchecked, in a static, stiff, preset bundle, breakdown
your services and prices, starting with a deconstruction of them into their component parts and exactly
what goes into the final price.
Even though he did not invent the model, with the razors-and-blades strategy, King Camp Gillette
ultimately paved the way for the freebie marketing model to increase sales. The razors-and-blades
strategy is simple: sacrifice returns on the razor to make profits on the blades because razor are useless
without blades, thus by creating a market for a good with negative cross elasticity of demand.
Razors and blades are like inkjet printers and ink cartridges, mobile phones and service contracts.
What about translation? If translation is the blades, you must find a razor to give away for free. If
translation is the razor, you must learn to sell the translation-related services as the blades.
For this model to succeed, though, offering and pricing must be analyze to spot profitable items, and then
deconstructed.
Deconstruction is possible even in the translation service offering and pricing to anticipate the upcoming
trend for translation as a service, and rather than charging a final fee to the customer for the translation
service bundle, break it down into its discrete services then sell each of them individually à la carte.
Customers can be invoiced with a bill displaying the different charges for each individual part of the total
service.
For example, T-Mobile launched a web application in the Dutch market allowing users to tailor their own
subscription, with the services they prefer and seamlessly modify the combination ad lib.
Why this has never been done or cannot be done in the translation industry? Maybe because most
players are so afraid of destabilizing operations that they prefer sticking to inefficient and outdated
models.

The future? Next exit
At the TAUS European Summit in June 2012, Jack Boyce of Google ended his presentation describing an
imaginary ‘TransDirect Inc.’:
 New MLV exclusively working with freelance translators (no SLVs);
 Built on a proprietary set of tools to connect creators directly to translators, and ensure reliability;
 Pay translators more, charge client less;
 Radical transparency from the client’s perspective;
 Vision: the eBay/Amazon marketplace of translation. The best place to work for a freelance
translator.
This view entails an extensive use of translation technology, specifically machine translation, and
linguistic data.
After all, most users of free machine translation would not pay for human translation, even if sufficient
capacity were available, and assessment is tempered by fitness for use: if users are satisfied with results,
anything more is a waste of resources.
The extraordinary success of machine translation is urging translation service providers to re-engineer
their business and related processes, focusing on niches of strict competence, for language pairs and
subjects. What they have been demanding so far on freelancers — specialize! — shall soon become their
gospel too.
The translation industry has been experiencing great changes: massive increases in content with
different kinds of texts for unprecedented and unmet demand, and improved technology for new ways of
translating. Some effects of these changes for quality are already apparent, and are likely to become more
profound in future.
In the best cases, most established LSPs are brick and mortar translation companies; in the worst, they
are mom & pop shops.
Unfortunately, the reins of content for translation are no longer in the hands of localization people but in
those of international line and product managers who have access to the customer voice, and this more
and more requires B2B relationships between actors at the same level.
In addition, translation management technology have set a divide between standard and micro projects.
Standard projects are the old, traditional, narrow doc-type focus translation projects, which are more
and more fit for machine translation and are most subject to price compression. On the other side, micro-
projects are worth much less than the overhead they cause, which requires a high level of human project
management, highly qualified translators, state of the art technology, and extremely efficient processes,
thus being expensive to produce while returning little revenue.
Discover and target new value segments, then. Reshape your processes and make a different approach to
and use of technology.

The disintermediation bogey
For Jack Boyce’s TransDirect Inc. to be real, and the T-Mobile deconstruction approach to be applied to
translation service providing, heavy disintermediation is required.
The banking industry was the first arena where disintermediation has been applied, not only for financial
matters, with investors being given the chance to trade directly via the Internet, but also for services,
much earlier, with the same banks spreading automated teller machines.
To make clear what disintermediation could mean, let’s get back for a moment to the analogy with NYC
and London cabs.
Uber is a mobile application that connects passengers with drivers of luxury vehicles for hire, more or
less in the same way as a radio taxi center, allowing users to be informed on the cars available closer to
their present location, and helping drivers to cut downtimes.
Uber has been accused in several jurisdictions of illegal taxicab operation, even though prices are about
50% to 75% higher than prices charged by conventional metered taxicabs. Uber has said that its high
prices are the premium that the customers pay for a cab service that is not only reliable but also punctual
and comfortable, and secure as all hiring and payment is handled exclusively through Uber and not with
drivers.
Uber is a perfect example of disintermediation, and the allegations of illegality from taxi companies are
spurred by the attack Uber allows drivers to carry to one of the most important niches in the market.
The market for public transport by car will eventually be fluidized and it is reasonable to expect also a
swift reshaping of prices.
Uber is just another shining example of what happens when an old service is transformed and renewed
by using technologies that increase efficiency and effectiveness, not only for customers and end users,
but the service as a whole. By the way, Uber has recently taken a major investment from Google
Ventures.
Also Weight Watchers seems to suffer disintermediation. Its crisis looks to be similar to that of many
industries floundering in the Internet age: there are a bunch of new ways to get for free the stuff for
which they used to charge. One of the causes of the crisis of Weight Watchers is, in fact, the development
of smartphone apps and the incredible spread of online diet plans offering free material that Weight
Watchers sells to its customers. The company has still its own app that provides recipes and tips, but it
does not replace the method of the program that is still based on meetings with support groups.
The constant psychological assistance associated with the weight loss program was certainly the idea
that led Weight Watchers to success, but the Internet generation of diet programs have a social aspect
built into them: you can build a community around your weight loss project without ever having to go to
a meeting.
Have you ever asked your customers what is the first thing that comes to their mind when considering
translation management?
Most probably most of them would answer knowing their companies and products by heart, integrating
in their processes, i.e. never affecting their efficiency.

What should an LSP’s value proposition be? Being fluent in vendor and project management, thus
available 24/7 with as many or as few resources as necessary, being fluent in translation technologies,
and being real subject matter experts.
The translation service bundle consists also of vendor and project management, which are actually the
two main processes of a typical LSP and can be sold as discrete added-value services. This is especially
true for crowdsourcing.
Don’t be fooled. Crowdsourcing is just one of many business models allowing translation buyers to
leverage massive online collaboration. Crowdsourcing is not free and does not necessarily rely on
volunteers, typically amateurs. It costs money to manage work, whether workers are volunteer or paid,
and build a collaborative translation capability. LSPs should not undervalue crowdsourcing. As a
business model it makes it possible to blend efficiency with highly skilled professionals by recruiting
specially selected communities of paid translators. Yet, a specialized back-end infrastructure is needed to
bolster the productivity of the community.
Also, everybody here knows that it could take months to recruit and pool a qualified staff, and months to
run a project of some hundred thousand words.
The main reason behind crowdsourcing is actually quality, in a functional perspective. Typical
crowdsourcers reject established translation tools and implied workflows for their own models and
tools, largely bypassing the translation profession.
Quality is definitely not under pressure. Translation is.
Translation farms are no news, they have been thriving for decades. But they are not sweatshops in a
Third World Country. Translators are the new and growing class of drudges, task rabbits bustling on
intellectual work in the Western world’s developed economy, like many C.C. Baxter.
Most translators have always been independent contractors not eligible for benefits, quite often working
for hardly respectful rates, and not able to exert any kind of leverage. They are definitely not like Henry
Ford’s workers, who received a pay that allowed them to purchase the cars they made.
Now it is time for cloud labor, which is not a new distributed workforce, as the cloud is no new invention.
Renaming things does not make them new. Distributed workforce is just another name used by
middlemen to pay the least amount possible to get a job done by exploiting old-fashioned technologies.
For any other job, as consumers, we would call this progress.
How can LSP not be displaced and reset by disintermediation and ‘utilityzation’ of translation services?
By anticipating them, by reshaping old business models and processes to technology, rather than striving
to integrate tools of outsiders into obsolete systems.

Negotiation
Customers still care for quality, but then negotiating on quality is not realistic since they see it as a given;
quality itself is negotiable.
Translation is a people process, and there are not enough good people in the translation industry. And
without good translators no middlemen can survive, while good translators can, even without LSPs.
Intensified competition at the higher end of the market implies increasing competition between LSPs for
scarce resources, i.e. for human translators who are able to deliver quickly with low error rates and who
have strong writing skills.
Negotiation should then be conducted on two fronts, deserving same dignity.
Over the years, the distance between translation vendors and buyers has become a chasm. You are a
translation buyer with translators and a translation vendor with customers. Remember Willy Brandt’s
first postulate of international trade: “If I’m selling to you, I speak your language. But if I’m buying, dann
müssen Sie Deutsch sprechen.”
LSPs, especially the largest ones, have repeatedly made translation insignificant and trivial for buyers,
wasting the chance to fill the void.
Differentiate your service offerings for different levels of quality to meet your customers’ needs. To
customers, translation is not a service, is a product, hardly presenting any meaningful qualitative
differences. So, don’t sell quality, sell services. Do not try to educate customers, unless you are asked to
make a convincing case to justify your requests. Make your supply conditions (e.g. pricing) as much
transparent as you can to customers, and suggest alternatives to any traditional approach.

The right screw to adjust
Give sales and project people the tools to sell and perform well.
Before selling and negotiating with prospects, you have to learn to know them. Do your homework;
collect as much information as you can on your prospects, e.g. turnover of the last three years,
procurement budget and expenditure capacity, and trend in similar supplies, biases, local market
conditions, etc.
Have compelling value propositions (differentiators) to prevent your company’s message from sounding
like everyone else’s, capture a prospect’s interest, give a customer good reasons to make a change and
buy from you. Provide sales tools such as case studies to demonstrate how other customers successfully
use your services. Brochures with laundry lists of services, quality standards, and languages don’t.
At the same time, select skilled and experienced vendor managers who know how to assess and select
the right professionals for each job and negotiate with them, with respect and consideration. Select
skilled and experienced project managers who know how to plan, schedule, and team up and gain the
best from the people.
In all cases, invest for training and continuing education of your people, not just by ensuring that their
required professional competences are maintained and updated (e.g. as per section 3.2.5 of EN 15038),
as if it training would only be a vendor’s responsibility.
Let me tell you a story that was very much en vogue when I worked for a large telecommunications
company, a quarter of a century ago.
Once upon a time, a systems engineer was called to fix a very large and extremely complex computer that
was worth 12 million euros.
Sitting in front of the screen, he pressed a couple of buttons, nodded, mumbled something and turned off
the computer. He then pulled out a small screwdriver from his pocket and gave a turn and a half to a tiny
screw.
He then turned the computer back on and verified that it worked smoothly. The customer was delighted
and offered to pay the bill immediately.
“How much?” he asked.
“A thousand euros, thanks,” replied the system engineer.
“A thousand euros? A thousand euros for a few minute work? A thousand euros to tighten a screw? I
know that the computer is worth 12 million euros, but a thousand euros is really exaggerate. I will pay
only if you send me an itemized invoice detailing your request.”
The system engineer nodded and walked away. The morning after, the customer received the invoice,
read it carefully, nodded and paid it immediately, without a complaint.
The invoice read:
“Services performed:
 adjusting a screw: € 1,00
 knowing which screw to adjust: € 999,00.”

Jerry Garcia articulated a competitive strategy for the Grateful Dead saying: “You do not merely want to
be considered just the best of the best. You want to be considered the only ones who do what you do.”

Changes ahead
I know I am telling you to implement a profound change in your operations, but it is becoming more and
more urgent every day.
Translations have always been sold by the pound because it’s easy and customers have the illusion of
knowing what they are buying and how much they are spending. In fact, many translators prefer the
‘cents-per-word trap’ because then nobody knows how much they really make per hour. Possibly, no
customers would be willing to pay the same amount as what they are paying if they knew how much
their vendors make per hour.
Maybe you could start quoting per 100 words rather than per single word, just to make percentages in
the application of rates evident to everyone, because a difference of € 0,01 is not just 1 cent, it could be
up to 20%.
Base
rate
Difference
(%)
Discount
(%)
100 word
rate
0,12 12,00
0,11 8,3 5% 11,40
0,10 9,1
0,09 10,0 10% 10,80
0,08 11,1
0,07 12,5
0,06 14,3 15% 10,20
0,05 16,7
0,04 20,0 20% 9,60
Business metrics
Translation buyers are interested in metrics to evaluate the performance of their effort and prioritize
investments, but also to measure their vendor’s business efficiency and effectiveness.
To this end, buyers are mainly interested in four types of metrics relating to cost, volume, efficiency, and
quality.
LSPs should therefore learn to show their data that can be intriguing clients, such as technology-enabled
savings, the volume of content processed, the on-time delivery score, and the average quality scores
obtained during internal inspections.
Maybe, if you still want to sell quality, you could use a quality index for your business, giving a measure
of key dimensions of the operational, product, and service quality of your business on the base of a group
of indicators assessing your capacity to meet the customer’s expectations at an acceptable cost. These
indicators could be:
 Customer Satisfaction Index, an average of all attributes that are believed to contribute to customer
satisfaction, generally based on measures of customer expectations, perceived quality, and
perceived value collected through interviews and econometric models;
 Customer Complaints, measuring customer dissatisfaction with the goods or services provided;

 Customer Retention Rate, an indicator of customer loyalty (or the extent to which a company is able
to keep acquired customers, number of customers at the beginning of a period/number of those
customers that remained customers at the end of a period;
 First Pass Yield, measuring the percentage of units produced moving through a process without
rework;
 Rework Level, measuring the amount of rework that has to take place in a process, i.e. the
percentage of items that require rework;
 Delivery In Full, On Time (DIFOT) Rate, measuring the percentage of deliveries completed in full and
on time, i.e. delivery reliability;
 Order Fulfillment Cycle Time, measuring the time from an order to the receipt of the product or
service by the customers.
Anyway, always be advised that, in a 10.000 word projects, the seemingly minute difference between
99,38% and 99,99% means 62 errors compared to 1: 2 errors every three pages compared to only 1 in
total.

Is quality under pressure? Or is translation?

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