Vendor Management represents a significant opportunity for Language Service Providers (LSPs) and end buyers of localization services alike, but how best to take advantage of that opportunity? The problem is not as simple as it first appears.
It has long been recognized that only a small fraction of the cost of localization consists of payments to individual freelance translators, but before rushing to “cut out the middlemen”, we need to consider the value that LSPs can add. It is also incumbent on the wise buyer to acknowledge the hidden costs of going directly to the source. Let’s look at a few typical examples.
How hard can it be?
Many larger LSPs (often referred to as Multi-Language Vendors, MLVs) and some end buyers have attempted to reduce costs by developing a global network of freelance translators and leveraging technology to manage individual translation tasks. With the ubiquity of capable and reliable cloud-based technology solutions, this approach dangles the carrot of vastly reduced costs and potentially streamlined delivery processes.
The actual “per word” price compares favorably to that charged by smaller regional or single language agencies (RLVs/SLVs), and there is a degree of control that may also be attractive. If the demand for a given language pair is closely matched with the “supply” (in terms of available freelancers in the pool), task assignments to individual translators, whose availability is known, can ensure a reassuring degree of consistency. And with some planning, the actual assignments can be automated.
What could go wrong?
Several things. First of all, the vendor management structure necessary to recruit and administer a worldwide network of freelance translators with varying skill levels, subject area expertise, availability, translation tool access/familiarity, etc. is significant. For larger MLVs there may be enough aggregate demand to cover these costs, but for most end buyers (and many MLVs), this will not be the case.
More to the point, focusing scarce enterprise resources on the development and optimization of vendor management processes may not be the best use of that collective brain power. There is a reason why companies outsource essential but non-differentiating services outside their core competency.
Other hidden costs (even for MLVs)
Localization demand is spread over multiple languages, and the obvious fact that translators typically focus on only one or two language pairs complicates the vendor management process. For MLVs, that demand also spans a number of subject areas or domains.
The larger and more diverse this network of freelancers becomes, the more distant and detached the decision making becomes from the actual outcome – translated material that meets the business purpose for which it was intended. And unlike most commercial transactions, a buyer of translation is uniquely unqualified to judge the value of the acquisition.
This means that where translation quality is critical, additional quality assurance steps must be added to the vendor management processes, either in parallel or “at the end”, neither of which are particularly cost-effective. One way or another, this involves a second (possibly separate) “supply chain”.
Before leaving this section, though, we should also touch on an assumption mentioned above – availability. Given that translators are typically freelancers, they are “free” to accept work from multiple buyers. This means that along with the other vendor management activities, it is important to avoid an “oversupply” of a given language pair or subject domain.
If there is not enough steady work to keep your translators busy, you may find that they are not available when you need them. This is yet another complexity that contributes to the hidden costs.
Power of partnership
So let’s look at a partnership model instead. What if we replaced a complex organization of vendor managers and individual freelancers with a smaller network of RLV/SLV partners?
From the perspective of the MLV, this might initially seem a high cost option. And in traditional approaches where every “layer” in the supply chain includes its own sales and management overhead, its own “project management” activities and its own often-redundant file preparation and file management activities, there is certainly some justification for this view. Add to that the extra delay for multiple hand-offs, and it is tempting to go back to the freelance solution. But to do that is to overlook the substantial value an RLV/SLV partner can bring.
What are we missing?
Plenty. First of all, most SLVs are physically located in the “target language” area. This means not only greater access to translation resources, but also a much more personal and culturally consistent approach to recruiting and managing those resources. It also means that the project or vendor management staff (unlike the translation buyer) is in a position to gauge translation quality.
As a company, the SLV can put in place both quality control and quality assurance processes that operate close to the “production line”, eliminating costly delays as well as quality “defects”. This facilitates training and feedback to translators and allows the SLV to selectively favor those translators who are most responsive and productive after quality concerns are factored in.
More overlooked value
Additionally, an SLV can aggregate demand from a number of MLV or end buyer partners, allocating work in a manner that avoids the “feast or famine” approach that their customers might individually experience on their own.
Similarly, starting with language expertise itself, an SLV can develop “core competencies” around language technologies, language asset management, translator training, etc. that provide often overlooked value to MLV or end buyer customers. And the power of partnership encourages both sides to invest in deep integration at the process and technology level that can reduce end-to-end costs without jeopardizing value.
What could go wrong with this approach? There are certainly pitfalls to be avoided, but investing in partnerships built around mutual trust and complementary core competencies is likely to generate compound “dividends” over time.
But are those the only options?
For end buyers, there are various “mix and match” approaches that might be tried. One of the most obvious is acknowledging the core competencies that an MLV brings. There is a lot more to localization than translation itself, and much of the file management and preparation effort can be handled more cost-effectively in one step, even (or especially) when the end goal is localization into multiple languages.
Source language terminology management and the leveraging of target language assets (translation memory, customized machine translation engines, etc.) are also often among MLV core competencies (even if some of the language-specific aspects are outsourced to an SLV).
And the same argument for investing in a long-term partnership with a trusted vendor applies here as well. Larger MLVs have the scale and capabilities to automate the interaction between themselves and both the end buyers and (if applicable) their own SLV partners, which is yet another often overlooked source of value.
Your mileage may vary
The standard auto-maker disclaimer applies here as well. Individual situations call for individual solutions, though the basic principle of focusing on core competencies applies.
Some end buyers or MLVs may have a large and consistent demand for “budget” translation that can best be met through a combination of investment in technology infrastructure and a network of freelancers.
For some heavily regulated industries (financial services or investment management firms, for instance), the combination of very high volume “boilerplate” necessary for regulatory compliance with a much lower volume of consumer-facing marketing material may call for a hybrid strategy.
Both end buyers and MLVs may want to consider the file management and file preparation activities as an opportunity for outsourcing to a trusted partner, and SLV/RLVs may want to develop such a service as an additional core competency. Like languages themselves, the variations are quite diverse.
How to choose?
There are a few key questions to ask that may help push you in one direction or another.
Is there a high and consistent volume in one or more language pairs?
If so, the vendor management infrastructure associated with your own network of freelancers may be justified. Even in that case, though, an SLV/RLV partner who can provide you with a dedicated team of translators assigned to this work may be preferable.
Don’t overlook the value of having a partner whose core competency is in translation management. And if, on the other hand, the demand is inconsistent or periodic, you will probably want to outsource that problem to a vendor that can aggregate demand from several sources.
Is there a high “cost” associated with translation “defects”?
Perhaps a better way of expressing this might be to ask whether the linguistic quality and character of the translation has intrinsic value beyond mere accuracy. In either case, finding an SLV partner who can understand and deliver translations according to your agreed upon standards should be considered.
Does your organization already need a global human resources function to support its core business?
If not, the additional cost and complexity of managing a global network of freelancers should probably be avoided.
Does your organization already invest heavily in content management initiatives such as terminology management and content style guides?
If not, there is a significant opportunity for you to generate added value by partnering with an LSP that has developed core competencies in this area.
Do you need help sorting though these options in more detail?
Most LSPs are happy to assist you (as a customer or as a prospect) in finding the best match for your situation. The days of simply quoting a per-word rate without considering the business needs are gone (along with most of the vendors who operated that way).
Having an open discussion with your LSP can be the first step toward building that mutually beneficial partnership.
“Anything I don’t understand is easy”
– Scott Adams in Dilbert
Whatever you do, avoid the trap that Dilbert’s manager falls into as he utters these words. The hidden costs of developing and maintaining a network of competent freelancers dwarfs the “per-word” savings. And when you overlook and unwittingly discount the many sources of value that a trusted RLV/SLV partner can provide, you risk becoming part of the stereotype parodied by this comment.
About the author
Bob Donaldson is the founder and Principal at Carson Strategy Group, which serves both buyers and sellers of translation services in the areas of business and technology strategy. He served in the US Army as a Russian linguist, and returned to the localization space in 2007 after 20 years in software development and engineering management.
While at McElroy Translation Company, he led a technology initiative that overhauled the vendor management process resulting in significant cost reductions and reduced turnaround times. He also led their “Glocal” initiative, which leveraged the power of partnerships to build a “globally local” network of service providers.
At Carson Strategy Group he has helped global companies streamline their localisation outsourcing process and LSPs implement technology and partnership strategies to improve quality and reduce costs.