Recession in Perspective

6 minute read

Two hundred people responded to our survey about the state of the translation industry in the summer of 2021. In this series, we will sequentially analyze each post-corona scenario: Redux, Reshuffle, Recession, Reinvention.

This is the worst-case scenario. Unemployment rates in the USA exceed 35%, and all western economies are slowly climbing out of the recession. Several airline companies have gone bust. Governments have taken control of economies and nationalized vital sectors. And global supply chains have been restructured. In 2021, the translation industry is likely to retract by 30 to 40%, if anyone can actually measure it. Many agencies have not survived and global suppliers have undergone a major restructuring. The only possibly good news is that big global-tech companies have further stepped up their investments in their machine translation and AI programs.

Untitled-Project (50)That was our projection for the recession scenario, which attracted just 12% of all voters. For obvious reasons, recession must be considered the baseline in this crisis, if not the whole story. As countries gradually begin to unlock certain activities for the summer, the economy will invite comparisons with the 2008 Great Recession, even though the figures add up very differently. The critical issues are how long it will last, and how safely the translation industry weathers this restructuring storm.

Fact Check

Twelve years ago some 8.6 million jobs were lost in the US; this year 20 million jobs were eliminated in April alone, and more than 33 million have been lost since the corona crisis began. Quite a few, no doubt, in the translation industry. The US unemployment rate is now hovering around 15%, up from 3% at the beginning of the year.

Meanwhile, the eurozone is projected to contract by 7.75 percent and the EU as a whole by 7.5 percent this year, the deepest economic recession in its history, according to a forecast published by the EC. In Asia growth is expected to stutter at zero percent in 2020 -  the worst growth performance in almost 60 years. Yet overall, Asia should fare better than elsewhere.

For one survey respondent, Sylvester Weise (Plunet), this recession was actually underway before the crisis burst. But how long will it last? Our scenario suggested a return to growth again in 2021. Too early? And how resilient is the industry to such a crisis, anyway?

Translators – the Difficult Long Game

“I don’t really believe in resilience as such in the industry,” says freelancer Sara Morselli (Translator Corner, Italy). “It is more about a continuing need for translation and communication around the world.”

For her and many others, the recession highlights a difficult moment, but also raises questions about how the profession might need to restructure in general. Freelancers will “either be able to work for the three or four big companies that survive or there will be no place for them in the industry.” She is finding that some big/medium LSPs are asking translators to reduce their rates due to the current recession. “And that comes after we have already had to accept slightly lower rates due to the rise of MT.”

Others agree that freelancers’ difficulties in adapting to industry automation predated the corona crisis. “The translators that will suffer the most are those who already are competing against machine translation. They will go under in great numbers,” reckons Riccardo Schiaffino (Aliquantum, USA).

“Translators rely on volume translations to survive,” he claims. “Now they are competing more and more with free/machine translation. That has nothing to do with the current situation.” He’s also fairly pessimistic about the time scale of the recession, but hopes along with many others that the one thing that will end the current recession will be the discovery of a vaccine. A longer recession could reap havoc in the freelance community, on top of rate pressure from the automation wave.

No one so far has anticipated layoffs among full-time staff at LSPs or other translation organizations (except for the news from Portugal about the 30% reduction in staff at Unbabel). Nor whether any tech projects working in stealth mode will have to be postponed until more certain times. But it is clear that, as in all of our four scenarios, business in the broad-based hospitality/tourism content sector - and hence for on-site interpretation - will be among the hardest hit this year.

From Crisis to Opportunity

Another thread of anxiety concerns a slowdown in the globalization process we’ve all benefited from in recent decades. Although this virus crisis is a human disaster rather than an economic blunder, many feel that the repolarization of the planet into an East-West contest could change the geography of business flows. As Anthony Wong (Globalink Solutions) puts it: “industry in general will become more nation-centric in order to achieve a higher degree of self-sufficiency.” If true, this will negatively impact the translation sector.

On the other hand, business wisdom has it that a severe recession will shake off the dead wood and let in more sunlight. For Alessandra Gobbi (NetApp), “despite a recession due to the contraction of international markets, investments will be more focused. Companies will opt for automation technology, and machine translation.”

Digitalization - a catch-all term for processes ranging from remote interpreting via workflow automation to MT – has of course preceded the recession and, as a restructuring process, will continue to dominate agendas long after it is over. It explains both the translator positions we saw above, and much of the thinking about the more radical post-crisis reinvention, as we shall soon be seeing in TAUS communications. But it needs nuanced understanding.

For Sylvester Weise at Plunet (translation management systems), the real strength of using automation comes from specialization: “If you can specialize your LSP in a niche market, they can then utilize technology to maintain a specific connection to the channels of your customers.” He is already seeing surprisingly many new leads that have led to more business for better organized, better automated LSPs in the wake of the lockdown. And he reckons that “this crisis shows lots of employers and organizations that ‘living in cyberspace’ is much easier than they had previously anticipated.”



Long-time European language technology journalist, consultant, analyst and adviser.

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