Just how fragmented is the translation industry? Common Sense Advisory recently noted that the 30 largest firms generate only 26.6% of total industry revenues and the industry has an extremely low Herfindahl-Hirschman Index (HHI) concentration, indicating a very large amount of very small firms.
In a 2007 ATA Conference presentation, I noted some US Census numbers that also show a very large amount of very small firms, which we also call 'mom and pop shops'. See the charts below showing percentage breakdowns of US translation and interpretation firms by number of employees. In 2006, 79.2% of 1,818 total US translation and interpretation firms had 4 employees or fewer. 98.7% had fewer than 100 employees.
That percentage has varied little since at least 1998.
Employment size is not the best number for measuring fragmentation of the industry, especially in an industry that largely follows the agency model and therefore makes heavy use of freelancers. However, even when following the agency model, a firm with 4 employees can only grow so large.
Although these numbers are taken from US Census data, it is pretty safe to say that the rest of the industry is also similarly fragmented. For more on the actual size of the translation and interpretation industries, see the market size links in the right sidebar.
6 comments:
"Fragmented" implies a negative judgment. I'd prefer a positive spin such as "How independent are translators?" It's not a bad thing that most translation outfits are mom OR pop outfits.
I think for most projects, it's very hard to improve on the value offered by one professional translator. If we add to that the economic gulf between what most agencies charge their clients and what they pay their translators, both the translators and the end clients have plenty of reasons not to use an agency.
Re: Matthew Bennett.
The value that agencies bring lies in such areas as scaling, project management, quality control and translator qualification.
In my company, the pass rate for translators willing to work for me is about 1% (that is, 1 out of 100 translators who apply pass the entry evaluation).
Naturally, my customers are such who require this level of quality and have economically justified reasons to pay for that. Typically they prefer to stay focused on their core business and outsource service functions, finding a good translator and managing them being one such function.
Just like in many other businesses, it boils down to what you expect and how much you are willing to spend on that.or acquire.
Don’t forget the cost of customer acquisition, sales, insurance, employee benefits, paid holidays and the ability to pay your resources before some customers actually pay us.
It's worth noting that the industry giants don't have thousands of in-house translators: they have a much smaller number of coordinators, and they use thousands of freelancers/ultrasmall companies to outsource the big projects they take on. It would cost them more to bring the talent onboard (paying unemployment insurance and all that overhead) than it does to keep the labor pool flexible and external, so we aren't likely to see a lot of consolidation in our industry.
Freelance Translators are more than the in house translators. They are running their own business well. It affects Agencies.
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