Applied Language Solutions

Applied Language Solutions

Strong growth and differentiation in a highly competitive global market

Applied Language Solutions (ALS) Limited was founded in October 2003 and has experienced phenomenal growth through the emphasis that the Chief Executive, Gavin Wheeldon, places on the provision of excellent customer services and team work. Based at ArmitageBridge near Huddersfield in West Yorkshire, UK, the company has seen revenue grow from £579,800 in 2004 to £8.1M in the 2006-07 financial year. In 2005-06, the company’s turnover from sales was £3.49M achieved through just over 70 employees. In terms of structure and legal entity the company is a private limited company.

ALS has become one of the key players in the highly competitive language translation market, experiencing exceptional growth through commitment to customer service quality and a highly-effective staff team. Today, the company enjoys custom from international retail-market companies such as Boots, Sainsbury’s, office hygiene suppliers such as Kimberly-Clark and healthcare providers or specialists including King’s CollegeHospital in London, Tyco Healthcare and MicroPace.

The company is now in the process of expanding its overseas operations and has over 14,000 translators covering more than 150 languages worldwide, many of whom specialize in the languages of particular industries or professions. Translators are always native speakers to ensure they are fully conversant with the latest changes in their own cultural tongue and have a detailed understanding of the way their own language is evolving.

The Market

The language translation market is highly fragmented with a large number of providers offering a range of services from translation of documents for individuals through to complex legal, scientific, engineering and financial translations services for multi-national companies. This fragmentation means that companies tend to be price-takers rather than price-makers, although some like ALS have used effctive marketing strategies to overcome this difficulty.

Translation services providers can be categorised by localisation, translation and interpretation services (LTI) and cross-lingual application services (CLA). Most of the larger companies providing services are multi-lingual vendors (MLVs). Examples of the functions provided by translation services providers are:

• Personal documentation (e.g. academic qualifications)
• Business reports, letters, product manuals and handbooks
• Marketing communications literature
• Travel arrangements and bookings via database interaction
• Language training

The tasks provided by companies, dependent on the size of the company and the needs of the clients, to deliver these functions are mainly:

• Client procurement
• Vendor account management
• Quality assurance
• Memory management
• Project management

Most language translation work is outsourced as few companies employ their own in-house translators. In turn few of the agencies employ full-time translators unless they have long-term contracts with large clients. For example, Airbus in Toulouse contracts its translation work to an agency which employs a number of specialists who work full-time on the Airbus contract.

The other aspect of translation is interpretation services provided for internaitonal conferences but this tends to be a separate business and interpretors often work for organisations such as the European Commission owing to the high workload and constant workflow involved.

Technology is also playing a part with the growth of automated translation programs which are particualry used for translating web site languages. Research by IDC has shown that visitors to a web site are four times more likely to visit a site if it is in their own language.

The continuing growth of global business is driving much of the demand and this is expected to continue despite the fact that English is still the lingua franca of international trade, business, government and education. In this context it is very difficult for a provider to develop a strong brand proposition and remain differentiated

According to Richard Collins in his article ‘Trading in Culture: The Role of Language’, new communication technologies have reduced the costs of transmitting and distributing information over distance (space binding), but distinct information markets remain. The most important differentiating factors are those of language and culture. These contradictory forces of integration and differentiation have always structured information markets. Language translation has to live within this paradox, providing accurate translation across national and international business cultures, providing a highly-sepcialised personal service which is increasingly under threat from the development of web-based translation software services.

Market Size and Share

Owing to the fragmentation of this ‘cottage industry’, the size of the global market is very difficult to estimate but research company IDC estimate that the size of the LTI and CLA services markets were $2.9bn in 2001, rising to just over $6bn by 2006. This can be expected to grow to $7.5bn in 2008, fuelled partly by the rapid economic expansion of China and the subsequent need for translation services of various kinds. India is also experiencing rapid growth but the fact that English is one of the key languages there reduces, somewhat, the need for translation services.

The structure of the vendor corporate market can be categorized as follows:

Source: Adapted from IDC data

Global MLVs: Offer all main languages, with a client focus on the IT,

aerospace, automotive and pharmaceuticals industries.

MLV–SMEs: Offer most languages and tend to specialize in a few key market segments, usually the result of the contacts and skills of the original founders.

SLVs: High quality in Single Languages and with a strong position in their own domestic market.

Agencies: Every major city in the world has between five and thirty local agencies.

They employ networks of freelancers, and have a few strong long-term clients.

Freelancers: Quite often have found a niche with one client organization which takes up most of their time. Sometimes, freelancers do additional work for agencies. Freelancers make up the ‘virtual’ end of the market in the sense that there are many of them and it is extremely difficult to track their numbers or the value of their business revenues. Many are specialists in particular professional fields such as civil engineering.

Sub-contracting is a key feature of employment patterns in this business and sometimes many layers of sub-contracting are involved, especially amongst software and website localisation companies. This means that overheads can become quite high and so whilst a translator might earn $0.10 for each word translated, the agency managing the contracting may be collecting $0.30 from the client – three times as much. It is thus not easy for freelance translators to earn a level of income which equates to their level of professional knowledge or skill, or to the time taken to complete a particular project for a client.

ALS has been highly successful in this fragmented and competitive industry. With a turnover of over £8M, ALS has moved quickly from being an agency to an SME MLV. With the current strategy of opening international offices, the company is set for continued growth over the next 5 – 10 years and has the potential to become a player in the global MLV segment.

Competitors

The company has moved from its humble beginnings as an agency to become, in four or five years, a multilingual SME vendor with offices in several overseas countries. Continued growth will expose the company to competition from some of the large global MLVs such as Berlitz, Telelingua, Lexelnet and Globalright.

In terms of the company’s UK market, however, the key competitors are organizations such as Language Line, Lingo 24, Language Marketplace and Nordic International. Each of these companies has its own level of specialism, particularly when segmented by industry, but all compete with each other for business. The larger clients often employ a dual-sourcing strategy, especially across international lines of business, utilising the services of several agencies at the same time.

Translation Services and Corporate Planning

As information becomes a corporate asset for many companies coupled with the development of the knowledge-based global economy, translation and effective communication also becomes vitally important. Corporate decision-makers

now understand that it must be integrated into corporate marketing communications

processes and corporate information strategies. Provision for the delivery of translation services is beoming a key part of the marketing mix, because accurate translation of vital documents is a weapon in the quest for differentiation and competitive advantage.

To a large extent, these requirements are driven by customers who are increasingly demanding:

• High quality, low cost and fast turnaround
• Ability to change translation staff quickly if necessary
• Flexibility over which agency or LV manages the contract with no long-term tie-in
• Access to an open-access web portal for ordering and project management, preferably part of a supplier’s intranet

Web-based and machine translation engines and services

IDC point out that several of the largest suppliers have developed workflow automation products as well as supply chain and customer portals for online project monitoring and collaboration. However, these packaged products have not proved to be very popular because customers do not want to be locked into a proprietary service environment.

Ideally, customers want to be able to access highly quality services delivered by dedicated professional translators matched with automation services where they are appropriate. Customers of multilingual communication services require an elusive combination of high quality, fast turnaround and low cost.

Nevertheless, van der Meer points out that since the late 1990s, machine translation systems have become popular for applications such as:

• multinational companies producing large-volume technical documentation in many languages within relatively restricted subject ranges. Many millions of pages are being translated in this way every year (Brace et al. 1995)
• systems for the globalisation and localisation of products (such as software) and their supporting documentation
• systems to produce draft standard translations for basic information needs such as correspondence and emails
• languages not normally used in the company’s business – for this purpose, relatively inexpensive translation packages are available
• systems for translating spoken language in restricted applications such as for telephone hotel bookings, conference management and interaction with databases

Applied Language Solutions: Marketing Strategy

Continuous growth has enabled the company to offer translation services covering 150 languages to a worldwide customer base. Turnover has doubled each year for the past three years to provide the company with an estimated 0.5% of the overall EU market (source: ALS) and the plan is to continue this high level of growth. This has been achieved through careful application of marketing principles through excellent customer service. The company has offices in Bulgaria, France, Spain, America, Guatemala, India, China and Hong Kong and aims to provide services to customers worldwide 24 hours per day.

Emphasis on internal quality and process has led to awards for the OHSAS 18001:1999 health and safety management system as well as the BS EN ISO 14001:2004 environmental management system. The company is also active in pursuing and retaining accreditation for ISO 9000 and 27000 as well as Investors in People.

Management Style

This rapid growth has meant that the company’s founders have had to undergo rapid changes in their management styles in order to empower new employees. Pride is taken in the fact that delegation has enabled people’s talents to help drive growth. In this situation it would be easy for the CEO to lose touch with the details of the business and its day-to-day operations, but an open door policy means that senior people are accessible at all times and remain constantly aware of any problems.

One of the major reasons for the success and rapid growth of ALS is the policy of providing excellent customer service through dedicated account management staff and high quality freelance translators. All translators have to be native speakers to ensure consistency and accuracy in the use of language. The company recognises that languages change over time and that a non native speaker can be unaware of subtle nuances in changes of meaning and phraseology. Moreover, translators have to be specialists in the client’s technical field of expertise to avoid the common problem of the inappropriate use of incorrect words and phrases during the translation process.

The inclusive style of management and leadership is evident in management’s desire to constantly find new ways of motivating, and communicting with, employees. New starters are given an in-depth induction into the company’s proceses and procedures to provide them with the knowledge required to function effectively. They are further made to feel part of the team by being issued with corporate clothing including polo shirts, weatherproof jackets and fleeces. The management find that this helps to promote a sense of belonging and identity amongst new employees and helps them to feel part of the company quickly.

Other motivational techniques include the provision of healthy lunches, monthly book competitions with a £200 prize and the provision of staff wifi laptops with free broadband access at home. Staff are allowed to take a day’s holiday on their birthday when this falls on a working day. Other benefits offered free to staff include parking, 20 minute massages and an MP3 player.

Ongoing staff training is considered to be very important and is pursued in all areas of the company’s operations. In particular, training in customer management, negotiation skills and sales/marketing are considered to be extremely important. Resources are in place to ensure that continuous training and employee development enable the company to continue its growth path and provide excellent customer satisfaction, as demonstrated in the diagram below showing the link between staff development, engagement, motivation and customer satisfaction.

Internal communication is reinforced by the open-door approach through internal communication methods such as a constantly-updated company handbook, email updates on enhancements to company vision and values and wall posters. Of great importance are the regular staff discussions which enable people to keep up to date with events and maintain open communication with each other a well as with the management team.

A daily email, entitled the ‘Pulse’, sets out key performance indicators from the day before and provides information on customer feedback, the number of website visitors and updates on translation projects.

Weekly sales targets are an important part of the motivation and reward process. Any employee who wins new business worth over £1,000 is encourage to communicate their success by pressing a button which triggers a set of disco lights and subsequent applause from other team members. When the sales team exceeds weekly targets by Friday lunchtimes, the whole UK office is treated to a lunch at the local village pub.

The company’s physical location in a rural location near Huddersfield means that it has to compete for staff who have a wide choice of jobs from a number of major towns and cities in the area, including Leeds and Manchester. Management’s reponse to this has been to position ALS as the employer of choice in the area.

External Communication and Relations

The Managing Director is pro-active in seeking external publicity for the company and has featured regularly in local newspapers. He also appeared on the BBC TV ‘Dragon’s Den’ series.

The company takes its wider social responsibilities seriously and so sponsor a local children’s rugby team, offer places for school pupils to undertake work experience, and provide internships for overseas students. Spanish lessons are provided for 7 and 8 year old children at a local school, Meltham Moor Primary. Charitable activities and fund raising include regular walks across the Pennines to raise money for a school in Tanzania sponsored by Huddersfield Language School.

Wherever possible, the company buys-in products such as staff lunches, and services such as the free staff massages, from local suppliers.

Technology Infrastructure

Managers have realised that the ability of staff to be able to work seamlessly around the world is important for motivation and productivity. This has led to the development of a Voice Over IP (VOIP) internet and teelphone system. A translator ranking system has been developed which ranks each translator based on application, references and qualifications with an additional ranking for each assignment the person has completed.

Customers are encouraged to provide feedback on completed projects via an online review system, enabling feedback to be rapid and simple. Translators have acces to a self-billing system which means that they do not have to submit paper invoices to ALS, cutting down the time between the completion of a project and payment.

The company uses technology to reduce, whereever possible, the need for physical transport and is the first translation agency to achieve the ISO 14001 environmental management standard.

Products and Segmentation

The company does not have a strict customer segmentation policy in the sense of focusing on a specific industry or client base. The company operates a multi-product portfolio policy which enables a flexible delivery sytem to translate anything from an individual’s birth certificate to a multi-national client’s engineering documentation. An example of this is Panduit, a manufacturer of network and electrical solutions, for whom ALS translates nine quarterly newsletters into fifteen languages.

The company has achieved some of its success by continuing to offer a personal service to all its customers with an emphasis on accuracy, reliability and speed without the need to adopt machine-based translation systems. The product delivered to customers is thus personalised and tailored to each situation.