Reuters
May 20, 2009
At a time when many small to mid-sized companies are cutting costs, trimming staff and facing a host of other recessionary set-backs, business at translation company TransPerfect is steadily growing, helped in part by an expanding international economy and demand for an array of sophisticated language-based services.
Sales at TransPerfect rose 31 percent in 2008 to $205 million and the company is on track to eclipse that figure this year, says co-CEO Elizabeth Elting. Its offices, the bulk of which are outside the United States, now number 57, with recent additions such as Prague, Dubai, Berlin, Milan and Utrecht.
"The prospects for the translation industry are incredibly strong," says Elting, who started the company in 1992 with partner Phil Shawe, a fellow MBA student at New York University's Stern School of Business. Together, they own the company, which Elting says is now the world's largest privately held translation services firm, and take a hands-on approach to running it.
"The world gets smaller every single day and this trend is only going to continue," Elting says. "We've seen sweeping global movements that directly impact our business- clinical trials being conducted in Eastern Europe, call centers opening in India, manufacturing throughout the Far East."
Beyond steady demand for the translation of Chinese and other Asian languages, there has been a growing call for linguists with Eastern European expertise, Elting says. Meanwhile, the longstanding need for interpretation of the romance languages also remains steady, says Elting, whose services play a key role in facilitating international trade, cross border mergers and acquisitions, and scientific research, to name a few areas.
‘CRAZY REQUESTS'
In addition to an internal staff of more than 1,100 employees, including project managers, sales reps, accountants, translators, and others, TransPerfect relies on an additional far-flung network of more than 4,000 highly-skilled linguists who operate on a sub-contracted basis. The requests are frequently daunting, sometimes calling for the translation of multi-million-word documents in just a few days' time.
"Over the years, we have taken in countless things where we have people working around the clock," Elting says. "There have been some crazy requests."
Fulfilling them is perhaps one reason why the company's clients now range from international law firms such as Akin Gump Strauss Hauer & Feld to multi-national corporations like Caterpillar Inc., Bausch & Lomb and McDonald's Corp.
"We are in a service business," says Elting, noting "that we are relentlessly focused on serving our customers."
Diversification by both geography and industry has been an integral part of the company's strategy since its founding, and has proven a good defensive shield against the economic downturn and weakness in specific sectors, Elting says.
"No one client, no one country, no one industry really affects us," says Elting, 43, who nurtured her early penchant for foreign languages with the study of French and Spanish in college and subsequent work experience abroad in Venezuela.
"We hear plenty of situations from our clients where they say, ‘We're on hold until the third quarter,' the budget has been cut, or the person we dealt with at the company has been let go," she says. "Our goal was to be very diverse and it's served us well."
Elting says she spotted a need for a more integrated and customer-focused business model while working for a competitor early on in her career. In recent years, demand for more sophisticated language-related services has prompted TransPerfect to push ahead into areas such as video conferencing, voice-overs, document management, overseas recruitment and multi-cultural marketing, creating a veritable one-stop shop for customers.
"They can achieve economies of scale, consistencies with language - there are a whole host of reasons," Elting says. "We have broken the mold of what would be considered a translation company."
FRAGMENTED INDUSTRY
Even so, translation still accounts for the lion's share of the company's revenue. Technology is helping to make the process easier, but voice recognition software is still years away from being an acceptable alternative to skilled translators, Elting says.
"There are new tools that allow us to leverage our human translation capabilities and automate certain portions of the manual process," she says.
Because of the low barriers to entry, a host of companies of varying sizes operate in the translation services space. Elting says global estimates are varied; they peg the industry at anywhere from $3 billion to $30 billion in annual sales.
"It's certainly changed a lot since we've started," she says. "In spite of that, the competitive landscape is still highly fragmented."
TransPerfect has bought several small companies over the years, but 90 percent of its growth remains organic. It has no debt on the balance sheet and no immediate need for large amounts of capital, which Elting says makes the prospect of going public any time in the near future unlikely.
Meanwhile, the industry outlook remains hopeful, helped by the prevailing political winds in Washington.
Says Elting: "Business has been in a globalizing trend for many years, and this is surely likely to continue with President Obama's encouragement of openness of borders and inclusiveness. For us, it's a business necessity to target global markets and we're continuing to expand our presence around the world."
-By Deborah Cohen