The study, by an independent researcher looking into the UK’s 1,300 language service companies, found that on average businesses reported a revenue growth of 2.4% over the course of 2015, compared to the UK’s GDP growth of 2.2% for the same period[i].
And the forecast is even better for the current year with the sector estimating 4.2% growth, a figure that increases to more than 11% when looking at medium sized companies in isolation.
ATC General Secretary, Geoffrey Bowden, explains: “This report highlights the scale and importance of the translation and interpreting company sector in the UK, an industry which is not only crucial for supporting the growth in the UK economy, but which is performing significantly better in our country compared to many of our European counterparts.”
The size of the French language industry is estimated to be worth between $650 and $950[ii] million, while in the Russian Federation LSPs sell under $200 million worth of services a year[iii]. However, when looked at in relation to the total levels of foreign trade, UK LSPs significantly out sell their French and Russian counterparts. For the UK that translates into 0.13% of its total $1 trillion foreign trade, while for France, where foreign trade levels are similar to the UK’s, it falls to 0.1%. Meanwhile, for Russia, where foreign trade levels amount to $0.5 trillion, the language industry’s share is just 0.05%.
Geoffrey continues: “This does however demonstrate the huge opportunity which is still being missed by UK exporters to capitalise on the services of LSPs. A study for the Department of Business Innovation and Skills highlighted that poor language skills are currently costing the UK economy £48 billion a year (3.5 per cent of GDP) in lost export sales.
“Therefore, while we are delighted to see a year-on-year growth in the industry there is still significant untapped potential. And in the current economic climate, when it is more important than ever to boost levels of international trade, we hope that the sector’s positive performance to date isn’t placed in jeopardy.”
Indeed, while high competition, the need to deliver quality under increasing price pressure and margin erosion remain key business challenges for LSPs, the report indicates that all of those issues are overshadowed by the uncertainty of Brexit, which is listed as the sectors top concern.
Fluctuating exchange rates, the potential introduction of tariffs and uncertainty around the future of European mother-tongue linguists, currently living and working in the UK, all combine to place Brexit firmly at the top of UK LSP’s list of key concerns for the sector’s future wellbeing.
Regardless of size, all LSPs are vulnerable to the impact of Brexit. The UK’s two largest language service companies (SDL plc and RWS) for example derive 85% of their revenue from business abroad, while at least five prominent language firms had expanded operations into lower cost regions across Central and Eastern Europe over the last two years. Meanwhile, a third of all respondents have recorded a reduction in profitability, partly attributable to changes in exchange rates.
Geoffrey concludes: “It is unsurprising that the impact of a UK withdrawal from the EU on international trade is top of the list of LSPs concerns and we would encourage the Government to sit up and take note of the issues raised – especially as any negotiated agreements will ultimately rely on the skills and abilities of linguists to ensure that their meaning is crystal clear and unambiguous in all European Community languages.”
The full report may be purchased for £175 + VAT from the Association of Translation Companies.
[ii] Survey by Chambre Nationale des Entreprises de Traduction