Translation Rates and The Matrix Reloaded

Reloaded

In the Matrix Reloaded, Neo meets the Architect and learns that the cause of the structural problem in the Matrix, leading to Zion’s systematic destruction and reconstruction, is choice. The same can be said about translation rates, but probably not the way you’re thinking. Allow me to elaborate…

In my previous post, we went down the rabbit-hole and found that translation is a US$ 34 billion a year market, with an estimated 12.17% yearly growth, that is expected to hit US$ 37 billion in 2018. Another interesting fact about the translation market is that it continued to grow steadily even throughout the recession. While the global economy plummeted, the translation market soared. However, paradoxically, throughout the recession, freelancers and small translation agencies were often being fed the idea that rates were dropping and the market was suffering.

How is this possible? Well, the Matrix, of course. By way of, at least, two factors:

1) Strong reliance on intermediaries: Translation is a highly segmented market where 70% of the work is distributed among freelancers and tiny translations companies with 1 to 5 employees. Thus, the market depends heavily on large companies that outsource to smaller intermediaries who, in turn, outsource to even smaller intermediaries or freelancers; each one biting off a piece of the final price.

2) Lack of information and/or excessive misinformation: During the recession, each player was told that the price being paid by the end client had dropped and that there was less overall demand for translation. However, the abovementioned yearly growth rate of the translation market proves otherwise. In addition, translators often lack training in business, law and economics, and there are very few translation-specific business studies to help them understand how the market works from a financial point of view. Meanwhile, large translation companies have this information. We know this from looking at their yearly revenue.

In Law, we refer to this as “asymmetry of information” and it results in an imbalance of power when negotiating terms and conditions of an agreement that leads the weaker party (the one without the information, or the “little guy”) in a position in which he feels there is no choice but to accept the terms and conditions imposed by the stronger party (the one with the information, or the “big guy”). That’s how choice plays into this: The little guy cannot make an informed choice when entering into business agreements, he has to accept what he is being told about rates because he lacks the necessary information to use as leverage for sealing better deals. Thus, he ends up accepting terms and conditions that are unilaterally established by the stronger party.

Of course there are many market giants who pay very well and are excluded from the above critique. But these giants are also highly specialized and quality oriented companies. There are two kinds of market giants: those who sell translation as a commodity good and those who sell translation as a specialty service. Similarly, there are two rational choices for translators who wish to earn higher incomes: i. to work directly with the market giants who sell translation as a specialty service, while avoiding intermediaries or commodity selling companies, and ii. to aim at end clients. The second choice is harder, but perfectly feasible. In my next post I will analyze the numbers supporting these choices.

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4 thoughts on “Translation Rates and The Matrix Reloaded

  1. sergiraneda says:

    Brilliant post, like all the Matrix series. P. Samuelson would be proud of you 🙂 I would add that our industry faces another asymmetry of information problem, one that affects rates: the misconception from the demand side that translation is basically a secretarial work that anyone claiming to be bilingual can do. Raising our rates through specialization (my choice) is critical not only to increasing our income, but also to educating and gaining the respect of clients who do not understand what we do and the skills required from us.

    Liked by 1 person

    • Thank you so much for your comment! I totally agree, when clients don’t fully understand what we do and think anyone who “kind of” or “sort of” speaks a certain language can translate, they are far more reluctant to pay fair rates.

      Liked by 1 person

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