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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Translation Rates and The Matrix

neo marty

I was recently contacted for a job by someone I deeply respect and with whom I genuinely enjoy working. I consider this person to be a great translator and a very intelligent human being, which is why something she said in our e-mail exchange really caught my attention, “you know that translation rates are dropping, right?” Actually, I don’t know that, because mine are rising.

If you think translation rates are dropping, there is a chance you are stuck in the Matrix. You are being fed an alternate reality from the outside by those who benefit from keeping you plugged in. Let’s take a quick look at the numbers and see how deep the rabbit-hole goes, shall we?

According to some sources (like the Common Sense Advisory Report), translation is a US$ 34 billion a year market with a 12.17% average yearly GROWTH that is expected to hit US$ 37 billion in 2018. In 2011, Mission Essential Personnel, which was rated #1 in the top 100 language companies, reported over US$ 725 million in revenue; while on the opposite end of that top 100, Intrawelt, reported US$ 4.18 million. Companies in the middle, like Global LT Inc., reported between US$ 12 and 14 million.

So, where’s all this money going and why are freelancers convinced that prices are dropping? Well, it seems translation is an incredibly fragmented market, where about US$ 4 billion goes to the top 50 language service providers, while the rest is scattered among all sorts of companies, 70% of which have five or less employees. This means, at least, four things:

1) There’s a lot supply, which affects rates. The amount of supply in certain market segments is decreasing prices, but only in those segments. This is basic Economics that I have explained in this blog here and here.

2) There’s also a lot of demand, especially, in higher paying segments. These higher-paying segments are highly specialized though, which is why supply is low and rates are high. That’s how I managed to increase my rates, for example, after Law School (more about that to come).

3) There are a lot of intermediaries between industry leaders and freelancers.

4) There’s a lot of money that’s not being absorbed by the business giants.

Items 2 and 4 above are your ticket out of the Matrix. I will address them in two upcoming posts.

Further Thoughts on Figuring Out Translation Rates

la mano del mercado dirigida

In a recent post on her blog, among many other interesting things, Corrinne McKay wrote, “If no one ever thinks that your rates are too high, that means that they’re too low. Or at least that you could be charging more.” I could not agree with her more. What Corrinne is saying in simple words is that, for lack of unbiased or objective industry studies on rates, your clients can help you measure the elasticity of demand that ultimately determines rates in your market. Allow me to explain, but first I need to make a little digression.

In her beautifully designed blog, Audra de Falco, wrote: “Setting lower rates means the whole market is forced to accept them. [I]f enough novice translators set severely low rates, it has an effect on everyone else who shares that language combination, and, in some sense, across the board for the entire industry.” Audra is correctly addressing the exact same notion as Corrinne, just from a different angle.

What both these women are intuitively showing is that, as I explained in a previous post, the “invisible hand of the market” determines rates. But though invisible and anonymous, this hand is ours to guide. Every time we make a transaction, we are guiding her in a certain direction. The more translators are willing to treat translation work as a commodity instead of a specialty service, and to reduce their rates to capture clients, the louder they are telling the market as a whole what translation work is worth, and they’re doing it incorrectly! This is basic math and market economics.

Our power to determine rates is limited by a simple economic principle: high supply and low demand decrease rates, while low supply and high demand increase them. What commodity-selling translators are doing is sending the wrong message and failing to preserve translation in the right realm, i.e. in that of specialty service. In specialty service markets prices are usually always high for a reason: highly specialized professionals are hard to come by. For those who haven’t pieced it together yet, the formula looks like this:

low supply + high demand = high price

or

few highly specialized translators + lots of clients = no need to compete on price

Cheap translators are bad translators because they have too much work, too little time, and no real area of specialization. They’re also bad businesspeople because they fail to sell translation as a specialty services, they’re like the McDonald’s of the translation world. Yes, they’ll make some money, but at what cost? What they don’t realize, on the one hand, is that they could make more money with far less effort if instead of lowering rates they increased their added value as linguists; and on the other hand, that they are detrimental to the industry as a whole, because their actions send orders to the invisible hand that determines rates for everyone else.

What Corinne and Audra are saying in layman’s terms can be explained by economics, which is why my point is twofold. For setting rates:

1) Don’t sell yourself cheap.

2) Learn basic economics!

Figuring Out Translation Rates

market

Figuring out rates can be tough. There is discussion forum after discussion forum where newbies are asking how much they should charge and veteran translators keep giving them the same apparently meaningless formula: too much and you won’t land the client, too little and they will assume you’re bad at what you do. But what does that really mean and how can that help those who are trying to figure out how much to charge?

What that seemingly useless formula is really saying is not useless at all. It expresses one of the most basic ideas in market economies: rates are determined by the “invisible hand of the market.” When demand is high and supply is low, prices rise. When supply is high and demand is low, prices drop. As a community, translators cannot come together and fix prices (that is neither ethical nor legal), all we can do is adapt to the market and understand that the elasticity of demand will ultimately control how much we can expect to charge for our work.

The good news is, on the one hand, that each transaction we make guides that “invisible hand” and, on the other, the translation market is segmented. So much so, that some would argue there is no single market at all. I’m not so sure about that. What I am sure of is that certain niches pay better than others simply because demand is high and supply is low and translators in those niches are aware of the value of each transaction they make. In other words, clients in those niches need to get a lot of things translated, but not-so-many translators are qualified to meet their specific demands and all parties involved know it. So these translators refuse to sell themselves short and clients know that in these niches cheap equals low quality.

Those veteran translators who brag about their “negotiating skills” probably really are great negotiators, but if you look closely enough, what you are really looking at is someone with the necessary proven qualifications to cater to clients in certain niches who already allot more money to translation. So when trying to figure out rates, there is no magical answer, just magical questions:

  1. What are my qualifications?
  2. Am I highly specialized?
  3. Am I an expert in a particular field?
  4. Do I have any added value?
  5. What market can I cater to?
  6. What are the characteristics of that market in terms of clients and competitors?
  7. What sets me aside from my competitors? Can that translate into money?
  8. How much does this market niche invest in translation each year?
  9. How much actually gets translated?

These are some of the questions we need to start asking ourselves. Rates are not, as some would say, solely a matter of professional ethics. Although I’m not advocating for throwing ethics out the window (quite the contrary), what I am saying, in a way, is that low priced translators cater an inferior quality product to a specific market segment where translation is seen as a commodity instead of a specialty service. If our goal is to be able to negotiate high rates, then we need to find the right niche and make sure we are qualified enough to play in that league. Of course, that is not as easy as it sounds. It requires research, specialization, and acquiring the right qualifications, among other things. But if we don’t want to get stuck as two-cent translation machines, then we have to make the effort to meet the demands of high paying niches.

Are Google Translate and Microsoft’s Star Treck Tech Taking Translation Jobs?

star treck 2

In 2006, Google came out with Google Translate and people went nuts arguing over whether or not that would mean job losses for translators. At the time, while sustaining that it takes a human to understand and convey language nuances and expressions of uniquely human abilities like sarcasm or humor, most translators agreed Google Translate was rubbish and there was no way a machine could ever really replace us. Back then, I argued that Google Translate would evolve, it would get better and some jobs would indeed be lost, and what’s more, they should be! Before you bite my head off for that last bit, please read on, I can explain.

Microsoft has announced the launch of its new Star Trek translation technology that renders real time translation of spoken language. Like its predecessor, Google Translate, it sparked the debate all over again. So again, here’s what I have to say: eventually some jobs will be lost. I’ve been following Google Translate since its inception and guess what? It was designed to learn and evolve –and it did. We’re talking about a program that in 2006 could not translate sentences with plural subjects or subjective clauses and now it can. In some languages, it even does so pretty well. The reason is that for the past 8 years users have been feeding Google Translate with the necessary corrections and information for it to evolve. But what can Google Translate get relatively right? Grammatically correct source sentences with basic language structures, particularly, simple instructions, like those found in manuals, mostly in Western languages being translated to and from English. If the source is grammatically incorrect, Google Translate will probably fail; but when the source is well-written and simple, then Google Translate can do the job about as well as a one or two-cent-per-word translator (yes, those exist!).

Recently, Microsoft embarked on a mission to create “even better” translation technology and we’d be lying to ourselves as translators if we failed to admit that a lot of what some translators do (again I mean one or two-cent-per-word translators) is really uncomplicated enough to easily be replaced by machine translation and then merely tweaked a bit by a human. Many argue that this doesn’t mean jobs will be lost; instead, the role of translators will simply change. Though the second premise is true, the first is mathematically unsustainable. Some translators will experience this change from linguist to editor, but it is not cost-effective for all translators to survive the cut. So while some cling to the editing raft, others will inevitably sink.

But is this really such a big deal, anyway? Even though technical manuals and similar texts constitute a large part of what actually gets translated, there is also a myriad of texts that are not that simple and still fall under the category of things containing uniquely human expressions and nuances that simply cannot be captured by a machine. In fact, sometimes, they can’t even be captured by another human with a lesser command of language, lower cultural level than the author of the source, or unsuitable background knowledge for the task at hand! Sometimes, even humans fail to convey the essence of a complex source text, and in my area of specialization, that includes legal translators, for lack of familiarity with either jurisprudence or nuances (not of legalese, but of legal systems altogether). So while I think good legal translators (like translators working in many other complex areas of translation) are nowhere near threatened by machine translation, I’m afraid I can’t say the same for those two-cent translators out there.

A lifetime went by, and translators are still overworked (and possibly underpaid)!

traductor estresado sin red bull (1)

Another lifetime ago, back when I was practically a full-time external quality manager for a large multinational translation company, I complained when a linguist submitted a translation for quality management about a day and a half late and during very odd business hours (nearly 2 am the day after her deadline). My email said something like, “this translation was submitted outside regular working hours in my time zone,” to which the linguist –who had not only delivered late but had also rendered very low-quality work– replied something in the lines of, “well, in my time zone, we work 24/7.” The obvious answer from me would have been, “well that explains your low-quality work.” Instead, I chose to drop the conversation with the linguist altogether and focus on convincing the PM to: a) extend the deadline and b) have another linguist edit and proofread the job before quality management.

Like I said, that was a million years ago, but I could never get over that conversation, not because I cared much about the linguist or her “witty” comeback, but because of what I thought that said about how a lot of translators worked at the time: too much, too quickly, too irresponsibly, too (insert adverb of choice here!). The question is why? Why do so many translators work 24/7 only to set themselves up for missed deadlines and quality complaints? Many say rates, which makes sense: the lower your rates, the more work you need to accept in order to earn, at least, a living wage, the more work you accept, the more words you need to translate per day, and you can imagine how the story goes from there. The thing is that I’ve been off the grid for years (literally). During the whole time I was in law school (which was five years, because I studied in Argentina), plus some time I took off after law school and the first few years of my PhD studies, I did not blog, participate in discussions, join groups, or otherwise engage in fluid communication with fellow translators (at least not regularly). But now I’m back, and guess what? This is still an issue! How can this still be an issue? I will explore this further in this blog, but something tells me it still has a lot to do with rates!