Localization Quality – Directly Proportional to Prices

As I discussed in my earlier posts about cost undercutting in the Indian localization market, the players are all in a frenzy of quoting low to grab more business. There is a huge unstructured segment too, dealing with some of the most important and voluminous projects. Add to this, the lack of and reluctance towards tools knowledge. Neither many of the agencies know how CAT tools work, nor do their translators own them. Low cost freelancers being used to save money are creating havoc to both quality, and timelines.

I had a friend working as a general manager at a popular children’s magazine. She narrated an incident which was as hilarious as it was an eye-opener. One of her Marathi projects failed on quality. She went down heavily on the contractor (a very prominent member on Proz and TranslationDirectory) and asked for an explanation about how it happened. To her surprise, the Gujarat based outsourcer said he had outsourced the task to a native Marathi linguist who had a very good hold on the language. Upon drilling down, she came to know that the ‘quality resource’ was a guard at the bank ATM next to the outsourcer’s home and was 'a good resource since he was from Maharashtra and spoke Marathi well’!! Exasperating – you may say, but this is actually the quality most of these ‘middlemen’ and companies are delivering. And obviously, it cannot be any different.

Another example was a multi language project we were doing a few days back. We outsourced 2 languages which were written using the same script. The work was probably more than the vendor could do. There were delays and we became anxious. When the files were finally delivered, we sent them to reviewers for quality check and lo! One of the reviewers came back and asked us for the correct language files! We checked and rechecked what had come from the vendor and what was sent to the reviewer, but we found that they were the correct files. When we confronted the agency, they did not admit their mistake and kept on insisting that it was a minor overlooking while copying translations, since their translators were not using the appropriate tools and they were pasting the translations into source files internally. However, when asked, they could not provide us the correct translations to be pasted in the files and we had to deal with an emergency.

One more interesting incident was with a freelancer whom we used for sundry tasks. Coordinators from my company are much friendly with the people we work with. The freelancer told one of the coordinators he wanted help with a new tool. Under curiosity, our coordinator connected his machine over Team Viewer, only to find that he was working on some task which we did not own. He asked why the agency which outsourced the task wasn’t helping him with the tool only to hear that ‘the agency said ask somebody from Webdunia since they do now know about it but Webdunia's coordinators will !’

While dealing with Indian languages, we frequently come across such stories and agencies, and shudder at the way people are handling business. The tendencies to provide incorrect information and sometimes even speak outright lies about capabilities are doing irreparable damage to the Indian localization scene and efforts of a few legitimate companies are being nullified by these. I hope, this does not usher-in the era of MLVs’ India offices.

Cost Undercutting in the Indian Localization Market and the Rising Sustainability Questions - 3

Sustainability in the Indian Market

The Players

While a decade back, there were almost no companies which actually qualified as localization companies, now, there is a plethora of players, all claiming to have been instrumental in changing the Indian scenario and bringing professionalism to the industry. While it is evident from the portfolios and projects accomplished by such companies, what their standing and contribution is, they are increasingly successful in creating the impression that they actually are the torch-bearers. And these ‘torch bearers’ have made the worst impact on the industry.

As I discussed in the second part of this post, companies who pitch for projects at $0.018 or 0.02 get translators for $0.004 to get their work done. This drives the others to the edge, and to still be relevant, the quality conscious companies have to lower rates. These companies spend about $0.008-$0.009 on their regular resources, and lowering their rates immediately hits their bottom lines. And this price run snow balls, thanks to some of the “middlemen” in the business.

From MLVs, loc business is routed through one or two steps to the actual translator. And each party tries to hold its pie, and pass down as meager money as possible. While MLVs are a relevant part giving end-to-end support and quality perspective to the chain, in India the middlemen between MLVs and translators have added no value but eaten up the precious pie.

Cut throat competition between such companies gave rise to a trend of finding out each other’s clients and pitching to them with ‘a cent less’ approach. However, this mindless quoting has now brought them face-to-face with some harsh sustainability questions.

Equation of Expenditure

Once companies have pitched for $0.018, they need to get everything done within $0.009 to stay healthy have enough working capital. That means translation (and if applicable, review) needs to be done within this range. Mostly such companies will not bother about getting any kind of review done, and even if they have a second pair of eyes look at the translated file, it mostly is a proof-reading of the target instead of a source-target check. Alongside the cost, the committed timelines are also mostly too short for getting work done, which leaves no scope for a thorough review. So, for a project to be completed in $0.009, they either spend $0.005-$0.006 for translation and $003-$0.004 for review, or look at ‘good’ translators for $0.007-$0.009 (whose translation they won’t review). Any quality translator for, say Hindi, will not go below $0.025-$0.03, which is far above the cost these companies have even coated for their translation. Just in case a review is a must, it poses more problems. Then, there are operating costs and overheads, which have to be covered.

The Going Gets Tough

Coupled with the new-found trend of penalty clauses for late deliveries, quality failures and other factors, doing localization business in India is increasingly difficult for the low quoting companies. There is also a 10% tax deduction at source rule applicable in India, which is increasingly a bone of contention between localization companies and localizers, since freelancers want companies to bear this cut, and companies increasingly bow to this demand because they are already paying less.

With all the foregoing facts, it becomes evident that most Indian localization agencies have been caught in their own web of low pricing and have to now struggle hard for survival. They dropped prices, but could not increase business enough to play a financially healthy volume game. At the same time, they have brought a lot of hardships to companies who created a lot of knowledge and know-how by training and investing in good resources. It is high time that such agencies look back and think, whether reducing cost to gain some more business has really increased margins and net worth for them. If not, this mad run will only harm localization quality and market as a whole.

Cost Undercutting in the Indian Localization Market and the Rising Sustainability Questions - 2

Rise of the Disorganized Sector 

We discussed the background of localization services costing in India in the first post. This helped formation of a strong disorganized sector, with little or no investment (and know-how), but which gives a tough fight to the organized sector in each business/service/sector. This was also helped by the fact that some earlier players, who just got in the game to play a few strokes and make a quick buck had no idea of what should be a healthy pricing structure for localization services. They were just at the right place on the right time, since they were, at the time working on some languages in some way (read technical enabling of Indian languages for serving DTP business).

Thus, they went the cheap services way, and Indian language pricing was doomed from the very beginning. The ensuing price war which is bound to go on, often sees smaller competitors pulling down structured and established, organized units. Unfortunately, this mentality of cutting the price and grabbing business, which transcended from other raw services into highly skilled services like localization, is driving the business towards a point of no return.

The Equation

Many small companies, who have by now mastered the art of making believe, are bagging projects at as low as an unbelievable INR1 (USD0.018 at INR56/USD) per source word or INR20 ($0.35) per page of translation for general content. Upon getting a project, they can frequently be found searching for translators who can work at $0.004 per source word – yes, you read it right. Sometimes, losing business makes freelancers stoop a little too much, and voila! Such companies will have their way!

Often bids requested for projects are even more discounted if the translator does not possess, say CAT tools, or if there is a chance of some bulk word count (even 5K).

This down to nothing pricing hits the quality conscious companies below the belt. It makes life tough for those who have invested time, money and resources in developing skills and quality, buying tools and training people for genuinely good work.

One may argue that this happens in all businesses and all walks of life… But, other questions arise too.

Part III - Sustainability in theIndian Localization Market

Cost Undercutting in the Indian Localization Market and the Rising Sustainability Questions - 1

PART I

In my maiden post under this blog, I intend to discuss my views about the most disturbing problem facing the Indian translation and localization industry from my point of view – the cost. I will be greatly obliged to have viewer comments and differing points of view about the topics covered.

What came to my mind first, was the plethora of problems facing the industry in India, and why it is taking so long to mature in a country which has taken pride in its language heritage. So I zeroed in on cost, but it is a contentious issue involving long discussions. Thus, I will divide it into three parts - the legacy pricing problems, the people who have fuelled it and where it has really lead to and the questions which now look at the industry in its face.

The Legacy

Since time immemorial, foreign companies and merchants have been keen to operate in India, earlier because India was big and wealthy, and in the present day marketplace because of the number of potential buyers.

Operating in a multi-language, multi-cultured society like India, means some serious cost. India has 22 official languages, hundreds of other languages and thousands of dialects. With over 1.2 billion people in the market, or, one-fifth of the world within one border, nobody wants to lose out. So that makes the defining factor for localization in India a no brainer too – the cost of localization.

Great Indian Price War

In this part of the world, cheaper is the name of the game and bargaining is the way of life. Around the year 1990, there were no ‘localized’ products in India. What we had were ‘translated’ products, done in-house at some advertising agencies, or by translators that these agencies could find. Translators were paid meagerly and translations were done using pen and paper.

The 90s saw a lot of technical advancement and advent of digitized output of translations. Around Y2K, localization companies, with specializations started surfacing. Microsoft paved the way for the first ever localized products for the Indian market, with 5 major languages in the first round. Languages were selected based on their user base and user community's business standing. This led to specialized rates (!) for localization, for the first time.

Once Microsoft entered the market, it was Adobe's turn to test the waters. However, some factors, more of internal than market factors made them not rush to localize their products. Google came into Indian languages towards the end part of 2000's, Yahoo, a bit earlier, and Oracle almost at the same time as Yahoo (for a learning endeavour they did for schools).

With this sudden in-flow of business, localization became the buzz word and content and language companies, even publishing houses wasted no time in securing a place in this Gold Rush. All of these wanted a pie, while sustainability and survival questions were non-existent in their minds.

Damage Done by the Not-so-Thinking Players

Since localization was a new phenomenon, and the earlier localizers were either translating for publishers/newspapers or some ad agencies, nobody understood the costs and other factors about localization. That made certain players quote prices which were far below anything done internationally. These companies/resources were not intending to be the fore-runners in the market, but were rather trying to grab a part of the localization booty one time, since there was lesser competition. That paved the way for ‘peanut pricing’ of Indian languages in the localization realm, which was here to stay.

With time, the companies who had just tried to cash-in on the sudden rush for localization in Indian languages were out of the race and new players as well as their ‘more serious’ contemporaries managed the entire scenario. However, they had an uphill task -- to push the per word value to a point where it could be acceptable and could make them survive despite mounting market pressures.

With all this new business coming, new localization techniques emerged and CAT tools were enabled for Indian languages. But whatever the changes on the business or technical front, the asking prices always remained very low, since outsourcers now knew the vulnerability – Indian companies could go back too much on price to grab business.

When Microsoft first ventured into Indian languages, they worked with very few companies. In those days, the industry was non-existent and loosely knit teams of freelancers helped some of the MS partners in getting the first jobs done. They paid translators according to the word count they could deliver, quality was often bypassed and swift and cheaper rate translation gradually gained prominence. The disorganized sector was born.

Part II

Cost Undercutting in the Indian Localization Market and the Rising Sustainability Questions - 2