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