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.
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