Nimdzi Insights on Industry Impact of COVID-19
The ATA-TCD interviewed Renato Beninatto, CEO of Nimdzi Insights, on the industry impact of COVID-19.
Q: What impact do you foresee that COVID-19 will have in our industry?
COVID-19 has evolved into a global event impacting public health as well as the economy. These are uncertain times, and we don’t have all the answers, but looking at past major crises around the world, we can venture into speculation about some likely outcomes.
In conversations with LSPs, we have found players who have seen volumes double in the last few weeks while others have seen their business completely disappear, especially in the case of conference interpretation.
It is often said that In Chinese, the word “crisis” is composed of two characters, one representing danger and the other, opportunity (even though this is one of the most quoted language-related misinterpretations, it serves a good purpose here). Considering that one of the key characteristics of the language industry is that it has so far been impervious to crises, it is safe to assume that while some segments will see a drop in demand for language services, others will spike.
As a result of the quarantine efforts imposed all over the world, Virtual Interpretation Tools – once struggling to find a place in the market – stand to gain adoption and will find new use cases across the spectrum. Linguists will adjust their service offerings by switching focus to the areas where there is increased demand. Conference interpreters can temporarily offer written translation services and join remote interpretation platforms.
The pandemic will have lasting effects on the way clients consume language services and will affect industry players financially until the pieces of the economic puzzle are reorganized. Since the duration of the crisis measures is unknown today, it is hard to forecast the financial final impact on the market as a whole, however, there are some things that we can affirm:
- The industry will grow at a rate much smaller than the 6.2% that we had forecast for 2020.
- The P&L statement of LSPs will see shifts in overhead from rent and utilities to collaboration software licenses and TMS.
- Profits will suffer, but pricing shouldn’t see major disruptions.
Q: Do you have any recommendations about how companies can prepare for the future and help mitigate the impact?
The magnitude of the COVID-19 pandemic is much larger than previous crises that might have affected a country or specific economic sectors in the past, but there are some lessons from other challenging times that apply:
- Different segments have different levels of liquidity. Some companies like gas stations and supermarkets have a daily influx of cash and are in a better situation than other businesses like law firms and construction companies from a cash flow perspective. The shutting down of non-essential activities will affect the market in uneven ways.
- Solidarity and tolerance go a long way. Everybody is affected, so it is easier to make new arrangements and change agreements that were made before the money was taken from the market. New rules can be agreed upon among the parties.
- Do everything in writing. Just as people are nice and easy when things are tough, they become forgetful and greedy when things go back to normal. Document your agreements with clients, suppliers, and employees to avoid unnecessary arguments and lawsuits later.
The new normal of COVID-19 will revolutionize the way we do business, but you can adopt some generic attitudes to contribute to the changes:
- Wait. Don’t make impromptu decisions that you might regret. Things are changing so fast that what seems unsurmountable today might be solved by actions from other parties. So, wait until next week to make that tough decision.
- Protect your cash flow. Governments and private institutions are offering emergency loans and streamlined credit lines at subsidized rates. Take them!
- Be generous. If you are in an advantaged position and have the privilege of being in an activity that is benefited from the crisis, buy more, pay more, hire more. The economy is a circle and what you do now will benefit you indirectly, too.
- Do more with less. If you are in an area that is suffering, remember that this will pass. People have survived long wars and depressions that lasted years by adjusting and adapting. Don’t be afraid to ask for help if you need it, everything can be accommodated.
Finally, stay home and wash your hands. In most cases, the quarantine is not about protecting yourself but protecting the others. This will pass.
About Nimdzi Insights
Nimdzi Insights is a market research and international consulting company working towards one main goal: to provide our clients with the insights they need to succeed on a global scale. The Nimdzi Team spreads across 9 countries and includes individuals with diverse backgrounds in the language and localization industry, as well as in international business, public policy, marketing, finance, and more. Find out more about us at www.nimdzi.com. We are here to help!