Slator on Industry Impact of COVID-19

Published on 10.04.2020

Slator on Industry Impact of COVID-19

The ATA-TCD interviewed Andrew Smart, Co-Founder of Slator, on March 31, 2020 on the industry impact of COVID-19.

Q: What impact do you foresee that COVID-19 will have in our industry

In short, revenues will fall, costs will be cut including staff and subcontractors, and firms with the strongest technology, balance sheets and access to capital will survive.  Verticals like media, gaming and life sciences look steady at the moment and existing trends toward automation and hourly rate structures will continue. 

After a decade of sustained growth, Language Service Providers (LSPs), their vendors and clients are now grappling with economic uncertainty and business continuity while maintaining the safety and wellbeing of their staff.

Business managers are planning for the impact from a reduction of sales. SDL said in its March trading update there are “signs of slower (client) decision-making” and it is cutting sales and operating costs, including “the prioritisation of in-sourcing to reduce linguistic outsourcing costs.”

Clients who are financially weak may result in bad debt.  Industries like travel, hospitality and retail are suffering and Visa has reported “a rapid deterioration of cross-border travel-related spending,” both online and in person. The BBC reports that tech startups worldwide are also cutting jobs as the coronavirus pandemic undermines their ability to make money.

Similarly clients will reassess their vendor-risk and focus work towards LPSs with the strongest balance sheets. This reaffirms the need for tight cash management and increased operational efficiency and supports the adoption of machine translation and the shift to hourly rates. Non-tech enabled mid-sized LSPs will struggle.

Already a remote work friendly industry, Work-From-Home has been widely implemented where possible. Keywords Studios said in its trading update it “faced some minimal disruption in the first two months of 2020” and “introduced work-from-home measures for some 4,500 of its employees.”

Self-isolation is driving consumer demand for media and gaming and players like Zoo Digital and Keywords are reporting increased demand for services, although it should be noted that production on new shows has been suspended. Life sciences will benefit as firms race for a Coronavirus vaccine.  Meanwhile, in-person services like conference interpreting have been badly affected and there is a rise in remote interpreting services.

Q: Do you have any recommendations about how companies can prepare for the future and help mitigate the impact?

To mitigate the impact, companies should protect staff and operations, communicate frequently with clients, tightly manage cash, and access credit lines and government assistance. To prepare for the future, focus on growth industries and profitable clients where you can best compete, search for viable adjacent businesses, and adopt technology to improve productivity.

Most LSPs have enabled their staff to work from home where possible, including the provision of contingency hardware and networking connectivity.  Numerous affordable communication and project management tools like Microsoft Teams, Asana, Zoom, Slack, etc. are available to ensure communication and client projects continue without disruption.

Regular staff updates and town halls also provide transparency and help reassure staff. In a financial worst case, staff in some countries might be more open to a temporary cut in hours or salary than to a permanent cut in headcount.

To avoid this, cut inessential costs ahead of revenue reductions, renegotiate supplier terms where possible and access credit lines before banks move to reduce their credit exposures.

Depending on your country, government-backed loans and partial salary reimbursements might be available. The US Small Business Administration has COVID-19-related loan resources.

Maintaining revenue is also vital. Most LSPs have issued COVID-19 responses to reassure clients and they continue to communicate frequently. Larger LSPs like TransPerfect and SDL have also set up dedicated crisis teams to manage urgent client projects and maintain business continuity.

Consumption of media and gaming, the fastest growing industries before the crisis, are being boosted by stay home orders. Demand is so great that YouTube and Netflix agreed in March to reduce their bitrates of streams in the EU for a month. Both industries also require a range of ancillary services like design and QA that offer additional revenue opportunities.

Also looking stable at the moment are Technology and Life Sciences, the latter of which is underpinned by a pipeline of trials. A search of shows that there are hundreds of studies involving Covid-19 currently taking place globally. Similarly the Public Sector is the largest industry and government and NGO demand is boosted during the crisis.Now is also an opportunity to review your technology as the proliferation of machine translation engines continues and managed MT options become more viable. Improving productivity will provide a competitive advantage as pricing models move from per word to hourly rate models.

About Slator

Slator is the leading source of news and research for the global language industry.  We make business sense of the translation and language technology markets through news and insights on growth strategies, demand drivers, funding, talent moves, technology and more. Our platforms include the website, Market Intelligence services and SlatorCon conference series, to foster high-impact discussions with the industry’s key decision-makers. To discuss our advisory services, contact Co-founder and Commercial Director Andrew Smart.