No one can say for sure how bad it will be or how long it will last, but there is a growing consensus that we are headed for a recession in 2022.
Between the global supply chain crisis, rising energy costs, and increased consumer demand, Americans are feeling the sting of inflation in a way they haven’t since the 1980s. In response, the federal government has started raising interest rates and tightening fiscal policy. While some are holding out hope that the government will be able to engineer a so-called “soft-landing” (tightening enough to cool inflation without sending the economy into outright recession), that’s a challenging and historically rare proposition.
The translation services industry in the US has grown an average of 4.9% per year since 2017. This, despite the challenges brought on by the pandemic. So what would a recession in 2022 mean for the translation industry? And what can translation providers do to remain competitive?
As globalization became the dominant business model of the 2000s, translation was touted as a recession-proof industry. Yet, in the corona recession of 2020 we saw a number of language service providers go out of business. This was the result of both macro and industry-specific changes.
We have reason to believe the coming recession holds even greater risk for translation companies.
That’s because the supply chain disruptions that started in the early days of the pandemic show no signs of letting up. This has shaken confidence in a globalized ecosystem. Nations are understandably looking to repatriate manufacturing in order to better serve their citizens. At the same time, there are growing undercurrents of nationalism and isolationism around the world.
These conditions could lead to a reversal of the decades-long globalization trend which fueled incredible growth for our industry. Translation companies that lack a diverse customer base face the greatest risk. Ecommerce translation specialists could be especially hard hit if demand for international trade weakens.
As difficult as recessions are, they are also inflection points that can fuel growth for those who are in a position to take advantage of it. And that means opportunities for translators.
As businesses fall victim to the recession their competitors inevitably seize market share. The resulting mergers and acquisitions can lead to an increase in demand for legal, governance, and financial translation.
Meanwhile, localization services will be crucial for companies that want to maintain and grow their international presence. That’s because in times of economic hardship it’s even more vital to pay attention to the cultural sensitivities and pain points of your target audience. Otherwise, you risk coming across as foreign and out of touch (a PR nightmare).
Even in domestic markets, translators can help companies fight recession by expanding their customer base. U.S. businesses, for example, can capitalize on the growing Spanish-speaking population to court new customers.
As the recession hits budgets, it will be important to maintain high-quality translations while reining in costs. This is why the already established trend toward machine translation is likely to accelerate in the coming days.
Many businesses have avoided machine translation due to its reputation for poor quality. However, they would be well-advised to give it another look. Translation technology is advancing at breakneck speed with ever-improving accuracy. When combined with machine translation post-editing (MTPE), automated translations can provide excellent quality at significantly reduced costs and increased scale, allowing businesses to get more for their translation dollars.
The recession also presents opportunities for individual translators. Like many skilled service providers, translators have seen an increase in negotiating power as part of the so-called “Great Resignation.” Faced with labor shortages, companies are having to compete for top talent on a regional, national, or even global scale, pushing up wages all around.
This trend is unlikely to abate even in a recession. In fact, there may be increased opportunities for skilled translators as companies cut costs by working directly with freelancers or hiring internally rather than going through translation companies.
Those who will benefit the most from this new reality are translators who pay attention to industry trends, sharpen their skills, and provide the most in-demand services. For example, the burgeoning cryptocurrency industry has been providing ample work for translators who understand the intricacies of that market. Similarly, translators who are proficient in the aforementioned MTPE can also capitalize on the growing demand for those services.
One tip that will help translators through the recession is to carefully choose their customers. Clients with heavy debt may struggle to meet financial obligations and ultimately fail to pay their invoices. Whereas, companies with a strong balance sheet can provide regular work and income regardless of the economic conditions.
Like individual translators, translation companies must be at the top of their game to not only survive the recession but come out stronger on the other side. We must pay attention to the changing needs of our customers, then tailor services accordingly.
No longer will it be enough to simply source the best translators and ensure high-quality outputs. We must strengthen business relationships and seek to be trusted advisors who can help customers navigate complex international and cross-cultural interactions. Those companies that position themselves as the one-stop-shop for all our customers’ translation, localization, and interpretation needs will weather the economic hard times better than others.
Of course, no one knows exactly what the future holds. As such, the greatest asset we can have at times like these is humility; a willingness to embrace the uncertainty and adapt rapidly in response to our circumstances.
As the economy slows it’s important not to make emotional decisions, but rather to be analytical and willing to change based on what the data tells us. This is true for those of us in the translation industry and the customers who depend on us.
History does not repeat, but it rhymes. This recession will not be exactly like those of the past. However, we do know that those who are able to make fast, data-driven decisions will be better able to navigate uneasy times.