Responding to translation price reduction requests

In the medical field, high-quality translation isn’t just preferred, it is mandatory for safety, compliance and regulatory requirements, and ultimately someone’s life could be in danger over a mistranslation. There is no room for error. This would seem to indicate that companies in this industry would be willing to pay more for this type of translation than for something such as a computer installation manual.

However, how often do you experience the unexpected phone call or e-mail from clients telling you that their company is cutting costs, and translation is one of the areas they have identified where they believe they can most easily cut back? I know my first thought is, “But our vice president of sales said that pricing is not one of our company’s value propositions and therefore shouldn’t be a primary part of the negotiation.” In the ideal world, pricing would always take a backseat to other values offered, such as error-free medical translation. Unfortunately, the reality is that cost is often at the center of discussions when a company selects or re-evaluates a translation provider regardless of the level of quality provided.

When this phone call or e-mail comes through, what usually happens next is the “pricing dance,” which typically looks similar to the following:

  • You begin the negotiation by telling your client it will be difficult to provide them with the same service and quality they expect if pricing is reduced. However, you commit to discussing the situation with senior management.
  • You then discuss the situation with senior management, and a few changes are made to the pricing for no legitimate reason other than to give the client additional savings — although you may find a reason for your ability to reduce the pricing to justify the change to your customer.
  • You go back and offer the client some sort of savings in order to keep them engaged, which in turn reduces your already-slim margins.

Does this story sound familiar? Why does this happen so regularly? Why does translation so often turn into a pricing discussion?

Translation has unfortunately made its home as an unwanted stepchild in the content development process. A common reason for this is that frequently within an organization there is no one who is truly responsible for translation. The task of managing translation is thrown on the shoulders of a technical writer, a project manager or someone else who doesn’t have the understanding, time or desire to deal with it, and is generally not compensated for this additional responsibility. Even in companies that have an internal translation manager or group dedicated specifically to overseeing translation, the company is generally too large or too decentralized to control this effort. This in turn creates multiple pockets within the organization that operate independently in regard to translation. When you examine most large organizations, you will find multiple translation vendors claiming to do work for them. A percentage of this is because these companies are trying to be risk averse by employing multiple vendors. However, the main reason is that the various groups or divisions within the company are simply working with different translation vendors. As an example, doing a quick internet search, I found more than 15 translation vendors claiming to work for or partner with either IBM or Microsoft, with both of these companies also having internal translation groups as well.

To add to this problem, rumors about what translation really is have spread rampantly across the internet. The trendy new way to look at translation is for it to be some sort of low or no cost automatic process that takes place almost magically because of machine translation (MT), crowd sourcing or otherwise. You can look no further than the hype Google, Microsoft and others are receiving. In a May 28, 2014, article on ExtremeTech’s website discussing the Microsoft-Skype partnership on Skype Translator, Sebatian Anthony states, “Skype Translator isn’t perfect, but it’s tantalizingly close to the creation of a Star Trek-like universal translator — or Babel fish if you prefer — that allows everyone in the world to communicate, even if they don’t share a common language.” Anthony later goes on to say, “Just by downloading a new version of Skype, Western companies could start doing business with companies in China and other huge growth markets.”

Although I fully agree that translation has evolved significantly with the assistance of technology and automation, and I have used MT successfully on many occasions for different purposes, I am afraid that these advancements have set up false expectations for uneducated customers and have contributed to unreasonable pricing expectations.

In addition to this, if you continue to wonder why translation is one of the regular targets for cost cutting, it helps to take a step back and examine the entire content development process. There are some common threads in the habits of procurement groups and decision makers with regard to cost-cutting measures in the content creation process.


Procurement decisions

First, procurement departments tend to target processes they believe can be automated. As I mentioned previously, translation nearly always falls into this category because of how the general population views translation. With the entire content creation process representing a much larger market than translation by itself, this idea is quickly validated by the sheer number of content management system (CMS) providers in the market. CMS Matrix lists over 1,200 systems on their website, and this does not include any of the translation management systems (TMS). On a somewhat related note, while cost savings can be achieved through a successful CMS/TMS implementation, generally the biggest benefit to a successful CMS/TMS implementation is company control over the content and not cost savings.

Related to the first point, since procurement departments may not have an in-depth knowledge of what they are analyzing, they look for popular trends, which, in this case, would include items such as machine translation, CMS/TMS and so on.

Additionally, procurement prefers to target items with no “face” associated with them. Why? First, it is human nature to initially deal with issues where you have no personal connection — quick word of advice: If you currently do not personally know the key decision maker or someone in procurement, you need to get to know him or her as quickly as possible. Second, CEOs and human resource departments everywhere constantly remind their procurement groups that their “people are the most valuable asset,” which implies that even if the procurement group recommends the reduction or termination of an internal team, they often do not have the authority or ability to make these changes without additional approval. This means that costs generated by software purchases or external suppliers are typically scrutinized in more detail and are reduced or terminated first. This also tends to mitigate the repercussions caused by changes within the company.

Finally, procurement goes after uncommon, unfamiliar or unbudgeted line items. With translation’s low visibility and priority within an organization, many times it is an afterthought or not even considered at all when yearly budgets are created. Translation may also have no process owner and unfamiliar costs associated with it, such as different types of per-word costs.

This is not to point a finger at procurement departments, as they are simply doing what has been asked of them. It merely demonstrates the obstacles that must be overcome as a translation vendor. Decision makers follow this pattern when one of the real issues may be staring them in the face — literally. In the case of content creation, most companies still employ some level of in-house authors. These writers, in terms of tenure in a company, may predate the systems, software or material used to produce the content. The procurement team might even associate with these writers on a regular basis. This can make the situation tenuous. In contrast, translation is generally outsourced, often with no face associated with it. There is no need to justify the changes to the same degree as would be required for recommending the termination of a writer, which could become very complicated due to additional approvals, paperwork or other reasons. The easier target is outside of the company.

The in-house authoring staff is also salaried and isn’t paid by production as would be the case with outsourced work. Technical writers are paid a full-time salary regardless of how effective they are or whether they are busy or not. Where metrics are frequently put in place for translation costs, productivity, quality and so on, and translation vendors have to perform to get paid, similar metrics are not put in place for authoring.

In no way do I mean to target technical writers specifically, as this is a common problem with other types of in-house departments as well. Furthermore, high-quality documentation makes all the difference toward creating a trusted brand and product. Well written and well organized source documentation also makes the translation process much easier and smoother. Similar principles could be applied for localized software as well. However, the translation services industry is again primarily an outsourced service and is part of the much larger business of content development, and therefore faces additional obstacles that other groups or industries do not face.

What is the solution to overcoming these obstacles that constantly require translation providers to adjust their pricing? Procurement departments and decision makers need to be educated in how translation fits into the document creation process and therefore how it should be considered when reviewing processes and costs. By doing this, procurement departments and decision makers will be able to more objectively evaluate where cost savings can be achieved in the overall content development process.


Changing the conversation

The first suggestion regarding how this can be done has to do with listening. As is the case with any sales opportunity, instead of fighting a pricing battle with the procurement team, listen carefully to the client to ensure you have a thorough understanding of the client’s needs and make sure the client understands exactly how you are going to satisfy them. Make certain that quality expectations between you and the client are understood and agreed upon, as there is not a “one-size fits all” in terms of customer expectations or for different content types. Try to examine why customers are doing what they are doing, even in terms of their procurement strategy. For example, if they are using a CMS, discuss with them why they are using it. Is it for cost savings, consistency or control of the authoring? Being educated in their strategy around other key decisions they have made in regard to content development can be used to create a bridge for similar discussions about translation — is the primary goal for translation to achieve cost savings, quality, to avoid the hassle of managing the translation or a combination of things? Assist them in understanding what the real “cost” is to achieve these goals. Then, when cost cutting is requested, these decision makers will be armed with the proper information to effectively evaluate whether additional cost savings can be achieved without compromising their goals.

Help clients understand the need to review and fix other processes first to increase the effectiveness of the translation and potentially bring down translation costs. I recently spoke with people at an organization about their content development process. Within a short period of time before even discussing the topic of translation, it was easy to identify how broken their other processes were. Even though nearly all of their authors were in-house employees, the authoring department was divided between different groups spanning several continents. They had multiple CMS tools in place that didn’t communicate with each other. They also had a small group of outsourced authors that basically functioned as its own writing group. I’m certain that from a quality and cost perspective, this company would benefit significantly more by revamping and centralizing the content creation process than it would from lowering translation costs.

Along similar lines, if the initial source document quality is poor, the translation difficulty will be high, turning slim translation profit margins into zero-profit margins or even losses, making additional cost reductions almost impossible. As the saying goes, “garbage in, garbage out.” Help your client also understand that quality translation is a meticulous process as is the case with authoring, and can sometimes be nearly as difficult.

Assist your clients in understanding the value of fully engaging someone, or a group, to manage translation and translation vendors within their organization if they have not already done so. This will not represent an immediate fix due to the problems I have stated above, but will be a step in the right direction and will save them time and costs in the long run. Furthermore, with weak economies in many regions of the world, it is also one of the best ways to confidently expand business to produce a strong global product. Fortunately, several companies have already done this with success, including Dell, Adobe, Cisco and many others, and most of these companies are also happy to share their experiences.

Finally, help clients quantify their translation costs and yearly spending. This can be done using some basic cost of goods sold (COGS) calculations, taking into account only the costs associated with producing the localized portions of the product — documentation, software strings and so on. For example, let’s assume that XYZ Company has a group of three technical writers that produce source English material, and their total COGS to produce this material is $200,000. Now let’s say the COGS to translate the equivalent material into German using an outside translation provider is $20,000. Let’s assume XYZ company’s English-speaking market brings in revenues of $10 million per year. If their German-speaking market brings in revenues of at least $1 million, you could make the argument that the current translation costs are already justified. If they are starting in a new market, the same argument could be used for potential sales to that market. Seeing the numbers may also encourage them to expand into other markets and languages as well.

This isn’t to say that additional cost savings can’t and shouldn’t be realized if your favorite customer’s procurement group comes knocking. Translators, translation companies and in-house translation groups should continually be striving for improvement. Technology, automation and processes should be regularly examined, evaluated and employed to the greatest extent possible. Resource managers should constantly be adding and testing new resources to add to their pool. For, if nothing else, the competition in the translation industry is fierce and will otherwise leave you behind.