How do language service providers (LSPs) compare against each other? LSPs come in all shapes and sizes, yet no single element determines how evolved a particular company is. Although revenue is frequently used in comparisons, it alone is not enough of a metric to benchmark what a company is capable of delivering. The resulting variability begs for structure and clear definition, so Common Sense Advisory (CSA) Research undertook the project of creating LSP Metrix, a capability maturity model for LSPs. It describes the journey that LSPs go through as they move from one stage of maturity to the next (see Figure 1).
Understanding how LSPs actually work and learning what drives their growth goes beyond the theoretical value of building a maturity model. Such a model enables all stakeholders within and outside the language services industry to better understand the dynamics driving the language service business and the ability to respond to fundamental issues such as price pressure or technology usage. Thus, instead of chanting “quality, service and price,” LSPs can leverage the model to make a more informed and understandable statement about how evolved they are as outsourcers of translation, interpreting or localization. They can also map out a practical path to progress to a more advanced maturity stage characterized by fewer failures, predictable results and higher profitability.
CSA Research Metrix model comprises 70 factors grouped under five dimensions: 1) business model, 2) business direction, 3) business development, 4) service delivery and 5) resources. LSPs assessing their performance will determine their stage for each of the five dimensions; their average stage factoring all five dimensions; and their “real” stage. Based on our years of research and many interactions with LSPs, we define the real or operational stage of the company as the lowest stage level reached on any dimension. For example, even if an LSP performs at a high level on four of the five dimensions, but very low on the remaining dimension, that single low score defines the company’s real maturity stage. Why? An imbalance in operations drags down an LSP’s operations even if it shows much more advanced signs of maturity in other dimensions. We have found that the benefits of achieving a higher Metrix stage in one area are usually erased when another area operates at a lower maturity stage.
Let’s take an example of how to evaluate a sample factor from business development dimension: the organizational model of the sales function. Who does the selling? Is it the owner, salespeople with experience selling language services, career salespersons from another field or even recent graduates? How many people are on the team? What structure is in place in terms of team management, role distribution and territory distribution?
At LSPs at Stages 0 and 1, owners do all the selling, often with no more sales skills than a passion for language and company knowledge. Hiring the first salesperson usually occurs at Stage 2. Due to lack of experience with “hunting,” several false starts or outright failures are common. As the sales team grows, it still reports to the owner who manages them directly. At Stage 3, LSPs have the basic structure of a sales team with a dedicated manager. They begin to clearly define territories and responsibilities. By Stages 4 and 5, LSPs have large sales teams with several layers of management and clear roles.
However, exceptions exist. LSPs that do all their business through a retail translation or on-demand interpreting site do not need a big salesforce to support growth. Instead, they need to show up very high on search engine rankings. What that means is that some LSP types have to analyze and modify certain factors for their individual situations — rating themselves more harshly on some to counterbalance rating themselves more softly on others. Either way, it is important to note that no single factor brings down the maturity assessment of an LSP.
Another rating consideration is technology and standards adoption. The adoption of translation management systems and of certifications such as ISO 9001 or EN 15038 might elevate the maturity of some LSPs whose business processes may otherwise not be at the described maturity stage. These precipitators can give a biased view of the true performance of the organization. In those cases, an LSP benchmarking itself or a buy-side vendor manager should review the rationale behind the element: Does the company strategically exhibit the behaviors around that function or process or just use it at a tactical level?
The reality of the fragmented LSP market is that the large majority of vendors fall in Stages 0 and 1. Not every LSP can, will or should reach Stage 5. And from those that move ahead, many choose to stay at Stage 3 — a phase characterized by the full control of operations and processes. LSPs should determine the value of reaching that next stage against the effort needed to progress to that next step. This includes reviewing elements such as profitability, growth, cash flow or client satisfaction.
Ultimately, the plan to move to the next stage and the ability to execute on that plan matters more than the current stage. To do that, companies should conduct a baseline assessment of their LSP Metrix stage by auditing the 70 factors in the model, looking at documented processes but also talking to various staff members about actual practices.
They can then use the information to fix the areas that drag them down. LSPs should work on filling these gaps and only then outline a plan for what needs to be done to reach the next stage. Thereafter, they need to perform regular reassessments of their maturity. Such reviews allow stakeholders to validate progress as well as areas that regressed due to common causes such as leadership changes, new service offerings or drops in production capacity.