Uncovering the Hidden Costs of Translation & Localization: A Quick Take

Uncovering the Hidden Costs of Translation & Localization:  A Quick Take

Introduction — What are the Hidden Costs? Where are they Hiding?

Picture this: Your management team has spent countless months analyzing, planning and developing enhanced service offerings with new brand messaging strategies that will keep you ahead of the competition. They’ve understood what the customers want, redefined the unique selling propositions, and got the communication strategies in place. It’s taken them weeks (or even months) to develop new creatives and rewrite copy-text for brochures, customer support materials and the revamped web site. Everything is in place for the high-impact launch.

But, wait: what about the local languages needed to communicate with, persuade and woo local clients to give you their long-term business, and to support and nurture the relationship for the years to come?

Unfortunately, after spending all this time and money to “get it right”, some companies dilute the value of their brand by placing low importance on the high quality translation needed to build long-term trust with local clients, investors or employees. This is especially devastating if you’re already in a market with established competitors who’ve “got it right”. Misconceptions about the perceived costs of streamlined translation also help push this mission-critical resource further down the ‘To Do’ list. But what and where are the hidden costs?

It really doesn’t matter if you’re one of the ‘big boys’ or not, because when it comes to calculating translation costs (and ultimately ROI) there’s often a lot more to it than meets the eye. To uncover some of the hidden costs surrounding translation and localization let’s first take a brief look at the three translation models most commonly adopted by companies:


where companies build an internal translation group. (Centralized Model)


where each country develops and manages its own translation model. (Decentralized Model)


where companies have a central point to manage outsourced translation. (Blended Model)

Some companies can afford the costs to build and maintain a dedicated pool of in-house translators (Centralized). To understand more about Centralized Model , and why it doesn’t work, all you have to do is look at the not so ‘cash-strapped’ software and automotive industries. Originally, these ‘big boys’ spent serious dollars on this approach, but only because there were no real alternatives around at the time. However, during the early 1990’s, developments within the translation industry gave them another option — so they quickly abandoned their current approach in favor of a Blended Model — centralized management; decentralized outsourcing. By going down this road they actually improved their translation quality, covered more languages, accelerated their time-to-market, uncovered and decreased their costs, while reaching new translation ROI highs. The Decentralized Model wasn’t even considered. It was (and still is) perceived to be a logistical nightmare in terms of management, quality, productivity, cost, accounting, timing, ROI calculation, etc…

In contrast, most companies tended to (and still do) opt for the Decentralized Model because of the perceived low set up and management costs. However, this is changing. The dynamics of globalization are putting pressure on companies to streamline or centralize content management, and by doing so, have presented managers with an opportunity to identify where the hidden costs are; understand how these costs impact company competitiveness, and; implement the resources needed to eliminate leakages. Some of the hidden costs they uncovered included:


Initially this seemed to be the most cost-effective approach, however, they quickly realized that staff in local offices weren’t qualified translators, nor were they employed to translate. So because their local offices lacked translation expertise there were quality issues that led to poor, unsynchronized brand messaging, which decreased the value of their brand. Frequent time delays also led to higher costs by slowing down time-to-market which impacted on revenues from their localized products. Of course, all this happened after their management team had invested their time and company money to develop specific messaging strategies so their company could speak with one voice.


By comparing a translators’ salary to, for example, their Marketing Officers’ salary, these companies found that translating documents in-house actually cost them more. Coupled with the time it took to produce a lesser quality translation, there were compelling reasons to consider centralized management and decentralized outsourcing that resulted in a higher quality translation, for less cost, produced in a fraction of the time.


It didn’t take them long to work out that every second their staff spent translating was time away from regular, ‘productive’ duties. Or in other words they identified losses in company productivity. It was mind-blowing just how much time (or missed opportunities) this amounted to when they multiplied this by the number of local offices.


On average they found it took their offices 10-15 times longer to produce a lesser quality translation. And this wasn’t even considering any formatting or engineering that was needed. Of course, this caused costly delays in getting localized products to market, especially if there were multiple products that were updated and re-released several times a year.


Knowing that translation was just a part (albeit the main part) of the costs, they looked at formatting issues. They uncovered some startling facts. Most of their local staff simply didn’t have the professional desktop publishing or HTML engineering skills (and why should they?). They found that outsourcing to a local firm was usually the only option. So now the costs of in-house staff doing the translation, their time spent sourcing and dealing with a local partner, and the fee-for-service the vendor charged needed to be factored. ‘Last minute’ time delays or quality problems also pushed their costs up.


Often, local staff or local translation firms didn’t take the time to define a terminology glossary so specific company terms (the jargon that made them different) or industry ‘buzz words’ had completely different meanings. Editing and proofreading by a second set of eyes also didn’t take place. All of this had adverse effects on quality. Multiply this by the number of local offices and, at best, they found their brand messages were diluted. At worse, it ended in total disaster.


Managers found that each office had their own quality ‘standards’, which varied vastly. The decentralized approach made it almost impossible for them to quality control local vendors or translations done by local staff, particularly if there were many offices in the equation.


Their costs started to escalate when they looked at the typical services offered by local vendors. Very few vendors had the capabilities to deliver a turnkey translation service, which included, formatting, desktop publishing or HTML engineering. In turn, this added significant ‘extra’ costs the bottom line of each local office as they had to find another vendor to do the formatting, graphic design work or HTML programming.


Of the companies that chose to use freelancers, most of the managers found that these ‘one man bands’ didn’t even bother to have someone separately edit or proof their work, so quality problems arose. In addition, freelancers slotted the work into their schedule, thus creating additional time-to-market costs.


Every local vendor you outsource to will have their own methods of costing and billing translation projects. Multiply this across your network of offices and you’ve got an accounting nightmare on your hands.


These are just some of the hidden costs that managers of companies migrating from a Centralized Model to a Blended Model discovered. We haven’t even touched on the hidden costs of localization, yet the list goes on and on. For example, what are the immediate or long-term effects on brand equity, customer support, time-to-market or inability to produce an ROI? All of these factors must also be added into the ‘hidden cost equation’.

So, by taking the time to examine where the hidden costs were and how they affected company competitiveness, these managers could now address all the issues. They were able to build strong cases for budget allocation because they now had the ROI metrics. They increased productivity. By reducing time-to-market, they reaped more revenues. By ‘going central’, they were able to manage processes effectively, including quality control. They covered more languages, and reduced their costs.


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