This summer, the association’s research team led by Konstantin Dranch (pictured) conducted a survey of more than 130 German LSPs, and they presented the first results on September 17 in an online conference. With the full guide to be released by the QSD in October, here is an executive summary of the key findings.
Access the full slide deck HERE
Germany – the largest EU market
M&A potential. Germany is a prime market for consolidation. It provides the largest opportunity in Europe for translation and localization services and 1600+ LSPs that are registered in Germany generate more than 1.25 billion euros in business every year.
Polycentric
Despite a huge opportunity, the German landscape has not yet produced consolidated groups in the 100+ million euro range that could compete with Top-20 global players for mega-contracts. Germany remains fragmented and most of the market leaders are medium-sized agencies with 6 to 30 million euro in revenue. These companies are currently facing a choice to get financial backers and embark on a program to consolidate more business via acquisitions and get into a 50+-million euro range, or remain lifestyle family firms and become overshadowed by more ambitious competitors.
There are dozens of mid-sized companies that remain privately-owned, so the potential for mergers and acquisitions is huge. The study identified companies that are the most attractive for acquisition.
Dropping 6% this year due to COVID
The largest translation market in Europe has been growing at a 7% average rate over the last 9 years. This year, it seems that the trend will be temporarily reversed.
Based on figures reported by respondents, we forecast a -6% overall volume decrease, however, many companies are hit much harder, and sales have been significantly redistributed.
Freelancers and small businesses suffer on average more than 35% decrease in sales
Medium-sized and large companies seem a little less affected by the crisis
Life sciences specialists grew in sales
Technology
German clients are becoming more and more interested in language technology, and key players are investing heavily in proprietary products. Traditional LSPs like t’works and Transline have hired move than 10 software developers to drive their digital transformation. New challengers like lengoo and Altagram have received funding to create and market software products.
The next battle for the largest market in Europe will be fought by companies that combine linguistic and technical expertise, and won by the firm that finds the best combination.
About QSD
Qualitätssprachendienste Deutschlands (QSD) association is a respected and recognized body that represents German language services providers for more than 20 years. It is unique in the German-speaking world.
All QSD members have certified quality assurance systems according to DIN EN ISO 9001 or ISO 17100, or proven quality assurance in line with the QSD quality guidelines. Before being admitted to the association, they completed an audit. That makes the association, founded in 1998 a pioneer in the industry with regard to quality assurance.
QSD is an active member of EUATC (European Union of Associations of Translation Companies). EUATC is committed to assuring the quality of language services at the European level. QSD is also associated with the BDÜ, Bundesverband der Dolmetscher und Übersetzer e.V., in the form of an extraordinary membership.
