Why Isn’t Lionbridge King of the Globalization Jungle?

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its closest competitor in the localization business. It has about 225 employees in the Boston area, split between its world headquarters in Waltham and its operations center in Framingham.

And in an interview last week, Kathleen Bostick, Lionbridge’s vice president of global services, detailed the company’s technology investments, which are intended to speed big translation projects. The biggest component is a “translation memory” system called Logoport, which matches up texts needing translation—say, a manual for a digital camera—with similar texts that have already been translated—for example, a manual for an older camera from the same manufacturer. “When you’ve got an update coming, you run it through the translation memory, and it will calculate how many new words there are, how many fuzzy matches, and how much material has already been translated, which saves a tremendous amount of time,” says Bostick.

Logoport, together with the specialized glossaries Lionbridge has compiled for translation projects in various industries, is part of a larger platform called Freeway that, according to Bostick, is the industry’s only Web-accessible translation services platform. While translation memory and computerized glossaries are common tools in the localization business, Freeway is the only translation system that allows thousands of freelance translators to log on simultaneously from their homes or wherever they happen to be located. Clients can access the system too, uploading projects for translation directly from their own content management systems.

“Nobody else has an online solution,” says Bostick. “We just put our one billionth word through Logoport.”

Lionbridge needs all that automation to deal with booming demand for localization services. Maturing economies in the Far East, for example, continue to attract Western companies like McKinsey & Company, which recently hired Lionbridge to create a Chinese version of its website. And increasingly, localization goes both ways: UFIDA, China’s largest software company, engaged Lionbridge’s Beijing office last year to create an English-language version of its enterprise resource planning software.

So, with businesses everywhere needing help expanding into global markets, and with so much manpower at its disposal, why is Lionbridge having so much trouble making money?

“It’s not revenues that are the issues at Lionbridge as much as margins,” says Sargent, whose firm does market research on companies in localization, translation, and outsourcing management. (Sargent himself was director of marketing communications at Lionbridge from 2001 to 2005.) “Their gross margins stink, and they’ve never been able to fix the problem.”

There are a number of theories about why Lionbridge’s margins lag behind those of competitors such as New York-based Translations.com and Maidenhead, UK-based SDL International. One is that the company leases too much expensive office space in cities around the world—and in fact, a recent cost-cutting campaign has led to office closures in New York and Germany.

Lionbridge’s net income is also being hammered by the U.S. dollar’s slide against the Euro and other foreign currencies, which makes it more expensive to employ people abroad. “The companies that are being hit the hardest are the companies that are Europe-based but selling in the U.S, because all of their costs are in Euros but their sales are in dollars,” says Sargent. “Lionbridge is a little better hedged than its European competitors in that respect. But they still … Next Page »

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Wade Roush is a contributing editor at Xconomy. Follow @wroush

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