S03E12 Leading A Language Company in Volatile Economic Conditions

Renato Beninatto

Thank you, Sultan. It’s great to see you again and to be here back on your fantastic podcast.

 

Sultan Ghaznawi

Thank you, and it’s so good to have you again on this podcast. I honestly missed talking to you. We normally meet in conferences, but a lot of colleagues are probably listening for the first time or haven’t listened to the previous episode. So for those colleagues listening to you for the first time please provide them a quick introduction about yourself and what you do.

 

Renato Beninatto

OK, I am the chairman of Nimdzi Insights and the publisher of Multilingual magazine. I have been in the space for about 40 years as a translator, as a business owner, as an executive in large translation and localization companies. And more recently as an analyst and consultant in this space. I was the founder of five companies in the language business and I enjoyed this business. This is has been my life and it’s always exciting because there’s an industry that it’s always advancing, always changing, it’s not boring at all.

 

Sultan Ghaznawi

Well, that’s something I definitely agree with you. And what are you up to these days, Renato, what’s keeping you busy?

 

Renato Beninatto

Well, I’ve been trying to get inspired about I have a sense that we are in a period in our business that it’s waiting for a major shift. We’ve been very business as usual for quite some time. So personally what I have done, I have delegated the management of my companies to professional executives and I have become a product. So they sell my knowledge, they sell my experience, they sell my time, and I can focus on observing, studying, analyzing, and discussing what is happening in our space. And what opportunities we have.

 

Sultan Ghaznawi

So with that, let me hear from you about what you see today. You said that our industry is up for some changes and shifts. But what type of general trends you see in the industry today, what is happening and where is the industry headed in the light of everything going on around us?

 

Renato Beninatto

OK. So as usual, and I’ve said this multiple times, is that this industry is impervious to crisis. It’s always growing, right? Sometimes it grows at a slower pace, sometimes it grows at a faster pace. This is an industry that thrives in challenges, the pandemic was the latest. It’s it was a clear uh, fear driven moment in the beginning where everybody didn’t know, everybody was afraid of what could happen. And then at the end of it, looking back, everybody had banner years, the best year ever, the best growth that they had expected and so on. So the business will, the trend is upward as usual.

 

The, what other trends I see I think that we are poised for certain reshuffle. I will always remember a story that I heard about the Cochrane project, which is something that happened in the medical industry where it was a big shift from the eminence based medicine to the evidence based medicine. In the eminence base, it was the fact that you were a scholar, that you had been working as a doctor for many years gave you authority in describing what was the treatment for a disease, even though that treatment might be just a fluke or there was no scientific evidence for that and moved from the evidence based where you use statistics data to determine what was the best course of treatment for any disease and I heard an interview with the founder of this Project Cochran and they asked him, so in the beginning, there was a lot of resistance to this change and what happened? Well, how did most of the universities in the world get to the point where evidence based treatment is the only way that medicine is taught today? And the guy said, you know, our adversaries, the people who objected to our approach died.

 

So I think we’re going through a similar phase in in the language services industry where the generation, my generation, the generation that resists change, that was born before the Internet is retiring, is getting out of business, is moving away. And we have a digital first generation of professionals in our space that look at the problems that we have in a different way. There’s still a lot of, especially in associations and professional organizations, a lot of resistance to adopting technology from the old timers and people are still teaching how to think in terms of uh, us and them. Uh, to a shift where a younger generation is has to cope with multiple sources of information, multiple types of work environments, multiple things. It was very easy when it was a typewriter and carbon paper, but today you have to work in five different translation environments you have to engage with translation memory, so that’s another shift that is having happening in our space.

And the final shift that I think is preparing to happen has to do with value and money and price and things like that because the landscape is changing on a daily basis and I’m not saying that price per word is going to move and people are going to charge in a different way because uh every single attempt that I have seen in the past has failed miserably, but I think that there are different criteria that are going to be used in determining value of effort, value of work.

 

Sultan Ghaznawi

So let’s actually focus our attention on our topic of conversation today which is you know how the current economics and the situation around the world will affect the language industry in the LSP business. Tell us about the macroeconomics and where does our industry stand in the context of everything around us?

 

Renato Beninatto

OK, uh, from from a big picture perspective, nothing is changing, right? The reality is you’ve heard me say this before when the economy is good we translate contracts when the economy is bad, we translate lawsuits. The type of content might change, but our role in infrastructure as an infrastructure for business is not going to change. There might be some contraction in the demand and, but it’s not going to affect the growth overall businesses need our role in the business environment is to enable communication and businesses don’t thrive or survive if they don’t communicate with their customers. And when there is a crisis, there is a tendency to increase the need for communication. So from a macroeconomic perspective, I don’t think that the demand is something that we need to worry about. On the supply side, the challenge that we have is that there is a scarcity of talent. It takes a long, long time… so it’s very easy to double the volume of content overnight. It’s very hard to double the number of translators, and this is where automation and productivity come into play in the conversation.

 

The other element that we have is because our, and this is macroeconomic in the sense, because of the lack of maturity and also because of the fragmentation of our business, we don’t dictate pricing and pricing is driven by competitive forces in the market and because the market is not very mature, especially in the low levels, the first type of conversation that providers want to have is about price and reducing price. They assume that the most important goal of the buyer is to reduce their cost of translation. And this is a very, I called this grocery store mentality, right? We drive down the value of the services that we provide because we don’t know how to talk about value, we only know how to talk about price. So there is an element of maturity in how we position ourselves in the marketplace and how we value our services, but the most important consequence of that is the fact that translators are not making enough money, so they’re choosing to leave the industry.

 

I recently was working on a consulting project with a with a client in Brazil. And we went and we had a meeting in one of these, how how do we call, shared spaces or the coworking spaces and we arrived there and the receptionist asked her what what kind of business are you in? And I said, well, we’re in the translation business and the woman says oh, I was a translator. You say you were why you? Why didn’t you work in translation anymore? She said oh I was doing medical and pharmaceutical translation. I went to translation school, but it was, I wasn’t making enough money, I was working very hard, I wasn’t making enough money and I got pregnant. She was pregnant. And I needed some stability, so this woman preferred to become a receptionist in a coworking space instead of continuing to work in London in a knowledge activity like translation because of the pay, because of the effort and the pay.

 

So think of this person went to college for four years, invested in her development, invested in technology, was working from home, couldn’t make a living in a decent way that she preferred to become a receptionist. This is just an illustration of how we’re shooting ourselves on our foots, on our feet. Where’s my English? And we instead of working together and elevating and promoting this business. So I think that this combination of inflation and scarcity of talent is going to drive a change in how we perceive the value of the things that we do and how we sell it in the marketplace. If it doesn’t, we should otherwise we’re doomed to disappear.

 

Sultan Ghaznawi

So Nimdzi is very active, you know, monitoring what’s happening in the landscape in terms of threats, opportunities and all of that. Let me ask you about what sectors and industries are expected to weather this economic downturn better than others based on your research. What do you know?

 

Renato Beninatto

I don’t know much. It’s still too early to talk, because the first of all economic downturn, there’s some controversy around that, right? There is inflation. It is because even though there is a contraction in GDP in certain countries, but the unemployment rates are low, there is a heated demand for talent, so inflation is a challenge and it’s ranging from, I don’t know, 4% in France to 9% in the United States to 55% in Argentina. And I don’t know what it is in Zimbabwe these days, but it must be in the thousands. The inflation is a disease in the economy and companies find ways to protect themselves around that.

 

Let me give you a little bit of context to this comment. I started my first company in Brazil in the 1980s. This was a period where the inflation rate was around, I don’t know, 15 to 20% month in the following ten years, we would reach something close to 2000% a year in inflation. You would receive cash in the morning and go to the supermarket that day because the next day the prices might have gone up by 10% or your money might have been might have been divided by 10, 15, 20%. It was a crazy situation, but companies survive and they find ways to cope with this. Inflation has to do with price and value, so this goes back to the early part of the topic that we were talking before. So what companies need to learn is how to deal and how to have conversations, creative conversations with their clients.

 

One of the things that I recommend to do is that because we’re very mature as business people in general, Uh, you pay for your utilities, or for your cable, or for your Netflix subscription uh, and your clients, your suppliers, your the companies that you buy from don’t ask you know whether you agree, if you can increase the price or not. They just increase it, right? Every one of us has some type of client in our portfolio that is not monitoring price closely, that is not uh, worried about price where a 5% increase might make a big difference for you and be totally unnoticeable for the client. So that client that is not monitoring the numbers of words that you translate, that client that you have been working for the last 10 years.

 

I had a conversation with one of my clients recently where I was approached and they said well we have this client, we’ve been working with this client for 15 years and they haven’t, they’ve been sending work to us regularly and they haven’t been responding to my attempts to communicate with them, and then they just keep sending work they don’t want to talk and I want to force a conversation and I wanted to offer them a discount to start the conversation to get them to talk to me and I say why, right? What what is the point of offering a discount? I said if this client is not… it’s happy with your service has been doing keep sending work to you uh, increase your price in the invoice. They’re not even going to argue with you or uh, you don’t, you don’t need to communicate. And if they, if they notice, if they think that it’s important, they’re going to call you and they’re going to start the conversation with you and you’re going to justify that your costs are going up and that you have to increase your price.

 

Obviously that doesn’t work with every client, but it’s something that you can try and you shouldn’t be afraid of doing because you can always go back and give a discount if the client is very important and reacts negatively to it. This, if you’re going to have a conversation about price with your clients, this is the time to do it. Everybody is open to it and uh a very few client s… and you mentioned the Nimdzi research, we know for a fact that the number one criterion for clients is on time delivery, the second criterion is domain expertise, the third criterion is quality, and the fourth criterion is price. So if you have a relationship with your customer for over the years, don’t be afraid to start sneaking in increases in your prices in your invoices, and you don’t even need to have a conversation about it. If they question you have a conversation and justify it, or if you’re too scared, go back to the previous price. But this is the time to do this.

 

Sultan Ghaznawi

That’s a very, very good point, Renato. And my next question was related to that as to whether is it a good time for translation companies to renegotiate the rates with their clients and you just answered that but is it justifiable in the context of the general inflation that is widely accepted?

 

Renato Beninatto

That’s an excuse, right? It doesn’t mean that you need to increase your price by the inflation rate. We haven’t increased price in this industry for years. I think that, I usually do an exercise Sultan, it’s very funny because I’ve been doing this exercise for 20 years. And it hasn’t changed over time. I ask a client uh, a final buyer, right? A localization buyer if uh your boss comes to you and says I have a project, it’s a million words into 5 languages, how much do you tell your boss it’s going to cost? And invariably it’s going to be between 4 and million dollars. So in the mind of the customer, there are fully loaded costs for translation is between 20 and 25 cents. Mostly 25 cents per word, right? 1,000,000 words, 25 cents per word, 5 languages it’s going to be a million dollars, and the this is the in the mind of the client, these prices have been constant for 20 years. How do you break into that?

 

Unless you won this client last week because you offered a price lower than your competitor, clients are ready willing to have this conversation if they’re having, if you are in a negotiation situation. Not this time, but in the next couple of months, clients are going to start preparing their budgets for 2023. This is the time that you need to talk to them about increasing your prices and let them know, hey client, uh, next year our prices are going to go up, I want to give you the heads up, if you have any issues, we can discuss and, and this is why I say the market is ripe for this because everybody is going through this process and you can have conversations about ways to reduce the total cost without reducing the price right, by using technology, by uh, improving integrations, there are many other services that you can provide that will reduce the total cost of translation for your client even though you’re increasing the price, right?

 

You have to be creative, the challenge here is how do I think differently? How do I think in terms of the value that I create for my client and not the price of the word? Many years ago I had a conversation with an electronics company that was translating manuals for TVs. It was a Chinese company and they were talking about price, price, price, price, price. And I told them, look how many TV sets do you sell 100,000, 200,000, 500,000? Divide the translation of your manual by 100,000 units that you’re going to sell, then you’re going to see that this doesn’t make a dent in the cost of the product that you have and you’re negotiating, reducing price, reducing your costs by 10% and this is going to have an effect of 0.000001 percent in the final cost of that TV set. And the client said, oh, I had never thought of it that way. If you understand your clients business and you show them that it’s better to have a better quality for a small increment in the price and that you have, the other argument is that your supply chain has increased your prices and we should be talking about paying more for translators otherwise they’ll be leaving the industry.

 

Sultan Ghaznawi

And I was going to ask a question exactly about that, in the context of inflation and particularly the higher cost of goods and services, what does it mean for our industry? Well, obviously for our customers it means something we can just, we justify the cost, but you know now our costs our supply has also gone up. And you know, for some of the larger LSP’s maintaining offices and the overhead that has gone up. So what does overall inflation mean for us?

 

Renato Beninatto

Well, and here, that’s a very interesting point there, Sultan. You see, for me the cost of office has gone down because Nimdzi has gone totally virtual. So it’s and this is where I say that there is a when I tell you that we are uh, in in the uh, doorstep of a shift in paradigms is that things like that the cost of technology has gone down, the cost of office space in my case has been eliminated. Uh, what is the all the only rule input that we have in our space is talent, right? People are scarce. We have this whole, the great resignation. Young people are choosing their jobs. They don’t want to be doing ****** jobs. They don’t want to be bored in the work that they do, and we have, we struggle finding qualified project managers. And this is not, you see, uh, ten years ago, the trend, the shift was uh, outsourcing to low cost countries, well, these low cost countries, Argentina, China, Vietnam, Peru and Mexico and so on, all these, this lower cost countries, they have professionalized and people know their value, the work from home trend has made them more available to compete with your local talent here. That cost is going to go up. Right?

 

So these strategies that we had in the past to lower the cost of production are not going to be working the same way as they used to work. You want to go, you can go to Africa and find talent in Africa. But the education levels are not there. The infrastructure is still not 100% reliable. We have three people working for us in South Africa at Nimdzi. Their cost is very similar to our costs with the costs with our employees in Europe. Right? It’s the, the market is becoming global in terms of cost of talent. So these are the things that we need to keep in mind and we have to reshuffle our costs and we shouldn’t be afraid of talking about that if you want, if you the listener want to work on improving your conversation with clients, learn how to talk about value and not price, and learn how to describe the value that you create, how your costs affect the quality of the translation that they have, not only the cost of the translator, but the cost of the project manager, the cost of the localization engineer, the cost of the DTP professional that is working on their projects.

 

All these things are going up and are becoming more leveled in terms of price worldwide. So it feels like I’m hammering on the same topic over and over again, you need to learn how to sell value because now is the time, I’ve said this for 20 years, but now is the time where the conversation about value has become really important.

 

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Sultan Ghaznawi

Renato, I want to hear from you about the impact of economy on other aspects of translation business such as mergers and acquisitions, international growth, in particular for larger LSPS and so on. What are your thoughts on how the economy will affect these kinds of things? So what will be the impact like?

 

Renato Beninatto

OK. So, scarcity is the word that comes up to mind. If you look at the top 100 companies in the Nimdzi 100, you will see that the majority of the companies, large companies in our market today, are owned by private equity 10 years ago, the majority of the companies in this space were founders, executives like us, like you and like me. Today, the majority of the companies in the top echelons are owned by investors who want to look at the uh, financial results before they want to talk about quality and anything else. They look at the EBITDA. So what is happening is that it’s a phenomenon that is cyclical, you know, our rankings today are top heavy. You have, 10 companies over $300 million company, at $300 million and we very quickly go down in the rankings and the 100th company is about $12 million. When you talk about mergers and acquisitions, the cost of buying a million dollar company, I mean the effort, not the cost, the effort for doing the acquisition of a million dollar company is the same as for a $10 million company and virtually the same as for a fifty $50 million. So the large buyers are not interested in buying million dollar companies. It’s a dent in in their business model. They’re looking for the $100 million company, $300 million companies, for the $50 million companies, and there aren’t many of those left. So the dynamic of this market is going to be more or less what has happened in the past. The middle companies get acquired, there is a hole in the middle of the ranking and the smaller companies tend to roll up and you get a few million, two million, $3 million companies that that merge get into acquisitions and they fill this void. They grow to 30, 40, 50 and then the big companies come and buy them and this is a little dynamic that creates a funnel of business going on all the time. So the fact that there aren’t companies in the middle has driven the value of those mid-sized companies up. The value for smaller companies is still in the same range, three to five times the EBITDA. The value for the 15 to 100 million dollar companies is around 10 times bigger, so it pays to grow if you want to sell your business and to get a better valuation for that.

 

Sultan Ghaznawi

Another aspect of the current wave of the economic shift, if you call it that, is automation, as you mentioned earlier, we see it happening everywhere and the excuses cost and availability of labor. Well, this subject is beaten to death in the context of automation for machine translation, where do we stand today with regards to labor availability to us, but also the rapid adoption of automation by our our client industries?

 

Renato Beninatto

OK, so this is a great conversation, Sultan, because I think it’s a myth, I think that what you’re describing is more fear driven than reality driven, and I’ll explain why. We’re publishing the Language Technology Atlas, which is this tool, this map poster that we publish every year at Nimdzi with this year there are 800 technologies that are offered in our space. The buyers of translation and localization services, with rare exceptions, are middle managers that have very little knowledge about the complexities of machine translation. In what we sell in, as LSPs, is the fact that we manage complexity, we manage workflows, we manage processes that are complex for the clients. They involve multiple languages, different language combinations, different volumes, different formats different delivery mechanisms, different delivery times.

 

So there are many variables that need to be managed and the clients outsource that to the LSPs. What is happening with machine translation is that when you talked to a layperson about machine translation, they will look at it as a monolith, they think of Google Translate. Most people think of Google Translate first because it’s the first mover advantage, it’s the biggest, it’s the most accessible and so on. But the reality is that there are over 40 machine translation solutions. And if you look at the reports that the industry publishes about the performance of the different machine translation solutions, you’re going to see that there is half percent increase, this month DeepL is ahead of Amazon Translate, which is ahead of, uh, Microsoft Translate. And next month it’s going to be ModernMT being ahead of Google and whatever, right? The reality is that machine translation involves complexity in the sense that not every language pair is the same, not every direction is the same. So Japanese English is different than English Japanese in terms even with the same tool.

 

The performance varies based on the direction. And then there is the specialization, so you have a generic machine translation solution. We have specialized machine translation solutions. Each one of these is different and one of the things that we need to to learn is that the clients don’t know and they have to come to an LSP. The more machine translation advances, the more solutions there are, the more relevant we become in this space, because the clients have the paradox of choice in their hands. So I tend to be optimistic about this because as machine translation advances becomes more complex and we are the specialists and the clients need us.

 

Sultan Ghaznawi

So let me ask you about, uh, you know, you mentioned about the freelancers earlier, I’m interested to know what your thoughts are on the impact of the changes in economy on our most vulnerable colleagues, including freelancers that are in emerging economies. How can we make sure they can make sure to be active, profitable, sustainable? Because at the end of the day, we all make up this ecosystem,

 

Renato Beninatto

Yes, you see, it’s the same problem, this is a chain, right? It’s an ecosystem. You said it, the translators are the most important element in our supply chain, but they’re also the most vulnerable, the weaker, the weakest link. There, there is another element. Demographically, our industry is mostly, the translation work is mostly performed by women and some of these are working part time and they have very little negotiation power. So in the example that I gave earlier, it’s easier for them to quit and move to something else than to convince a small LSP to pay them more.

 

So I think that what I’m seeing in in talking to LSP is that they’re struggling in getting talent, in retaining talent because the market is very competitive and all it takes is a, uh, a vendor from outside your country to offer you 20% more and you move and you work with them. But still, what I see more and more happening is the veterans, the more experienced translator just checking out and preferring not to work than to work for low rates or preferring not to work just, you see, we’ve, we should find as LSPS, we should find ways to pay more to our suppliers instead of finding ways to screw them in a different way. This, uh, edit distance pricing that some companies have started to promote and translators are just saying no, right? It’s great for you that you can measure how much effort I put into the translation, but it’s not worth for me economically to be working and only finding out after I did my work how much I’m going to be paid for it.

 

So we all need to work together in this, in having serious conversations about how much we want, but the most vulnerable people… I was once in a conference and I was moderating a panel about pricing and I remember clearly one of our colleagues, a freelance translator who was a mother of three kids and her husband was unemployed. The husband was looking for work, and she only had the opportunity to work from 10:00 PM to 2:00 AM in the morning and she didn’t have time to negotiate, she didn’t have time to deal with the clients during the day, she worked at night and not much. She was doing whatever work she was able to get. We want to avoid this. We want to have good talent recognized and the translators don’t be afraid to ask for increases. Like I said before, you can either communicate that your prices are going up or you can negotiate, but don’t be afraid to just say that your price is higher starting next week or next month, next project, whatever that is.

Sultan Ghaznawi

Let’s shift gears here, and while we’re talking about emerging economies and vulnerable people, we also see conflicts and unrest and parts of the world that will directly or indirectly affect the western economies. What kind of threats or opportunities or not or do they present to the language sector?

 

Renato Beninatto

So the, obviously the example that comes to mind is Ukraine and Russia. There’s a lot of talk about this when the war started in February but what has happened is that the Russian LSPs are doing business, the Ukraine and LSPs are in business and life goes on right. Again, there’s more stories, there’s more demand for language services, and I I believe that these are marginal situations that don’t really have a macro effect in the business, maybe of one of the things to look at is how China is performing because China is one of those markets that doesn’t affect the general industry, even though it’s a big content generator and a big exporter.

 

But it’s not a big source language, right and uh, because prices are very depressed in China, the changes that are happening there have little macro effects for us there. They are basically cancelled by the growth in other areas, I would say. I don’t see this as a major concern for our business as a whole. Maybe a moral concern, but not an economic concern.

 

Sultan Ghaznawi

Speaking of China, Renato, what supply chain issues, in particular, what is happening with China, both politically and economically, with COVID still keeping a stranglehold on manufacturers and businesses there, do you see a shift in productivity? What opportunities do you see for our industry under the new supply chain model where countries like Vietnam or Brazil are picking up the slack from what China cannot deliver?

 

Renato Beninatto

Interesting! So there’s another element here that is this whole shift towards and we just had here in the United States the Inflation Reduction Act, the Biden passed, which is essentially investment in green energies uh, this is another paradigm shift that is going to happen is you have. Uh, technologies, new things coming into the market, new types of content. You mentioned Vietnam and the first thing that came to mind is that I read that there is a Vietnamese electric car manufacturer that is opening up factory in the United States, this will require a lot of translation for sure. There’s new brands.

 

The whole electric car movement is creating new brands, new relationships, new supply chains. And in the United States, the other thing that happened is there is this shift of transistor chip productions from China to the United States and several companies are in-suring back to the United States. But at the end of the day, where the technology is manufactured is only going to affect where that content is invoiced to. The content is going to be growing and it doesn’t matter where it comes, it will need to be translated into the languages of the markets that the product is going to be sold. Uh, we are global by nature, right? I like to say that the first disruptive innovation that happened in our industry was in the late 80s, early 90s when e-mail started to become ubiquitous and we shifted from translations doing being done in a 50 kilometer radius from your office, to translators not being done by natives in country.

 

This wasn’t how it was done before, and this is not going to change. So, uh, whether the content comes from Vietnam, from Brazil, from South Africa or Botswana, uh, it’s, uh, content in one language there needs to be converted into the other, and we’re going to have to do it and deliver it according to the need of the client. So this is when I say that this industry is not really affected by so many macroeconomic factors as other industries are.

 

 

Sultan Ghaznawi

At the beginning of this conversation, you mentioned that our industry is ready for a change or a shift. I would like to hear your opinion where do you see that change happening, in what sense is it automation, is it more to do with what we are actually doing, moving from translation into content processing? What is exactly the shift that we’re waiting for?

 

Renato Beninatto

So think of what happened when we moved from 3G to 4G. That’s what enabled Facebook and Twitter and LinkedIn to explode, right? Now we moved from 4G to 5G and from fossil fuel. We’re moving from fossil fuel to electric engines. I was walking the other day on a bridge here near my house and I was shocked at the number of electric cars that I saw here in Seattle, compared to what I would have seen a year, two years ago. There is a lot more presence of them. So there is a change in the platform. Let’s say you have the operating system of our environment, of our business environment. We’re going into 5G, the metaverse has become overused term because we looked at this cartoonish thing that the metaverse is.

 

But the 5G and electric cars or the movement away from fossil fuel are two major shifts that will change what we translate, that will change the platforms where we do it, it’s going to change the productivity that we have, but what will not change is that there’s going to be content that needs to be converted from one language to the other, and that you need people to be managing that complexity either as project managers or as individual contributors. In the case of translators, editors, DTP’ers or whatever that function role is. Think of the minority report movie with Tom Cruise making gesturesto review some files in this screen, transparent screen, we’re moving into that direction. A lot of the things in that that we described in that movie like facial recognition are part of our day-to-day activity and we don’t really think about that. So what we do is not going to change how we do it and on what we act is probably going to change. So that’s the shift that I see.

 

Sultan Ghaznawi

Speaking of, you know, a climate and green energy sectors growing, I’m going to ask you about what new areas of business will find translations as a means to reach out to the world. In my business, for example, it’s a bit of shameful plug, but we do a lot of data services, so we, for example, work with clients in the agriculture sector and the green energy sector where they monitor forests and we have people, you know who will look at the pictures of forest density, identify the number of trees and so forth. How would those things creep into translation business? Green energies or sustainability is an area that no translation company specializes, and yet it’s a major industry, a lot of funding going there.

 

Renato Beninatto

Yeah, yeah. But you see, what you described is that there is software that identifies, counts the number of trees and so on. That software has a user interface, that software needs to be localized. There is going to be training material for that software. That training material needs to be localized. There’s going to be videos and sales material for that technology and that needs to be localized too, right? So it’s not only because like I said before, everything… we touch every aspect of business and because of that translation is involved in in many steps, maybe not counting the trees, but a simple thing there. I mean there was internationalization and localization in that product if you want to count in English, you’ll have the comma in the dot for thousand and decimal separators, and if you do it in Europe, it’s going to be the dot and the comma, right? Little stuff like that.

 

We’re involved in every part of every activity and the fact that you do data enablement, and which is a fantastic line of expansion for business, is that the data generates reports the reports need to be localized. So nothing lives in a vacuum that is only available in in one language if it wants to thrive. So this is where I think that even with the shifts and changes in behavior in ways that things are, we are always adapting. We’re always moving towards this new thing, and there’s going to be value in doing the old things too. And that’s another myth that I see in the industry in general, is that we have this idea that new technologies replace old technologies.

 

New technologies tend to coexist with old technologies for a long, long time. Uh, recently, I don’t remember what was the situation that happened that we had to find developers that knew how to do Fortran and Pascal, which were languages that were uh taught, I don’t know, decades ago because software, there’s old software, legacy software that is underlying in lots of operations in our world, in the defense, defense space, in the finance space, in the health space. So technologies could exist even though we advance, we always have the old ways of doing things that need to be done.

 

Sultan Ghaznawi

Renato, what economic indicators and gauges should we keep track of as an industry as we are moving along into the next 12 to 24 months?

 

Renato Beninatto

Let me think, of course, inflation because it affects our pockets as individuals and as businesses, right? But what we need to be looking at is, the development in new I don’t want to say new technologies, new platforms which is very generic but error that I try to avoid is to look at things in a linear way, right? That things are going to be an advance and development on the things that we’re going to do, that we’re doing today, that tomorrow is going to be today plus five, and the day after tomorrow is going to be today, plus ten, and so on. The reality is that we need to look at the future as a conic thing, right? Everything is advanced, advancing at different speeds uh, and in different ways that they affect us.

 

So what we eat, where we live, where we, how we are transported, how we, uh, pay for things, how we consume information, all of these things that we do on a day-to-day basis are affected by advances that are happening, right? So we’re driving electric cars, we’re going to be flying on hydrogen powered planes, we’re going to be eating genetically modified or with this alternative protein foods, we’re going to be paying with a different type of currency that is not cash anymore. This is a behavior that has changed and in front of our eyes, the way we interact with money, right? And these are, uh, if we look back at the way we did things ten years ago, it’s funny how much things have advanced ten years from now we’re going to look back and we’re going to say, wow, the changes that have happened are outstanding.

 

So I think that we don’t progress and we don’t grow and we don’t advance in a linear way. It’s not only translation that is we have to look at we have to look at everything around us. And everything is going to grow, change, improve and require our services in different ways to deliver. The pandemic brought us Zoom, the pandemic brought us a complete revolution in the interpreting business and then something else might bring a complete revolution in the way we do translations. But they will coexist, it’s not a replacement. That’s the the limiting behavior that I see most often is thinking that everything is going to be everything is going to be changed inexorably. That’s not the situation. As you can see, I’m very optimistic still.

 

Sultan Ghaznawi

That’s exactly what I was going to say, I always like your sense of optimism. And as we reach the end of this interview, Renato, what is your message for the executives and everyone listening to this podcast today? What would you like to tell them about the economy and how should they build resilience?

 

Renato Beninatto

Don’t wait too long to try new ideas. As an executive your job is, and especially in western economies, our mentality is to focus on growth, and I will tell you what I tell my clients when you wake up in the morning, there are three things that you need to think about. What am I going to do today to grow my business? What am I going to do today to create value to sell my business? What am I going to do today to buy another business? These are the three ways that you can develop a growth mentality. Don’t be afraid to make mistakes, don’t be afraid to try new things. And don’t worry, because you can always uh, get up and do something different the next day. One of the things that I have observed over the years is that we seldom hear about companies going bankrupt in the in the, in the language services industry. It’s very rare I can count on the fingers of one hand how many stories I know of companies that have gone out of business and why? Because this is a growth business. This is an area that there is a room for everybody. So be be bold. Try new things. Don’t be afraid and go out and find clients. Go sell.

 

Sultan Ghaznawi

Renato, thank you so much for the opportunity to speak with you again. It has been a pleasure speaking with you in this conversation. Absolutely on point with regards to what is going on in the world and around us, so I hope we can cover another important topic and in closing, let me thank you again for sharing all your thoughts.

 

Renato Beninatto

It’s my pleasure, Sultan. Good job. I love being in having these conversations with you.

 

Sultan Ghaznawi

Absolutely!

 

It is always fun and interesting to talk to my friend Renato. He has been around in our industry for a long time and seen many shifts and tides. He’s optimistic and that is something I share with him as well. This industry is resilient and shown that economic downturns have had little effect on the translation and localization services, in fact, in many cases the demand has increased. I believe that the next 12 months will see some changes and challenges and we have to be quick enough to adapt and adjust. Language companies will find that demand for translation and interpreting will spike in new areas such as defense, financial services, legal and regulatory, retail and ecommerce. It is important to have a strategy and plan for contingencies, but remember, fear is your biggest enemy.

 

That is a wrap for today. I enjoyed talking to Renato and I hope you were able to pick up some ideas that you could apply to your business and change it for the better. We have many other important topics to cover in the coming weeks, so stay tuned for more. If you have any ideas for topics or best, please do share.

Don’t forget to subscribe to the Translation Company Talk podcast on Apple Podcasts, iTunes, Google Podcasts, Spotify, or your platform of choice and give us a 5 star rating for this episode.

 

Until next time!

 

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