1. Interlexis Pte Ltd GistXL Pte Ltd Select Books Pte Ltd SMALL BOATS, ROUGH SEAS Challenges Facing Small and Medium Translation Companies in Asia Today Presentation at the China International Forum on Translation Industry 2006 TAN Dan Feng (dan@interlexis.com) Executive Director Interlexis Pte Ltd/GistXL Pte Ltd/Select Books Pte Ltd

2. Interlexis Pte Ltd GistXL Pte Ltd Select Books Pte Ltd Translation Ecosystem Producers e.g. international institutions, government ministries & departments, multinational corporations, local enterprises Providers e.g. translation companies, individual freelancers, corporate in- house Trainers e.g. universities, institutes, polytechnics, in-house training, private courses Facilitators e.g. translator associations, standardisation and accreditation bodies Tool Makers e.g. MT, CAT, multilingual DTP developers & support

3. Interlexis Pte Ltd GistXL Pte Ltd Select Books Pte Ltd Evolution of Requirements Time increase in volume expansion of languages diversification of domains proliferation of mediums growth in technology requirements

4. Interlexis Pte Ltd GistXL Pte Ltd Select Books Pte Ltd Shift in Translation Paradigm Individual professionals (free-lancers) Cottage industry model (groups of professionals and small companies/agencies and in-house operations) Large language service corporations with multi- service, multi-national operations High value translation projects are becoming more complex, requiring greater resources and combination of skillsets

5. Interlexis Pte Ltd GistXL Pte Ltd Select Books Pte Ltd RankCompanyHQ CountryRevenue in US$MEmployeesOfficesStatus 1Lionbridge TechnologiesUS400.0400050Public 2L-3US372.3n/a Public 3SDL InternationalUK142.9150050Public 4TransPerfect/TranslationsUS74.038530Private 5RWS GroupUK66.43328Public 6SDI Media GroupUS65.020023Private 7Xerox Global ServicesUK60.02004Public 8Euroscript s.a.r.l.LU59.258010Private 9STAR AGCH52.079035Private 10CLS CommunicationCH38.628014Private 11Logos GroupIT36.512017Private 12LCJ EEIGDE/IT/BE/ES26.51598Private 13MoraviaCZ25.23819Private 14Merrill Brink InternationalUS24.51404Private 15McNeil MultilingualUS24.32005Private 16Hewlett-Packard ACGFR21.7656Public 17ThebigwordUK21.01087Private 18WelocalizeUS20.51045Private 19SkrivanekCZ18.535050Private 20VistaTECIE15.61235Private Source: Common Sense Advisory, Inc., 2006

6. Interlexis Pte Ltd GistXL Pte Ltd Select Books Pte Ltd Region% of Total Market 200520062007200820092010 U.S.A.42%3 6963 9734 2714 5924 9365 306 Europe 2541%3 6083 8794 1694 4824 8185 180 Asia12%1 0561 1351 2201 3121 4101 516 ROW5%440473508547588632 Total100%8 8008 9879 66110 38611 16512 002 Growth in Translation Market by Region Average Rate of Growth: +7.5% Source: Common Sense Advisory, Inc.,

7. Interlexis Pte Ltd GistXL Pte Ltd Select Books Pte Ltd Translation Provider Pyramid Large, full-service LSPs Corporate in-house Small and medium LSPs Freelancers (including small independents) Small/Medium LSPs Owner-operated Small: < USD2.5 million revenue Medium: USD2.5 – 15 million revenue

8. Interlexis Pte Ltd GistXL Pte Ltd Select Books Pte Ltd Pressure from the TOP Increasingly global nature of contracts Master contract from corporate HQ One vendor for multiple languages Service delivery in multiple sites More onerous vendor qualification requirements Global LSPs expanding in Asia Growing complexity of projects Additional skillsets required (computer engineering, DTP, web) Additional investments in tools and technology required Digital content (large volumes, short delivery timings) Small/Medium LSPs

9. Interlexis Pte Ltd GistXL Pte Ltd Select Books Pte Ltd Pressure from the BOTTOM Technology as a “disintermediator” Customers can deal direct with individual translators without using a company or an agency Customers can choose “best fit” provider locally and across national boundaries Individual translators can connect with other freelance providers (translators, designers, programmers) for higher-end projects Small/Medium LSPs Technology as a “leveller” Gap between the sophistication of services offered by small/medium translation companies and by freelancers have shrunk

10. Interlexis Pte Ltd GistXL Pte Ltd Select Books Pte Ltd Competitive Strategies Strengths and Weaknesses Scale Approach  Internal organic growth or M&A  Multiple offices, languages, service lines  Full control over company direction – but hard to change direction once it is set  Large capital resources required – but no guarantee of profitability  Comprehensive value-services  Tends to be market-driven rather than client-driven

11. Interlexis Pte Ltd GistXL Pte Ltd Select Books Pte Ltd Specialization Approach  By domain, language or territory  Usually one office or highly centralized model  Competitive strength in core area, usually with higher margins  Single way of doing business and single culture  More adaptable than Scale approach  Limited value-services  Highly client-centric  Tends to be short lived – likely to diversify or be acquired Competitive Strategies Strengths and Weaknesses

12. Interlexis Pte Ltd GistXL Pte Ltd Select Books Pte Ltd Value Chain Partner Approach  Formal grouping/partnership of independent with defined roles and responsibilities and scope  Provides medium to large size capabilities and resources  Can be complex organizations for others to understand  Multiple offices but less opportunistic than Scale approach  Highly client-centric (less market focused)  Decentralised model needs strong co-ordination  Partners do not have the same resources or motivations to make certain changes  Possibly lower margins compared to Specialization approach Competitive Strategies Strengths and Weaknesses

13. Interlexis Pte Ltd GistXL Pte Ltd Select Books Pte Ltd  Small and medium translation companies need to be clear about their positioning and objectives, and adapt their operations accordingly  Expansion and internationalisation are not the only choices  Small and medium translation companies have some important strengths:  Adaptability  Good balance of attention to customer and range of services  Most importantly, owner-operators have a passion for what they do (language entrepreneur) Conclusion