Siemens and Translation: Outsourcing vs. Insourcing

Large companies are in a constant state of flux about how to best manage translation. Should they do the work in house or should they outsource it to a translation agency? Ask any translation vendor and they will passionately tell you that outsourcing is the only way to go. Ask any in-house translation team and they will argue the opposite.

Some companies, such as Siemens, rely on a combination of both internal and external teams. As an $80 billion company, Siemens has plenty of translation work to go around. Although Siemens has had an internal translation division for years, it did not require its divisions to use them. Similarly, this internal translation team was not required to work only on Siemens projects; today, roughly 25% of its revenues are generated by non-Siemens work.

But this arrangement came to an end on April 7th, when Siemens formally spun off (or “carved out”) its translation agency. According to the press release, the move was part of Siemens’ “continuing strategy of concentrating on its core portfolio.” This new company is known as LS Language Services GmbH ( It has 20 employees and manages up to 70 different language pairs. In 2003, the company generated sales of 9 million euros — a very respectable figure for a firm this size.

I suspect that this move was largely driven by Siemens’ stated goal of reducing head count, but I also believe there are other factors at work here.

I spoke with Ilona Wallberg, head of sales and marketing at LS Language Services. Although LS Language Services is still owned by Siemens, she believes that it now has a degree of independence that will help it win new business. In the past, her company lost out on non-Siemens projects because of conflict-of-interest concerns. For instance, a telecoms vendor would naturally be reluctant to give translation work to a division of a company that it competes closely against.

Wallberg believes these concerns will be less of an issue now that her company has a new name and an independent business plan. She expects that in five years approximately 50% of the company’s revenues will be generated by non-Siemens work. She also believes her firm will expand its industry focus far beyond IT and telecoms.

So what does this development signify, if anything? Here are a few thoughts…

    Some skills may be better kept in house

    While I realize that companies are always looking for ways to reduce head count, I can’t help but wonder if Siemens is outsourcing a skill set that would be better off kept in house. Consider the value-added services that a translation division could provide to a large company, if it were effectively used. Translators and project managers could educate the many marketing and product development teams to better understand the cultural issues of each market and region. It could even provide high-level cultural and linguistic analysis of every new product name, color, positioning statement – just the types of services already being outsourced to naming and brand consultancies (many of which do not have global expertise).

    Granted, most in-house translation teams do not provide these types of services today. They translate text and manage print and electronic localization projects and that’s about it, which is why they are so easy to “carve out.” But I do believe these are the types of services that companies increasingly need and are not getting from their conventional translation agencies. This in turn opens the door to consultants (such as Byte Level Research).

    Who’s going to manage that Web site?

    LS Language Services is one of many handlers of the Siemens Web site. Wallberg notes that there are hundreds of people involved with updating content to the site and only a handful of those people are professional translators or project managers. Last year, in our Web Globalization Report Card, we gave the site a score of 62 on a scale of 1 to 100. The site clearly has room to improve, and I’m not convinced it will get there any faster by outsourcing all work. In fact, I believe it will be increasingly important to have full-time Web content managers in house to work hand-in-hand with product developers and marketing managers.

    Translation agencies are not viewed like advertising agencies – which is both good news and bad news for the industry

    In advertising, it is rare to find competitive companies using the same agency. For example, the agency that has the Verizon Wireless account won’t also have the AT&T Wireless account. Companies view their agencies as consultants or partners, privy to high-level strategic intelligence and planning.

    Now look at the translation industry. It is much more common for a translation agency to do work for competing companies simultaneously. Companies may have their concerns about such an arrangement, yet these concerns are not as frequently an issue. Non-disclosure agreements are signed, and that’s the end of it. On one hand, this is great news for a translation agency, as it can thrive by focusing on specific industries. But it is also bad news because it means that companies do not view translation agencies as highly as they view advertising agencies. In other words, a translation agency is akin to a print shop, not a partner.

World’s Largest Translation Agency Is Getting Larger

The BBC writes about the expanding translation demands of an expanding European Union. When 10 additional countries join the European Union on May 1st, they bring with them the demands of translating and interpreting nine additional languages. This is on top of the existing 11 languages the EU currently manages (and Turkish will be next).

The world’s largest commercial translation agency, Bowne Global Solutions, is a $200 million company. Compare that with the EU, which is about to devote more than $1 billion (US) to translation and interpreting.

Here are some interesting stats from the article:

    EU Translation: Before and After

  • European Commission has 1,300 translators
  • They process 1.5 million pages a year
  • They cost the EU 550 million euros

    After May 1st, staff will almost double in size:

  • They will translate 2.5 million pages a year
  • Their budget will be over 800 million euros

The article also touched on the challenges of interpreting. For example…

    The need for translation already takes away the cut and thrust of a normal parliamentary debate.

    When the Italian Prime Minister, Silvio Berlusconi, last year likened a German MEP to a Nazi camp guard, it took several seconds before the German realised he was being insulted and pulled off his headphones in disgust.

This is a great article, as it touches on so many issues. Some within the EU are calling for a common language. Naturally, English has been proposed, but the French will have none of that. Esperanto has even been proposed. I think it’s safe to say that for the foreseeable future, European translators and interpreters face a bright future.

Pull-Down Menus Are A Global Problem

As companies add more and more localized Web sites to their portfolio, they are increasingly resorting to using pull-down menus for navigation. Yet as the FedEx gateway (below) illustrates, pull-down menus are no panacea; they may in fact cause more problems than they solve.


The FedEx gateway includes more than 170 countries from which to choose. For residents of the US, the menu is rather easy to use – as the US has in effect jumped to the front of the line. But what if you are a resident of Sweden, Taiwan, or Venezuela? I’m afraid you have a lengthy bit of scrolling to do.

Pull-down menus simply do not “scale” well. In addition, this particular menu does not list the countries in their native languages – also not a good idea; this raises a more vexing problem – how would you alphabetize the list of countries if they were in their native languages?

Finally, FedEx makes a major (but common) mistake by placing the U.S.A. at the top of the menu. This display of favoritism may benefit the bulk of its Web users, but its does not create the appearance of a globally agnostic company. I’ve spoken with more than a few non-US residents who resent this strategy.

So what’s the solution? The 3Com gateway offers a very good alternative:


Notice how the gateway groups the countries by region, thereby avoiding any patent displays of favoritism. The site also presents the countries in their native languages – a huge usability boost.

Granted, the page only includes a fraction of the countries that the FedEx menu includes, but I believe that it could be expanded to include an equal number of sites.

While I realize that the pull-down menu takes up very little real estate, it’s simply not a valid solution for global gateways. For our recent presentation on this hot topic, check out The Art of the Global Gateway.

Web Site Review: Dura Automotive

We received a press release this week from DURA Automotive Systems regarding their Web globalization efforts. Here is an excerpt:

With locations in more than 14 countries, Web-based communication transcending the barrier of language is critical for DURA Automotive Systems. Developing and maintaining a Web site for multiple languages can, however, be a time intensive and costly endeavor. With the development of a Web-based administrative tool by Logic Solutions of Ann Arbor, visitors to DURA’s website will be able to view the website in the language of their choice simply by selecting it from a dropdown menu. And, more importantly, DURA will have seven or eight dynamic Web sites with the maintenance of one.

First Comment: This press release was issued prematurely.

According to this release, Logic Solutions is providing both a software tool to help DURA manage the eight sites more easily and a navigation tool that will help visitors to the site easily find their specific locale. Yet when we visited the site, there was no navigation tool to be found. Here is the home page:


Although the administrative tools may very well be in place, the navigation aid for visitors is absent. For example, to get to the German site (shown below) we had to input the URL directory:


Second Comment: A global template will ease the management burden.

We still need to learn more about the backend management tools. Yet just by looking at the English and German sites we see widely different layouts. Should DURA adopte a global template, it could save significantly in maintenance costs because promotional blurbs and visuals can be prepared to fit globally consistent layouts.

Final Comment: Translation firms beware; Web development firms are coming!

It is interesting to note that these Web globalization tools were prepared by a Web development firm and not a localization or translation firm. As more companies invest in global sites, we expect more Web development and integration firms to enter the fray.

What has long been the domain of the translation industry could be co-opted by other industries. That’s not to say that translation firms don’t have an important role to play; they do. But the question is: will translation firms be kept behind the scenes as low-end vendors, or will they become valuable business consultants? My gut says that most translation firms will not move up this value chain (more on this in 2004).

Can You Find the Global Gateway?

I’m a strong advocate for “global gateways.” A global gateway is the term I used to refer to the navigation system that directs users to their language-specific or locale-specific Web sites. Once you offer more than one language or locale, you’re going to need a gateway. (Here’s our report on the topic.)

To understand the importance of the global gateway, I recommend visiting a Web site that offers multiple languages. Start with the Web page of a language you do not speak and see how easy it is to get to the English-language site. Here’s a good test site: the Danish company TDC. Currently, the link to the English-language site is effectively buried. I’ve also included an excerpt below in case the site gets redesigned.


As you can see the “English” link is located on the very bottom of the page. Only the most persistent visitor will be fortunate enough to find it.

Amazon uses a similar strategy:


Unfortunately, most Web sites — even the most locally usable Web sites — have a long way to go in creating globally usable Web sites.