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Sandwiched Between Waves of Pressure

The biggest players in the local translation market seem to be stuck with current rates, while the pressure is on from clients to improve efficiency and from subcontractors and employees to pay more.

From left to right: Miklós Bán, espell Zrt.; Veronika Mendel, Intercontact Kft.; and Péter Lepahin, Hunnect Kft.

More workload, intensifying competition and growing revenues − these are the key trends of the Hungarian translation market, estimated at HUF 9 billion, that were detected in the yearly survey by Proford, the Hungarian Association of Professional Language Service Providers. As Proford chairman Miklós Bán tells the Budapest Business Journal, the findings are in sync with what is going on globally. 
“The volume to be translated is on the rise, but since no proportionate budget is allocated to orders, more efficiency is badly needed to make clients happy,” Bán says.
Sixty percent of the respondents in 2017 said that competition had become fiercer, as opposed to 38% in 2016, whereas the ratio of those reporting revenue growth climbed from 40% in 2016 to 50% in 2017. Average revenues in 2016 of the polled agencies amounted to
nearly HUF 161 mln.The statistics indicate a parallel increase in rates, with 21% claiming last year that they managed to raise their prices. However, Péter Lepahin, general director of Hunnect Kft., believes that just a few players would be able to affect an overall rate increase.
“It should be rather typical in certain specialized areas, such as in terms of rare language pairs or some highly complex material,” he says. “Another explanation is the fact that it’s more about catching up with fees after the long years of stagnation. In the long run, we don’t expect to see a constant hike, though.”

Dynamically Growing

Veronika Mendel, CEO and owner of Intercontact Kft. agrees that raising prices must have been the privilege of some smaller, dynamically growing agencies. “We also have two-to-four-year contracts with most of our clients, so until their expiry we cannot increase our rates,” she says. “In the case of public procurement, it seems the situation has even worsened because of a few companies that dominate this segment with super-low rates.”
It is of little help in this regard that by now, on average, some 45% of orders stem from abroad, the survey found. The top Hungarian translation firms often work as a supplier for international agencies which, however, also implies they are placed low in the supply chain.
Ferenc Jantner, CEO and owner of Forduna Kft., notes that one of his translators once commented on poor payment by comparing the job to digging ditches. “A professional chamber that would enforce rules on the industry - which must include allowing only properly qualified people to practice this profession - could change all this,” he says. Such a move would trigger a self-cleansing of the market, Jantner believes.
Bán adds that big translation agencies are sandwiched between client pressure, which calls for ever more efficient operations, and a growing demand on the part of subcontractors and employees to raise payment. Bán is also head of espell Zrt., one of the largest market players. The company operates in the super premium segment that serves a mature clientele, most of whom have had very negative experience with cheaper work and are willing to pay more to have guaranteed high quality.
“It all comes down to what risk the client is ready to take, that is what is reflected in the rates,” notes Bán.

Quality Expectations

Among the biggest challenges, elevated quality expectations and the difficulty to retain talent were mentioned most frequently in the survey. Lepahin confirms that quality-related benchmarks are constantly growing ever more stringent; on the other hand, compliance with the new European data protection regulation, the GDPR, may mean companies are faced with more obstacles in the near future.
Forduna Kft. has invested in infotech solutions in order to meet the elevated expectations of its clientele. By upgrading Trados translation software and training staff to use it, more consistent translations can be prepared.
“Trados provides ways to spare resources as well, which allowed us to raise profits. Our rates have stagnated, though,” Jantner tells the BBJ. Forduna Kft. also runs a junior traineeship program in cooperation with ELTE university thanks to which young graduates proofread the material before filing it with the client. This improves overall quality, whilst those participating in the program get trained on the job to become pros themselves one day.
As far as fighting work force fluctuation is concerned, employee needs must be taken into account with care. Citing the practice of espell, Bán refers to the particular fluctuation in the project manager position, which is a highly stressful job. No wonder many young people head across the borders after a while, seeking better wages.

Yet Another Market-shaping Force

Assessment of the translation market must go hand-in-hand with highlighting the impact of key lobby organizations of the sector. As Miklós Bán says, Proford, of which he is chairman, does an enormous amount of work to promote the interests of its members and local translators in the broader sense. The same goes for SZOFT, a recently established organization for freelance translators, which gathers professionals of the new generation. “These younger translators are a lot keener to train themselves; they build networks and are characterized by more digital-age behavior than their older peers, who tend to cling to their own status quo,” says Bán.
The proliferation of cutting-edge technology also carries the trend to cut the number of middle men in the supply chain, so digitally trained freelancers are gradually getting closer to clients.