My reply to the message I received this evening from Mr. Didier Hélin, Vice President of World Wide Vendor & Supply Chain Management at Lionbridge. The message, in which Lionbridge requires its partners to provide a 5% discount on all projects, was sent from a no-reply e-mail address, giving me no opportunity to reply in person.
Dear Mr. Hélin,
As you have taken the liberty of e-mailing me without providing an e-mail address that I can reply to, I am taking the liberty of replying to you in this way. A copy of this message will be sent to my Vendor Manager in Amsterdam.
Let me reply to several points in your message.
- “industrial production in the USA fell by 0.2% in September, the first decline in more than a year”. – As it says, the first decline in more than a year. This means that for more than a year, industrial production has been rising. That is not a downturn, it’s an upturn. A 0.2% decline is a natural market fluctuation and is no indication at all of the economic situation in the translation and localization industry.
- “In October alone, the US Dollar lost 6% of its value against the Euro.” – I don’t understand this. On www.x-rates.com you will find that on September 29, 2010, 1 dollar was worth 0.7347 EUR. On October 29, 2010 (today) this had fallen to 0.721657 EUR. The difference is about 2%.
- “Most economists predict little or no growth in Europe and Japan for 2011.” – I would like to refer you to the IMF’s recent projection, dated October 6, 2010, stating, amongst others:
- “The IMF upwardly revised its projection of world output growth to 4.8%”
- “economic recovery is proceeding broadly as expected”
- “the economic growth in the United States (…) is projected to accelerate to 2.6% this year and 2.3% next year, following a decline of 2.9% in 2006”
- “the eurozone economy will grow by 1.7% this year and 1.5% in 2011”
- “in Japan, the IMF expects the output to rise by 2.8% this year and 1.5% in 2011”
- “In China, growth is projected to average 10.5% in 2010 and 9.6% in 2011”
- “In India, growth is projected to be 9.7% in 2010 and 8.4% in 2011”
- “Against the backdrop of this negative economic context” – Now, I don’t think the economic context is as negative as all that after all…
- “we require all our partners to provide a 5% discount on all Lionbridge projects” – I am sorry, but this is not the way it works. Your partners may offer you a discount, but as a client you cannot require a discount, much the same as I, as a client, cannot require a discount from my supermarket.
- “Lionbridge bears the full burden and risk associated with exchange-rate fluctuations” – that is true. However, I have never seen an e-mail similar to this one requiring me to increase my rates by 5% in reverse conditions. In other words: Lionbridge also bears the full profit of exchange-rate fluctuations. This is all part of running a business.
- “as a USD denominated company this means that we have effectively seen our outsourcing costs rise by approximately 6% in the last month alone”. – As I’ve indicated above, this figure should be closer to 2%. The dollar lost 2% of its value against the euro – if your outsourcing costs rose by more than that, there must be other factors as well.
- “Lionbridge has taken extraordinary steps to reduce its fixed costs (…). We ask our partners to do the same.” – I would be very interested to hear what steps you would suggest that I take to reduce my fixed costs. I am an independent freelance translator working from a small office in my own house. Would you expect me to move to a smaller house? To stop paying my health insurance? Not to turn on central heating this winter to save on energy costs?
- “As our translation partner, your success is tightly aligned with our success.” – I would have phrased that differently. Lionbridge’s success is dependent on the quality work of its partners, and quality comes at a price.
As a freelance translator, there are no steps that I can take to make up for a 5% drop in my income other than raising my output by about 5%. That would mean that I would be spending less time translating the same amount of words (e.g. by not proofreading or spellchecking my work), which would have an unavoidable negative effect on the quality of my work. I am sure that that is not what Lionbridge would want.
However, having worked as a supplier for Lionbridge for several years, I know that there are quite a few areas where there is much room for cost reduction. I am amazed, for example, by the huge number of steps in your supply chain – each step adding unnecessary additional margins and overhead costs to the rates that I charge, all the way at the bottom of that supply chain. In addition, each step in the supply chain adds to the risk of mistakes being made somewhere along the process. Again, I’m assuming that Lionbridge is dedicated to deliver quality translations…
Another point worth mentioning is that Lionbridge has a dominant position in the translation industry. It would be good to see Lionbridge using this dominant position to change its end-clients’ view on fair translation rates, rather than to impose discounts on its suppliers. This would be beneficial for the translation industry as a whole.
In closing, let me rephrase your requirement to a request, in assuming that you are asking me if I would be willing to provide a 5% discount on my work for Lionbridge. My reply to that request would be a polite ‘no’, bearing in mind that the rates that I charge to Lionbridge are very competitive as it is.