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Russian translations: now open for business

Serge Gladkoff
June 10, 2008

 History shows that it is difficult to make anything but very short term economic predictions. People tend to extrapolate observations of the past into the future. However, human society is such an unpredictable and non-linear system that even the near future is full of surprises. Such unexpected factors have changed Russia from a ruthlessly built communist economy without the slightest tolerance for private property and private initiative, through the complete economic chaos of 1990s, into a market economy with a wide proliferation of small businesses, foreign trade and investment. Today Russia is an appealing location for business adventurers with an interest in this potentially huge market.

The problems of bureaucracy and corruption in the Russian economy are significant. This has been recognized by the Russian government which is taking a stance to fight it. Even so, the present state of the Russian economy is much friendlier to foreign trade and more complimentary to the West than it has been since the Russian October Revolution of 1917. Russia today may have many drawbacks in the eyes of a Western citizen, but it is open, it is not hostile, it is much more stable than it has been, and it is growing quickly.
The dynamics of this market indeed give more than a hint of its potential. On the demand side, the Russian economy is growing at the annual rate of seven percent, reaching one trillion Euros in 2007, taking seventh place in the world while promising to climb to number five by 2009. Notably, export/import operations are growing much faster – with an increasing rate of 38 percent (!) since 2002.
Translation demand
Therefore, it’s easy to see why we now have a ravenous need for translations from and into the Russian language in order to service this growth. Huge opportunities for foreign businesses and domestic economy developments fueled by foreign trade and foreign investment mean that the Russian translation market is healthier than it has ever been.


Fig.1: Russian trade growth with foreign countries reached 34 percent of annual rate in 2007 (Source: Russian Federal State Statistic Service, www.gks.ru). This well exceeded the GDP growth of 7 percent, meaning that export/ import operations and domestic marketing of imported products will boost the demand for localization services.
Before the 1990s, Russian translations were of cultural, political or technical nature. Now they serve a healthy and growing business exchange on all levels. They include finance, business, marketing, and many other fields. And, unlike it is commonly believed, Russian foreign trade consists of a lot more than crude exports. Russian imports from the EU are very significant and growing fast. This is the basis for the growth of the Russian localization market.

So, what do we see on this market from the perspectives of supply and demand? On the supply side, we have a certain number of reputed and established local translation service providers; however, their number is fairly low for an economy of this size. This is due to the fact that the Russian translation service industry suffers from globalization. While other domestic service industries such as insurance and banking are protected by government measures, the Russian translation service market has been cannibalized by more adept and powerful international translation service providers. A likely reason for this is the fact that a foreign company seaking to increase operations in Russia is more likely to give outsource translation and localization to an international developed multilingual supplier it might already be working with, than to establish a direct relationship with a Russian translation firm.

Multinational or local provider?
It is considered a fact that it is more efficient to centralize multilingual translation project management and leave it in the hands of one supplier. But at the end of the day, translation has to be done by native speakers residing in the target country. This means that the translation itself is left in Russia, although the expatriate Russian translation community is very active. Therefore, many Russian translation suppliers are seeing a significant increase in business from international multi language vendors (MLV) rather than from direct clients.

This business growth is very much diffused by the community of Russian-based freelance translators. Many MLVs are in fact working directly with Russian freelancers. However, this is a risky approach because it requires considerable overhead to maintain freelancers as reliable suppliers – and even more so in Russia. Russian-based freelancers are less mature than their savvy western colleagues, and this will not change for a while. Today, out of the 145 million Russian citizens more than 40 million (25 percent) are on the internet, and this number is quickly growing to approach the level of developed countries (about 66 percent). With more Russian people using the internet, we will also see an increase in the number of Russian freelance translators. This will lead to a mixed pool of Russian freelance translators consisting of people professionally engaged in translation as well as people trying to figure out if translation is a field in which they can make money.

Therefore, it will require significant time and effort to build a network of freelance translation suppliers. Usually this effort is only undertaken by MLVs. MLVs set up an individual and SLV supplier network and resell their expertise to global clients in a multilingual package. You can be quite sure that the margin is going to be significant; otherwise, the huge effort of building an extensive supplier network would not be justified, not to mention the operational costs of a large MLV.

Finding quality
The internet removes barriers for better or worse, depending on the point of view. It is now far easier to find a remote service supplier and this convenience flattens the structure of the supply chain. Yet, there’s a certain supplier level below which I wouldn’t recommend to go as a foreign company. Even for developed MLVs it is not advisable to solely rely on local freelance translators in Russia. You are much better off by working with reputed local Russian single language vendors (SLVs), or – even better –  with Russian companies that can proudly say that they are regional (CIS) or even global MLVs. If you scan the Russian Yellow Pages for “translation” (in Russian), you’ll find more than 160 translation companies, however, 140 of them are either not operating any more or represented by a single person with an email address. Other problems of working with purely local outfits are the lack of communication skills, the lack of appropriate business culture and ethics, higher risks, and lower reliability and performance service than suppliers can provide. Quite naturally, freelancers often lack proper business processes, technological means and tools, and the production capacity to handle large volumes. The latter is not a unique problem for smaller suppliers: there are about 15 active, capable, and operationally reputed translation providers in Russia that are safe to work with, and they are currently all overloaded with work.

I must also mention here, that today’s main problem for local suppliers in Russia is not an abundance of work but the sharply rising costs of labor, rent, and other operational costs. For the past ten years the average salary in Russia has multiplied by ten(!). Despite of these developments, this is not the case in local service firms and therefore, the salary increase cannot be reflected on the costs of contracting them.

Localization: more than pure translation
So, where does one stand in regard to translation services in a country with this kind of economic growth? The answer is: we are in a risk zone of an underdeveloped service market, where the dangers of improper service are higher than those on developed markets. This is another consideration that causes many foreign clients to work with either a foreign MLV or with the best local SLVs and regional MLVs. In a sense here, SLVs are back in business again.

When I say “translation” in this article I also mean localization. Cultural adaptation, adaptation to local regulations and practices, country-specific consulting services and marketing services are what is actually needed for newcomers to Russia. Typically, Western firms will contact a large consultancy to take care of the entire package of these challenges. However, in many cases translation companies will do the same at a much lower price. Check out the portfolio of your translation agency and you might find out that they can do a lot more than pure translating – such as DTP, copywriting, legal translations, etc. – and you may be enjoying considerable savings.

Quality counts
Finally, it is crucial to understand that the Russian market is extremely sensitive to language quality. The attention your product will get depends on much more than the mandatory requirement of having all your product and marketing material translated for the Russian end user. B2B operations require solid language support, too. As far as language tolerance is concerned, it varies across industries, but generally you can easily find yourself in the situation of having a local in-country reviewer finding your translation “unacceptable”. The national Russian level of language quality sensitivity is about the same as French and exceeds the German level. This even increases the attractiveness of organized local language production, since individual translators are unable to ensure a consistent and reliable translation quality.

A market of economic opportunity
To summarize this for the company that is willing to extend its presence to Russia and foresees growth in Russian translation volumes:

Russia is now a market of economic opportunity and it will continue to be one for the decade to come. Much has been underdeveloped on this territory, and immense potential will continue to uncover itself as we go. You don’t want to miss the race of conquering market share. In this gold rush, you need a localized product and a good local language to carry your marketing message and agile support.
Russian translations do need care and deserve to be handled by a provider with established, developed, and reputable local production.

Find a local translation provider of proper size, capacity and scalability, with a good reputation and a respectable track record, as well as proper systems, tools, and communication capabilities. Be prepared for the level of costs of Eastern Europe and above.
Ideally, your translation service provider should be capable of rendering your additional complimentary services, such as DTP, authoring, multimedia, legal translation, printing, etc.  This may help you to save costs by placing jobs at a lower process tag compared to specialized consulting firms that mostly do simple things branded as expensive consulting services.

Russian language is back in business. Make sure you handle it properly to be where you want to be on this huge market that occupies one eighth of the Earth’s land territory and ranges number seven of the world’s top 20 nations in terms of GDP.
Serge Gladkoff has been engaged in the localization industry for more than 17 years. He has worked in various positions and companies in Russia and has been co-owner and president of the Logrus International Corporation for 14 years.

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