Ready for a Pivot?
The pandemic era meant increased localization workloads. This was a time for scaling up processes and technologies. Projects were necessarily delivered with speed and automation. Doors opened to expand international languages and increase localization budgets.
As we emerge from the pandemic, however, have we arrived at an inflection point? Supply chain disruptions, worldwide political upheaval, continued pandemic concerns, inflation, and potential layoffs/hiring slowdowns are now part of our world.
Are we as localization professionals attuned to what it all means to our businesses? Are we planning solutions around how these factors might impact the localization landscape? This blogpost takes two different approaches to how you can think about and solve for the latest reality.
Part 1: A New Strategy for Buyers and Vendors
OK, so things might slow down a little. Stock markets are down. We’ve all read about recent layoffs and rescinded offers. It seems like forever since any localization team or vendor needed to think about anything other than expanded scale and growth.
While remaining positive about your business is a must, “hope” isn’t necessarily the best strategy if you and your team do need to pivot toward something a little leaner. If you’re a vendor, what intriguing new offers might you make available to clients who are tightening their belts?
We’ve got some ideas. Here’s hoping (a wish, not a strategy) this will only be a theoretical read for you!
Where Does Headcount Funding Come From?
Before the past decade’s economic expansion, localization buyers needed to understand two basic finance concepts: Operational Expenses and Capital Expenses. It’s a good time to remind everyone of these fundamentals. We simplify for the sake of clarity.
Operational Expenses (OpEx) are the expenses a business incurs from normal business operations. This includes ALL money paid for both localization projects and monthly software subscriptions. With one huge exception, OpEx funds are much easier for your team to access than Capital Expense funds.
Capital Expenses (CapEx) are expenses paid to gain a benefit in the future (more than 1 year). Think buildings, computers, computer programs installed behind your firewall, etc. Access to CapEx funding is more difficult.
But what about headcount? While headcount is officially an OpEx, Finance teams tend to treat it like CapEx. This makes sense as the investment in new employees is long term. Think about how much money it takes to hire, train, or fire someone…especially in countries with stringent labor laws. Insurance, bonuses, payroll taxes, RSUs, etc. mean that companies may pay 1.25 to 1.45 times more than an employee’s salary to keep them at the company (known as the “fully-burdened” cost of an employee).
The punchline: It’s easier for localization buyers to get funding to pay for vendor services than it is to get funding for additional headcount.
Building a Strategy: Buyers
If you can’t get additional headcount, you’ve suffered layoffs, or members of your team have been asked to do more, make your case for additional OpEx funds to fill the gaps. Explain to Finance that this is a prudent short-term solution that prevents the bigger investment in headcount. Can’t get headcount allocation for a project manager? See if you can get the OpEx to pay additional fees to a vendor to staff the role. Ditto technology headcount – resources that localization teams generally lack anyway.
We favor the use of vendor resources over contractor resources for the following reasons:
- You already have Purchase Orders and contracts set-up with your vendors. Minimize your admin time!
- Vendors are already knowledgeable about your operations and systems. This saves you a great deal of training/onboarding hassle.
- Vendors have a bigger stake in your long-term success than contractors. They need the partnership (and you) to succeed and flourish.
Building a Strategy: Vendors
Now that you understand your buyers’ challenges, what are you doing to make their lives easier? How streamlined is your ability to fill their potential resource gaps?
If your buyer is hit by budget cuts, prepare an assessment of the buyer’s potential resource gaps. Critically, be prepared to clearly articulate your stopgap solutions – PM, technology, linguistic – to your buyers. Your buyers will thank you when you demonstrate your ability to solve their short-term resource gaps. Your owner will thank you as the revenue continues to flow in via these new services.
Finally, if you are not expanding your technology capabilities and offering tech-related services to buyers, you’re falling behind the competition. Vendors who can offer services that directly assist buyers with integrations (writ large) and automated workflows will be the biggest future winners. Regardless of your buyer’s situation, it’s a great time for you to expand your own technology bench AND to create more/better technology service offerings for buyers.
Part 2: Localization Teams
Now is the time to plan a potential pivot in your localization business. Over the past decade, most of your energy has been dedicated toward production — getting projects turned around as quickly and efficiently as possible.
As circumstances begin to change, however, you might be asked to do more with less. Perhaps you can’t get additional headcount, suffer layoffs, or have team members assigned to additional tasks. If you face these types of challenges, it’s wise to redirect some of that “production” energy toward business strategy and operations.
In the context of potentially shifting corporate objectives, three key areas can yield dividends. Take a few minutes from your production focus to consider these areas and their potential for positive impact.
Review the Scale of Your Operations
“Scale” has always meant both “up” and “down”. So far, however, you’ve only been used to scaling “up”. In the current reality, localization teams should revisit and (potentially) reprioritize operational activities. Inventory your core and non-core functions and activities.
Can you streamline, prioritize, or eliminate some testing with little impact to quality? Perhaps it’s time to align with stakeholders to hone your company’s language strategy to prevent your company from over-localizing?
Evaluate Your Spend/Budgets
During the “expansion decade”, budgets/funding for international growth have often been non-issues in most companies. Be prepared: your environment might shift.
What do revenue projections look like? Have sales and marketing identified big shifts in customer behavior and spending patterns in certain regions over the next several years? Analyze how your corporate product offerings may be shifting.
Once you have data on product and market trends, look at your own localization funding. How can you use your funding in different ways? Can you shift some of that spend to vendor partners/regional resources? Work with your internal management and Finance partners to solidify and confirm a localization budget that is based on current reality. New budgets for product and services may require evaluation/reprioritization of content requirements.
Optimize Your Localization Team Roles
Take a fresh look at localization team roles. This could be the time to drop lower value-add tasks or to look for more novel partnering opportunities.
Can you, for example, retool to include self-service functions? Can team members participate even more in initiatives or cross-company planning meetings? These efforts result in better alignment with corporate goals and create a more positive perception of you as a partner.
Summary: Align Efforts with Reality
Localization teams rarely work in a vacuum. As you see signs of shifts in your company’s operations and goals, this is the time to deepen your understanding of…
- new product and corporate priorities
- revenue projections and international market changes
- the greater organization’s goals (and the potential that all processes will be more heavily scrutinized based on whether they align with these goals)
Use this intelligence to position localization during this time of changing market conditions. Frequently communicate with/demonstrate to partners and management how the localization team supports rapid corporate shifts. Doing so provides the bonus of building your profile as a corporate leader!