#AskALocalizer 6: Understanding Vendor and Client Finances in Localization

Dear #AskaLocalizer,

I’ve been considering making a change in my professional life, and localization keeps popping up as the best option for applying my language skills. But, whenever I read about it or learn more about it, I keep hearing and reading about the “vendor-side” and the “client-side,” especially regarding finances. What’s the difference between vendor-side and client-side finances?


Loc-curious Career Shifter

Many vendors in the language industry are often referred to as language service providers (LSPs). At a basic level, they’re companies that offer language services as their way of making revenue—you may have heard of some of the big ones like TransPerfect, Lionbridge, Keywords, etc. LSPs get business by marketing to clients and winning bids on projects. Obviously, LSPs need to prove value over their competition to win client bids, but they must also make sure they maintain profitability at the same time. Winning bids for LSPs is the lifeblood of the business, which sounds scary, but it shouldn’t be. Everyone is a potential customer for any business offering localization services.

Clients are companies in which the main product or service is something other than language services—for example, Apple, Google, or Meta. When a client develops a new app and wants to make it available in different countries, they have this work completed either by purchasing localization services from LSPs, handling it internally through an in-house localization team, or a hybrid model of both. In-house localization teams in client companies must prove localization’s return on investment (ROI) to management: proof that for every $1 allocated to the localization budget, the company earned $5 back. Much of the work of localization project managers on these teams often consists of proving their team’s value up the organizational chain, letting management know that the localization team is a profit center, not a drag on the company’s bottom line! Proving ROIs is the best way to achieve this.

Which Side Has the Greener Grass?

When determining whether you want to work on the client or vendor side of localization, the amount of risk you’re willing to take on is an important factor to consider. For instance, if you choose to begin your career on the client side, you put yourself at a greater risk of being laid off due to budget constraints (similar to what is happening in the job market as of the writing of this article in early 2023). Corporations typically allocate 1-4%* of their total budget to the localization team, and when it comes time to make budget cuts, language and quality are unfortunately often the first things to go. This is similar to what we’re seeing in the current state of the economy. You might be able to keep your position as a project manager on the client side, but management of localization will become increasingly difficult to handle. Now, if you want to play it safe because you’re new to the industry, working on the vendor side will give you more security because LSPs (with some exceptions) tend to grow or stay the course during times of upheaval. Again, everyone can be a potential client for the vendors. Even when things are as wild as they currently are on the economic front, content still needs to be translated, meaning there will always be demand for LSPs.

I hope this helps!


Jon Ritzdorf has 15 years experience leading technical solutions design and pre-sales process management. Jack-of-many-language-trades, but mainly language technology (NLP, MT, TMS, etc.) focused. Additionally moonlighting as an Adjunct Professor instructing the next generation of professionals for operations and business positions in the language technology and globalization services industries.

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