Survey of Language Industry Companies in Canada - Translation, Interpretation and Language Training

This study was prepared for Industry Canada by the consulting companies Amiral Partenaires and Gestion Auri.

August 2006

Summary

This document presents an analysis of the results of a survey of language enterprises conducted during the summer of 2005 by the Small Business and Special Surveys Division of Statistics Canada. More specifically, the survey concentrated on translation and interpretation businesses (NAICS 541930) and on language training schools (NAICS 611630).

Although these businesses represent a significant part of the language industry, many activities were not covered by the survey, such as public-sector language schools, governmental translation bureaus, translation departments of large companies and freelancers, which together account for a major part of the language industry's activity.

The survey included 607 businesses, of which 369 (60.8 percent) belong to the translation and interpretation sector and 238 (39.2 percent) to the language training sector.

Canada-wide, 63 percent of businesses surveyed offer translation services, 41 percent language training, 17.1 percent language assessment services, and 16.8 percent interpretation services.

With a few exceptions, businesses offer services primarily in their fields of expertise. Thus, the services offered in another field are relatively marginal. Slightly less than 5 percent of businesses in the field of translation offer language training, and of those in the field of language training, 12 percent offer translation services. These percentages approach zero when viewed from the perspective of income generated and staff employed.

Overall, firms generate sales of $404.1 million. When considered with revenues from interest and dividends, this total increases to nearly $410 million.

Firms in the translation sector (NAICS 541930) generate $174.6 million in sales (43.1 percent), whereas those in the language training sector (NAICS 611630) generate $229.5 million (56.9 percent).

Ontario firms produce $174.2 million worth of goods and services linked to the language industry, accounting for 43.1 percent of revenues. Quebec ranks second, accounting for one quarter of overall revenues ($101.7 million). British Columbia follows with $91.2 million, whereas the other provinces and territories generate $37 million, or less than 10 percent of revenues.

In Ontario, revenues are distributed almost equally between the translation sector (45 percent) and the language training sector (55 percent). In Quebec, the translation sector dominates with 73 percent, whereas the opposite can be said for British Columbia, where the language training sector represents 93 percent. In other regions, the situation is similar to that in Ontario.

In addition, the survey reveals that 170 businesses had billings of $500,000 or more. These businesses account for no more than 28 percent of businesses in the industry, despite generating 83 percent of sales in both sectors analyzed.

However, 283 businesses generated sales of less than $150,000. Although they account for 46 percent of businesses, they generate less than 5.4 percent of revenues.

The sources of revenues by type of client are quite varied. The translation sector obtains its revenues mainly from the private sector, as well as from governments, public institutions (hospitals, schools, etc.) and individuals. For its part, the language training sector obtains its revenues primarily from individuals, as well as from private-sector businesses, governments and public institutions.

Approximately 25 percent of revenues ($103.5 million) is derived from exports. However, the proportion of businesses engaged in exporting is slightly higher, at 30 percent.

Nearly two-thirds (63.6 percent) of export revenues ($65.8 million) are generated by businesses in the language training sector, whereas only 18 percent of them state that they export. However, export volume does not reflect all activities related to foreign students, as more than two-thirds of language schools offer courses to foreign students. Consequently, a large share is not accounted for under export revenues.

Close to half of export revenues of the language training sector comes from Asia, the other half originating in equal parts from Latin America and Europe.

The translation sector generates 36.4 percent of export revenues, or $37.7 million. However, the proportion of businesses exporting is much greater (37.7 percent) than in the language training sector.

In the translation sector, business is conducted mainly with the United States, generating more than two-thirds of export revenues for the sector, compared to 25 percent for Europe.

Translation firms that export earn an average $271,000 in export revenues, compared to $1.5 million for language training schools.

Regarding the future outlook for the international market, half of businesses in the language training sector say that they would like to set up operations or extend their activities in this market, compared to 21.5 percent of businesses in the translation sector.

With respect to production costs, salaries and benefits make up the main share of expenses in both the translation (50.5 percent) and language training sectors (45.3 percent).

In the translation sector, subcontracting costs account for 31 percent of overall expenses, compared to only 2.5 percent in the language training sector. In the latter, however, sales commissions account for 7.4 percent of expenses.

Operating and other costs are much higher in the language training sector (37.8 percent) than in the translation sector (16.5 percent).

Although none of the questions in the survey addressed the issue of profits, the deduction of expenses from stated revenues indicate that businesses in the translation sector are more profitable that those in the language training one.

Firms from both sectors employ 7,405 persons, of whom a little less than half have full-time positions. This figure represents less than a quarter of that estimated for the entire language industry. Firms, especially in the translation sector, often use the services of subcontractors (6,954).

Among the 3,649 language teachers, 70 percent teach English, 17 percent French and 13 percent a language other than the two official languages. British Columbia accounts for the largest number of English teachers (857), followed by Ontario (788) and Quebec (584).

Among the 1,512 professionals in the business of translation, terminology and interpretation, 68 percent are translators, 24 percent are interpreters, 3 percent are writers and editors, 3 percent are proofreaders and 2 percent are terminologists. Businesses in Ontario account for the largest number of translators (482), followed by Quebec (368). Firms in British Columbia account for the largest number of interpreters, followed by Quebec. In British Columbia, businesses in the translation sector employ approximately 50 percent more interpreters than translators. Notwithstanding, the proportion of revenues generated by this sector is relatively small.

Average revenue from sales per employee is $76,002 in the translation sector, compared with $44,940 in language training. The difference between the two sectors is largely attributable to the large proportion of part-time employees in the language training sector.

Regarding the question of forecast growth in the number of employees during the next fiscal year, 21.7 percent of businesses anticipate an increase, whereas 6.5 percent expect a reduction. The others do not envisage any changes in employee numbers. In this respect, language training schools are more optimistic than translation companies (34 percent compared to 13.7 percent).

Insofar as recruiting problems are concerned, 23.1 percent of firms indicated that they have had difficulties, whereas 50.7 percent had none and 26.2 percent did not reply, as they were not recruiting at the time of the survey. The difficulties appear to be greater in the language schools, with 27.8 percent having experienced difficulties, compared to 20 percent for translation companies.

The 249 language schools recorded just under 200,000 enrolments in 2004. The average number of enrolments per school was 800 in Canada, but this varied from one region to another: 1,584 in Ontario and 444 in Quebec.

A little less than 15 percent of language schools are very small, with fewer than 50 enrolments. The largest schools, falling into categories of 1,000 to 2,999 enrolments and 3,000 enrolments or more, represent 15.9 percent and 5.8 percent of establishments, respectively. Half the language schools ranged from 50 to 499 enrolments.

Summer study programs, international students, youth and the general public are categories of clients targeted by more than 40 percent of businesses in Canada. The business and public administration clientele are less targeted than thought, the former attracting 36 percent of businesses and the latter, 23 percent.

Overall, 64 percent of Canadian language schools target foreign students. In British Columbia, this proportion reaches 89 percent. In Ontario, it is 66 percent and in Quebec, only 29 percent.

Asia ranks first as the place of origin of foreign students.