A Pragmatic Eye

I think this article fits in quite neatly with the Lionbridge hoo-hah, in terms of why there are a number of agencies in general who feel quite at ease with being the party that determines prices, unilaterally, on a take-it-or-leave-it basis. I wrote the original version almost 2 years ago (Dec 2008) although it has been tweaked since then. Perhaps discussion may lead to further refinement; I hope so.

It’s a long read, so you may want to make a cup of tea first. And then here it is – who sets prices?

(I surely have to include the occasional Wodehouse reference in here, too…?)

Another great post in Miguel Llorens’s blog. My jaw did indeed slow hang lower and lower as I read first that they thought they deserved some credit because they pay people, and second that the 5% cut is somehow justified by the allegedly excellent (but unquantified) productivity gains brought about by the TW. I note the use of another weasel word in that section, namely “share”.

However, I would like to raise an eyebrow, speaking as one of those he mentions who maintains Lionbridge have the right under a free market to attempt to impose such a cut (subject to contractual procedures being observed), as regards the description of their action as “feudalism”. In microcosm, perhaps, if you interpret their actions as a misguided assumption that freelancers are beholden to them and no other. But not in any wider sense.

We are not vassals, tied to the land and the landowner, with no choice but to accept what scraps the aristocracy throw our way. We don’t need to actually revolt. We have choices. I suggest we (by which I mean those involved with Liox – I am not, in fact, in that unfortunate number) exercise them, and if enough of us do so, then that serves the purpose of a revolt, again in microcosm, and Lionbridge’s fiefdom would, unless they changed their approach, go the way of the fiefdoms of history.

And that is probably enough posts about Lionbridge for now.

Update Fri 12th Nov: Seems Miguel Llorens might be letting the adulation get to his head. Hurling around even minor vulgarities just sounds like someone trying to be both big and clever. Either that or, as others have pointed out, mysteriously angry. Notwithstanding my agreement with the underlying argument, it’s all getting a bit tired and repetitive now, and points are being confused. Llorens’s first three points are effectively the same. Clearly (to me!) Walsh’s point about software companies asking for 10% was to point out other industries are worse (not, however, that two wrongs make a right, it just means two industries have players behaving badly). The simple response to Walsh asking why Q2 figures were used is that they were the latest available at the time. And so on. I’m not sure simple abuse, which is all point eight is, is the way to continue the nascent debate. I can only deduce that is not the plan.
I suppose I ought to post some of this there, not diss the geezer behind his back 🙂

Update 2: Fri 19 Nov: (Probably frightfully bad form to add stuff in this way – wouldn’t do it if there were comments, honest) Interesting, I was not the only one to be a little critical of Miguel Llorens’ last Liox-related effort. My post to his blog, as replicated (in part) above was far from the only one criticising his tone and language.  The trend continued on Sat & Sun. Miguel, previously a frequent responder to those who comment on his blog, was mysteriously silent and offered no justification, explanation, nothing. On Monday 15 Nov, the blog had vanished. By Tues 16th parts had re-appeared here. Needless to say, the comments did not follow, and still have not.

(Posted on Sunday 7 Mov 2010, written on Friday 5 Nov 2010)

The saga rumbles on, as Quarter 3 results came out on Nov 4, and it does not make for joyful reading if you are with Lionbridge, looking at the news from Yahoo! and their own announcement.

They mention currency losses, to be fair. The share price has taken a pounding. I would only expect more cost-cutting and revenue-raising measures. And assuming they eschew the route of asking their customers to pay more, I think we can all see where this is leading. Indeed, since I guess the senior execs would have had this info available some days before it was made public, I think we can now see the cause behind the 5% email (see previous post). They have also announced another scheme to squeeze money out of their suppliers, of which more some other time.

As I have always said, they are free to make such decisions as far as I am concerned, subject to the contractual arrangements being crystal clear (i.e. for anyone taking on work from 1 Nov. the new rate is explicitly stated in the offer/purchase order, which is then explicitly accepted by the translator) rather than there just being some reference to, say, a rate “as per the general T&C” (or something similar) being the rate that has just been unilaterally reduced and notified in the “no reply” email. In other words, subject to what what English law (inter alia) refers to as a new “offer and acceptance”. I don’t like it, but fully respect their right to do it.

I think it would have been easier to swallow if they had waited until the day after Q3 results were announced, and then just said “In the wake of yesterday’s annoucement re: Q3 results [with link to same], we have to ask you for a 5% rate reduction”. It would have been more straightforward and more honest. Slightly tougher administratively, perhaps, losing the convenience of new rates applying from the first of the month, and starting on a Monday to boot (I’m sure the computers are up to it; I’m thinking of the staff). But there would have been less webrage and discussion and rebuttal of some of the statements used to ‘justify’ the “no reply” email, such as all that hard work demonstrating their exchange rate losses were probably only 2%.

They are unlikely to win any popularity contests no matter what. But how much (extra) damage to reputation has been done by all this? And how much extra attention drawn to their underwhelming Q3 figures? How many translators who might have sucked up an imposed rate decrease have been given pause and decided not to work with Lionbridge in future, or minimise their involvement? How many translators who would have remained oblivious to the financial news are now aware that all in the garden is not rosy, and just as importantly, how many of their clients?

Email sent by Lionbridge towards end of Oct (29th? 30th?) 2010. Not to me, I don’t work for them, but it caused some hoo-hah.

The global economic downturn of 2008 and 2009 affected all of us. Together, as translation partners, we weathered this challenging and uncertain economic environment and demonstrated our value to clients worldwide. Today, while some economies are showing some signs of improvement, the overall demand environment remains fragile and volatile:

* This week, The Economist commented that “industrial production in the USA fell by 0.2% in September, the first decline in more than a year”;
* In October alone, the US Dollar lost 6% of its value against the Euro. Year-to-date the US Dollar also lost 6% of its value against the Japanese Yen;
* Most economists predict little or no growth in Europe and Japan for 2011.

In today’s uncertain economic environment customers expect all of us to deliver “more for less”. To remain competitive, we are all demanding more from ourselves to meet these challenges.

Against the backdrop of this negative economic context, effective November 1, 2010 through January 1, 2011 we require all our partners to provide a 5% discount on all Lionbridge projects. This discount is independent of any other agreements we may have in place with you.

Lionbridge is not taking this step lightly and understands the effort it represents. Please keep in mind the following points:

* In most markets, Lionbridge bears the full burden and risk associated with exchange-rate fluctuations; as a USD denominated company this means we have effectively seen our outsourcing costs rise by approximately 6% in the last month alone;
* Lionbridge continues to put tremendous effort into securing new and existing customers and markets, effectively providing for our and YOUR future revenue streams;
* To meet customer demands, Lionbridge has taken extraordinary steps to reduce its fixed costs and we will continue to do so. We ask our partners to do the same.

In closing, I want to reiterate Lionbridge’s commitment to increasing market demand for translation services by providing the industry’s most innovative, efficient and high-quality services that enable clients to extend their global reach. As our translation partner, your success is tightly aligned with our success. I want to personally thank you for the services you are providing to Lionbridge during these challenging times and I look forward to extending our partnership in 2011 and beyond.

Thank you,

Didier Hélin
Vice President
World Wide Vendor & Supply Chain Management

Lionbridge

(My thanks to Miguel Lloren’s remarkable blog for the text of the letter.)

And this was sent from an email address marked “IMPORTANT – DO NOT REPLY”. By the 2nd Nov. Didier was saying that was a mistake. I don’t know the bloke, but I don’t believe that for a nano-second. I’d like to think it’s the howls of protest about their high-handed attitude that have led to the right of reply being opened. Opinions vary on the rights and wrongs of the reduction itself. Almost everyone thinks Didier sucks for sending the news from a no-reply mailbox.

I know many agencies act as if they hold the balance of power, I’m used to it happening, I try to avoid them. Sadly, there are vast numbers of translators who accept it, and L. merely take advantage. Quite honestly, in all sectors, there are companies who act as though all their suppliers are interchangeable widget merchants, lots of companies impose unilateral reductions, it is not unique to translation and it is not unique to Lionbridge. I actively boycott (can you ‘actively’ boycott?) several retail companies who behave in a similar way. (And see also here for similar high jinks.)

What annoys me about this particularly is the utter bilge spewed out in the email when contrasted, as others have pointed out, with the self-congratulatory crowing of the latest financial press release (‘latest’ at time of writing, 2 Nov 2010) (also here).

The email shows real contempt, as if its suppliers really are too stupid to click a couple of links and read about L’s financial situation for themselves. Because let’s be totally frank here, in terms of the underlying message, either the email or the press release is lies, since they cannot both be true. Either the company is doing really well, or they are struggling. To the best of my knowledge, releasing statements on financial matters that are wilfully inaccurate, or indeed lies, is an offence. Sending emails full of lies to translators is not….

I like to think that if I had somehow fallen into the trap of being one of their suppliers, I’d have replied along these lines. Outstanding stuff. Or possibly as here.

In terms of the content and impact, while, as the famous internet disclaimer goes, I am not a lawyer, it would, I think, represent a material change and is, therefore, tantamount to a new offer, which the supplier is (theoretically, if not perhaps practically in some cases) free to accept or not. But, it has been pointed out that:

According to previous forum threads, for some of the translators affected by this, this particular company represents the bulk of their work opportunities. This is not something I personally defend, but it needs to be pointed out. And it would not take much to convince me that the company has encouraged this.

And what this means is that those translators are in a very bad place, indeed.

Indeed, and I do have some sympathy. And yet, it must be said, if people are in a bad place because L. accounts for a huge proportion of their turnover, it is to a large degree their fault. Putting all your eggs in one basket is a) the easy option in terms of running a business (being pretty much effort- and hassle-free) and b) risky – for reasons like this or company failure, or a major disagreement, or whatever.

This kind of thing happens everywhere, all the time, in all industries. I am not saying that makes it right, necessarily, although under a capitalist system, most of our clients’ first duty is to their shareholders and therefore they have to strive to maximise profit at all times and act accordingly. Sadly, when the balance of power is heavily weighted to one side, the bilateral negotiation aspect goes missing, which is regrettable, to say the least (or it becomes very blunt – most “requests” are little more than demands anyway). Some business models maximise profit by minimising all costs at any cost; others see the added value in maintaining ‘partnerships’ and all that warm, nice, cuddly stuff. But anyone in business has to be aware of the system they are operating under, that it can be a bit dog-eat-dog, and protect themselves accordingly. Which, if you get all your business from Lionbridge or anyone else, you are failing to do.

In summary – I don’t blame Lionbridge for trying to cut costs, but I have utter and complete contempt for the mealy mouthed manure they came out with to justify it, and the “do not reply” aspect was just the icing on a foul cake. For translators caught with too many eggs in one basket… well, all businesses are aware this is a high-risk (if low-effort) strategy, and if you’re not aware of that, or are aware and have done nothing about it…

But they’re the ones with the chauffeur driven limos, not me. They aren’t complete fools. They know exactly what they’re doing. I’m not helping them achieve it, never have and never will, and I would recommend anyone else to act likewise.

See also discussion on proz here.