Language Line Plans a Roll-Up as Translation Demand Soars

Louis Provenzano
Language Line Services' chief executive and president Louis Provenzano says the Monterey, Calif. company had $300 million in revenue in 2010. Photographer: Jim Pinckney/Pinckney Photography via Bloomberg

The University of California Medical Center in San Francisco spends more than $3 million a year on translation services for thousands of patients who don’t speak English. Since 2009, the demand for foreign language interpreters from the center’s medical personnel has risen by a third, for languages ranging from Farsi to Mongolian.

When the center’s 19 staff interpreters aren’t available or lack fluency in a specific language, it pays translation agency Language Line Services about $2.50 a minute to translate over the telephone. Available 24 hours a day, Language Line touts its ability to make interpreters available within minutes. “If it’s immediate and an emergency, that’s when Language Line is the best,” says David Morgan, the center’s executive director of outpatient services.

Language Line’s 5,000 employees and freelancers handle roughly 40 million phone calls a year in more than 170 languages, close to half of the languages spoken at the U.N. The Monterey (Calif.) company had $300 million in revenue in 2010, maintaining an 11 percent annual growth rate since 2006, according to its 52-year-old chief executive and president, Louis Provenzano. Fewer than two-dozen companies worldwide earn more than $1 million annually from such services, says Nataly Kelly, an analyst at market researcher Common Sense Advisory in Lowell, Mass. “They don’t have any competitors in their size range.”

Linguistic Crazy Quilt

As the foreign-born population has quadrupled in the U.S. over the past four decades, Language Line has ridden the wave. The Hispanic population alone grew 43 percent from 2000 to 2010, accounting for more than half the country’s total population increase, according to the latest Census Bureau figures. More than 175 languages and dialects are spoken across the country today, making the U.S. the world’s largest market for over-the-phone interpreters. Language Line now wants to seize a relatively immature market: interpretation services provided onsite at client locations.

While telephone interpreting accounts for more than 90 percent of its business, Language Line also provides onsite interpreters in California, where they are used during trials and depositions and in doctors’ offices, hospitals, and medical clinics. Over the coming 12 months, Language Line plans to expand its onsite operation into Arizona, Illinois, New York, Oregon, and Texas, Provenzano says. By 2014, the company wants to sell in-person services in every major metropolitan market in the U.S.

The onsite interpreting market is expected to reach $4.3 billion worldwide this year, making it four times larger than telephone translating, according to Common Sense. As Language Line expands its in-person services in the U.S., the company will have to compete with hundreds of mom-and-pop companies. Because many have longstanding relationships with customers that may be hard to break, Language Line is likely to build through acquisition. “The onsite interpreting market is ripe for consolidation,” Kelly says. “It just needs a company to go in and do it.”

Postponed Offering

It’s unclear when Language Line’s expansion plans will get a funding infusion. Language Line, which is owned by private equity firm ABRY Partners in Providence, R.I., filed last year for a $400 million initial public offering, but the IPO is on hold because of uncertainty in the U.S. and European economies. “The markets are tough, so the board is just waiting and seeing,” explains Provenzano, who speaks six languages.

Language Line was co-founded as nonprofit in 1982 by policeman Jeffrey Munks to help the San Jose (Calif.) Police Dept. serve a growing Asian population. It became a commercial business a few years later. It started to grow quickly soon after 2000, when federal antidiscrimination laws pressured health-care providers and government agencies into offering interpretive services, while banks, insurance companies, and retailers started doing the same to take advantage of the growing buying power of non-English speakers, particularly Hispanics.

Recognizing the potential in immigrants peddling its home-care products, Amway uses Language Line to discuss products, orders, and promotions with its U.S. direct-sales agents, who collectively speak more than 20 languages. About 40 percent of the 450 Amway service reps handling calls from the U.S. and Caribbean speak Spanish, Mandarin, or Russian; Language Line interpreters handle the rest. For Amway, language support is part of doing business in the U.S. “We as a country are becoming more multicultural every day,” says Monica Stitt, Amway’s director of customer service, “and it’s a reflection of the world becoming more of a global community.”

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