Transco (Welocalize): Ahead of Its Time

With eight successful acquisitions to its credit over the last few years, Welocalize continues to remain focused on building an excellent company. Transco (Beijing, China) was one of its acquisitions in 2006—in fact, probably the first pureplay Chinese localization company to be merged or acquired. In the following interview with Michael Anobile (LISA’s Managing Director), Yolanda Tan (General Man­ager of Welocalize China) shares why the acquisition has been so successful and how her operation has implemented a hybrid delivery model worldwide. 

Michael Anobile: I think that there’s a shift in the mar­ket, and I believe that the shift has been taking place particularly in China since early 2000. I see in the context of the service providers a richer value offer­ing, and it’s this richer value offering that we’re try­ing to understand better. We’re trying to see how it relates to the companies’ growth in China.

We want to understand the dynamics. Where is the growth? How is it affecting the industry? Are the market and the industry stimulating this growth here in China?

We can benefit from hearing about your experience with Transco. Could you share how Transco was formed, what the goals of Transco were, and your opinion of what it was like to work these seven years to grow that business? It must have been very exciting.

Yolanda Tan: Yes, it was. Transco was founded in early 1998 and of course we didn’t have many people at the very beginning. But we grew very rapidly and doubled every year, especially since 2003, reaching about 150 in 2005.

The year 2003 seems to have been a pivotal year in the industry here in China

Anobile: The year 2003 seems to have been a pivotal year in the industry here.

Tan: Yes, we thought more about how to grow and make us a great company in 2003. In 2003 summer, there were over 100 people. And we had another 50 people by early 2004.

We focused on becoming a Regional Localization Service Provider in 2003/04

We not only grew in size, but also in the diversity of services we offered. We started with Simplified Chinese translation, then Traditional translation, along with Korean and Japanese. And at the same time, our engineering team expanded very quickly. We strengthened our software engineering and document engineering team, so the company could provide full localization service.

Anobile: What do you mean by document engineering?

Tan: Tasks such as DTP, Flash, multimedia, HTML formatting and compil­ing, as well as preparation and post-preparation of files for translation. 

Anobile: And do you recall approximately how much of the business was focused on translation vs. testing or document engineering?

Tan: For translation, it was about half, and software testing was about 60% of the remaining half. The rest was for document engineering.

Anobile: But where were you making most of your money?

Tan: Through all our services, but we needed to invest in something new to us at first.

We became ISO-certified in 2003 and received our CMMI Level 3 Appraisal in 2005

In the same year, we were proud to be ISO-certified and have had it renewed each year. It drives us to improve customer satisfaction systematically, to es­tablish a formalized and streamlined process and work flow, implement and execute, take actions for continuous improvement. That means consistency and quality.

Based on the ISO 9001 quality management system, we apply the Capability Maturity Model® Integration (CMMI) model to managing software engi­neering in localization and were CMMI Level 3 appraised in 2005. CMMI has some same requirements as ISO 9001 standards, while it provides a sys­tem for risk management that ISO 9001 lacks. It is designed for system and software engineering and fits the needs of managing software localization at a higher level.

For insights into how the former Transco applied the Balanced Score­card Method (BSC), a well-known management tool for enterprises seeking performance excellence, to its localization business, read BSC as a Strategic Management Tool for the Language Services Indus­try, by Vic Dickson, formerly CEO of Transco.

To find out how the former Transco integrated exchange risk into its localization budgets, read Exchange Risk and Localization Budget Planning, by Jack Yang, formerly a Strategy Analyst for Transco.

In 2004 and 2005, there was no obvious increase in scale, but we prepared for this jump with a sounder basis. We wanted to be a multilingual vendor (MLV) in China.

And then we merged with Welocalize in 2006.

Vic Dickson had a vision: “We can do more.”

Anobile: How would you describe your challenges during 2005/06? It seems from what you’re saying that Vic had a vision, and that vision was, “We can do more. We have established ourselves as a Regional Localiza­tion Vendor, and we can do more. We can streamline our processes. We can focus on quality. We can build a team that produces quality output. We can focus on developing the necessary skills and establish ourselves particularly in the Asian languages.” So, what were the challenges to do more?

Tan: At that time, I think the challenge was that we needed more talent in different positions to ensure continuous growth at a greater level. We also needed to find our edge as an MLV.

I think another problem, though minor, was our concept of being a Regional Localization Vendor. For many clients, it’s normal for them to send a Chi­nese or Asian localization project to a European company, but it’s not so nor­mal for them to present a European localization project to a China-based company. We needed to gain their confidence, I think.

Our Western clients weren’t comfortable sending us European localization projects

How competent is a Chinese localization company to handle European lo­calization projects? That’s the question many asked. We can look for part­ners, but what’s our added value to our clients? We are in a place with lower costs, but that’s not enough: clients care about the cost/performance ratio.

Anobile: OK. So the main challenges were (1) a Chinese-centered sales force that wasn’t global, and (2) clients who wanted Europeans to man­age Asian projects. There was an issue of credibility.

Tan: Yeah. We couldn’t be unique, I think. We built our external resources, and we had our vendor pool and so on, but we didn’t think we were unique at that time.

How do you project uniqueness in an industry that is commoditized?

There were already many localization companies offering similar services. You need to provide something different. We were looking for the right angle.

Anobile: So, by August 2006, Welocalize had acquired Transco while you were struggling for that identity, for that uniqueness. Was there unique­ness in the merger from your perspective?

We are the first pureplay Chinese localization company to be merged or acquired

Tan: Of course, with the strength of Transco in Asia and Welocalize in US and Europe, we built a top mid-tier, rapidly growing localization company together. In addition, although there were acquisitions and mergers in the trade from time to time, it was the first merger for a real Chinese company.

Anobile: Yes, it’s the first pureplay Chinese acquisition, with Welocalize as a Western, middle-sized translation/localization company acquiring a smaller company of Asian language experts.

Tan: Transco wanted to find a company to match its own culture and opera­tion, and Welocalize was the right one.

Anobile: Why?

Welocalize was just the one we were looking for—no management left after the acquisition

Tan: Both share common values: integrity, customer focus, motivation, lead­ership, innovation. It made smooth integration and cooperation between of­fices easier. It also meant that the merger would be good for our customers and partners.

Anobile: Did it make it easier for this merger?

Tan: Sure it did. That is why no management left the company after the ac­quisition. And for the clients of the former Transco, we can do more since we combined the strengths of two great companies. Those clients are happy to see there are more supporting teams standing behind the China office, and the clients of other offices know there are dedicated teams taking care of their projects.

Anobile: It’s been more than a year since the merger, so where are you today?

Tan: It has been a year and a half since the two were merged in August 2006. We face the demanding requirement to get more talent aligned with new opportunities. After a short time of integration, we entered another period of rapid growth, a more than 20% increase in size.

All of our former clients are still with us, and giving us even more work now

Our clients are happy to see this smooth integration and growth. We get more work from them because of our bigger teams and more diversified experience.

Anobile: Where are most of your customers based?

Tan: Mostly outside of China. Most of our clients are international compa­nies that have branch offices all over the world, so we work with their U.S., European, or Asian offices, or with their country office in China, wherever decisions are made. As more and more Chinese companies see the need to sell to the whole world and that localization will help them enter overseas markets quickly—and that we have more than 10 years experience in the trade—I believe that we will have more local customers.

Anobile: Is most of the decision making coming out of America and Europe?

Tan: My answer would be yes now but we see the trend that many interna­tional companies are setting up their China offices now and have their China team be in charge of it.

Anobile: But you’re physically doing the work here?

Tan: Yes, we have 180 people here for project management, vendor manage­ment, translation, DTP, software QA, etc. We are the half of our Hybrid De­livery Model. This model will add value for our clients through our flexible combination of onshore expertise and offshore production teams to create a cost-efficient solution.

Anobile: What does the future look like for Welocalize in China?

Our vision now is to be “the top 3 in 3”

Tan: In the second half of 2006, just after the acquisition, we were building the basis for faster growth in the near future since we now have more clients to care for. Now the foundation has been built and we are working with other offices toward our goal, our vision, to be “the top 3 in 3” [i.e., one of the top three localization companies within three years]. There will be growth and breakthrough like we have never seen before.

Anobile: How big is Welocalize today financially?

Tan: For 2007, about USD 34 million.

Anobile: There’s still quite a significant gap. You know, it’s hard to grow from a USD 30 million company to a 300 million company. From 30 to 50 is the next big stretch, and that is a stretch for many companies.

Tan: We are proud to be the top mid-tier localization company. Be the best, not the biggest.

Yolanda Tan served as General Manager of Transco, which merged with Welocal­ize in 2006. Her experience as a translator and as Manager of Translation and Vendor Management for Transco gives her knowledge and expertise in both lo­calization and operations management. She is an advocate of process control and management in localization.  

Source：http://www.welocalize.com/chinsim/news/index.php3Localization Industry Standards Association

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