As billions of enterprise capital and personal equity investors pour into generative AI and enormous language model startups, attention is popping to identifying the industries and firms most poised for AI-driven disruption. The $50 billion global translation industry has emerged because the principal candidate for this transformation Smartling lead the charge.
While the broader translation industry experienced declines in 2023, Smartling's translation business achieved a remarkable 40% growth rate last yr, which is able to speed up even further in 2024. What is the motivation for this outstanding performance? The company's groundbreaking use of AI delivers human-quality translations at half the value and 10 times faster than traditional approaches.
“We’ve built an AI translation solution that produces human-quality translations at half the value and in half the time,” Smartling CEO Bryan Murphy said in an interview with VentureBeat. “Since we went to customers with this, there may be obviously loads of interest because every executive on this planet is currently tasked by their CEO to do two things: develop an AI strategy and reduce costs.”
Smartling was founded in 2009 and had already established itself as a number one company Translation management platformand serves major brands akin to British Airways, Shopify, Survey Monkey and Lyft. But over the past 18 months, the corporate has made an aggressive push into AI, developing proprietary models and integrating machine learning into all of its voice services.
Reduce costs, increase margins with a vertical AI focus
“Our goal is to make high-quality translation ubiquitous by reducing costs by at the least one other 50%, much like the transformation of cloud services and storage during the last decade,” Murphy told VentureBeat. “If you look back to January last yr, we had zero revenue from AI-powered human translation (AIHT). It was a brand new product, we just launched it. Now 50% of our volume is AIHT. In fact, our business has grown by 70% in comparison with last yr.”
Smartling’s AI translation initiative quickly began to bear fruit. In January 2023, AI-driven projects accounted for nearly no revenue. Today they account for nearly half of the business and, due to the technology's attractive volumes, a growing share of profits. The company has also filed several patents related to using AI in translation.
While tech giants like Google, Amazon and Microsoft pursue general AI models, Smartling has taken an industry-specific approach and optimized its technology for the unique challenges of translation. This includes integration with over 20 industrial engines and major language models akin to GPT-4 to attain the best quality translations.
“By taking these measures, we are able to improve the standard of the performance of those engines by about 40%, which is big,” Murphy said. “And that’s because we have now this translation hub. The big aspect of that is what we call voice quality estimation. “It uses AI to measure the standard of those streams in real time, so we are able to make decisions about where to route the interpretation and what to do with it.”
There is a risk of disruption with traditional language service providers
The rapid rise of AI-powered translation is putting significant pressure on traditional language service providers (LSPs), which make up the vast majority of the worldwide translation market. Most of those firms rely heavily on human translators and have minimal technological capabilities or financial flexibility to adapt to this disruption.
“Based on our findings and broader trends in AI, I expect significant changes in the interpretation industry as more firms adopt AI-first solutions,” Murphy predicted. “We need to repeatedly refine our prompting technique – that's where our patents lie, in the way in which we actually create these prompts. It’s really a really aggressive research and development environment where we work to discover probably the most effective large-scale language models for what we wish to attain.”
Looking ahead, Smartling goals to speed up its already high growth rate, driven by continued investment in its translation AI. With a war chest of over $223.3 million in enterprise financingThe company is well capitalized to expand its market share because the industry moves on this recent direction.
As AI drives change in areas starting from healthcare to finance, the Smartling story shows that in some industries the long run is already here. With the fitting technology, talent and business model, the competitive landscape can change virtually overnight. In translation, there appears to be no turning back from an AI-centric paradigm.
So while investors need to ride the wave of generative AI, industry-specific disruptors like Smartling are well value a glance. With a head start in developing its industry and an ambitious roadmap, this under-the-radar incumbent is showing that the true promise of AI can be realized not by the splashy startups, but by the businesses which are now using it to outperform traditional businesses transform.
