Final Evaluation of the Language Industry Initiative

3.0 Results

The following sections describe the evaluation results, in basically the same order as the evaluation questions.

3.1 Success

3.1.1 Has the Language Industry Association (AILIA) succeeded in positioning itself as a national language industry association?

General findings

Although the results show that the AILIA made considerable progress last year, it did not entirely succeed in positioning itself as a national association. The distribution of its members indicates that organizations from Western Canada, particularly language schools, are underrepresented. As well, the AILIA still has work to do to establish a critical mass of members, at least if it wants to remain influential. The overall satisfaction of its members with the AILIA is below expectations, particularly in the language training sector. The AILIA depends heavily on public funds to survive, and its long-term survival is uncertain under its current structure.

The detailed results are described in the following paragraphs by information source (or by method).

In-depth interview results

Most respondents were of the opinion that the AILIA has some recognition, more so in Eastern Canada (particularly in the National Capital Region) than in the West, especially with respect to language schools, where the level of representation in the AILIA is lower than their actual economic weight. According to some respondents, the AILIA has succeeded in providing the language industry with some visibility.

A number of respondents said that the AILIA made considerable progress in the last year, particularly on two major projects. First, its working group on national standards for translation services made significant headway (producing a set of preliminary standards). Second, the AILIA played a leadership role in the standing offer for Public Works and Government Services Canada (PWGSC). The AILIA held several meetings with PWGSC, which was thinking of establishing a standing offer for translation and interpretation services.

Most respondents felt, however, that the AILIA had not entirely succeeded in positioning itself as a national association. According to one industry representative, the AILIA failed to meet expectations, or at least not for this organization; the organization members participated in the annual AILIA conference last year and were disappointed. They had the impression that the AILIA was not well organized and that it lacked leadership. According to a number of respondents, the relationship between the three sectors is unclear and its grouping is somewhat artificial. One respondent pointed out that the AILIA is mainly associated with the language training and translation sectors because, unlike these sectors, the language technologies sector provides products rather than services. Some respondents questioned the relevance of the AILIA for these sectors, given that several professional associations already exist, including the Canada Language Council (CLC), the Canadian Association of Private Language Schools (CAPLS) which, as previously mentioned will merge in the spring of 2008 to create Languages Canada.^{Footnote 10}

Documentation review results

As with the interviews, the documentation review primarily indicates that the AILIA has more members from Eastern Canada. The geographic distribution of its list of members in 2007–2008 confirms that AILIA members are concentrated in Eastern Canada, as shown in Table 9. Table 10 represents the actual distribution of the language industry using data from another source.

Table 8: Distribution of AILIA Members in 2006–2007 by Sector and Province

Region	Training	%	Translation	%	Technology	%
NB	1	1%	4	4%	1	3%
NS	2	3%	0	0%	0	0%
PE	0	0%	0	0%	0	0%
NL	0	0%	0	0%	0	0%
QC	17	23%	52	49%	22	56%
ON	42	57%	44	42%	14	36%
MB	0	0%	0	0%	0	0%
SK	0	0%	0	0%	0	0%
AB	1	1%	1	1%	0	0%
BC	11	15%	5	5%	2	5%
YK	0	0%	0	0%	0	0%
NT	0	0%	0	0%	0	0%
NU	0	0%	0	0%	0	0%
Total	74	100%	106	100%	39	100%

Table 9: Distribution of Canadian Translation and Training Firms

Region	611630 NAICS	%	541930 NAICS Translation	%
Source: Survey of Language Industry Companies in Canada – Translation, Interpretation and Language
QC	48	10%	180	49%
ON	60	25%	111	30%
BC	81	34%	35	9%
Other regions	49	21%	43	12%
Canada total	238	100%	369	100%

A comparison of the two tables reveals the following:

• In terms of training schools, Ontario schools have significantly more AILIA weighting (57%) than within the industry (25%). Conversely, British Columbia has half as many members as it should have, if the goal of AILIA is to represent the entire industry.
• The table reveals similar results, albeit to a lesser extent, for translation firms; Ontario represents 42% of AILIA members, whereas its actual weight within the industry is 30%. British Columbia has half as many AILIA members as its actual representation (i.e. 5% of its members, whereas 9% of Canadian translation firms are located in British Columbia).

According to the 2005 Industry Canada report on career choices, Ontario and Quebec each account for 30% of language schools, while British Columbia has 23%. If these percentages are accurate, the difference between the membership and economic distributions would be less (but significant, nonetheless).

Case study results

The case study results reveal that the AILIA has created a major hub for industry representatives. Through its activities, members have created partnerships, participate in business opportunities, share information and network, thus allowing them to realize they are not isolated.

The AILIA performance reports indicate a number of AILIA business activities, including the following in 2006–2007:

• annual general meeting (with 46 members participating);
• the second Language Industry Showcase in November 2006 with 26 exhibitors; approximately 100 people visited the exhibitors and attended the conference luncheon;
• participation in annual conferences and conventions of Canadian and foreign organizations;
• workshops on export strategies;
• publication of 10 issues of Info-AILIA; and
• publication and distribution of industry brochures to more than 1,000 recipients, including the 500 largest companies in Canada.

AILIA directors admit that it has not always been easy to convince AILIA members of the benefits of bringing the three language industry sectors together despite their different needs. According to the AILIA, each of these sectors is too small to have the same impact as with AILIA. It is therefore necessary to identify what the three sectors have in common.

According to its directors, the AILIA is an effective advocate for its members before the federal government. The AILIA has played an important role in discussions between the language industry and PWGSC on a future standing offer for the translation sector. The AILIA accompanied a PWGSC delegation as part of a pan-Canadian consultation. According to current AILIA directors, this enhanced the visibility of the association.

One of the questions raised by this evaluation was AILIA's longevity, given that the LII has been its main source of funding since it was created. According to data from AILIA annual reports (see table below), government contributions were its main source of revenue between 2003 and 2007.

Due to difficulties in securing government funding, the AILIA had to suspend its activities for a four month period near the end of the third year of operations. This suspension had a negative impact on its ability to maintain and launch projects at a time when it was gearing up its operations.

Table 10: AILIA Funding Sources

Revenue	2003–2004Footnote *	2004–2005	2005–2006	2006–2007Footnote ****
* From September 1, 2003 to March 31, 2004. (back to footnote reference *) ** Under the Labour Market Partnerships program (for more information on this program, go to http://www1.servicecanada.gc.ca/en/epb/sid/cia/grants/llmp/desc_llmp.shtml), the AILIA reached a funding agreement in April 2005, with Human Resources and Social Development Canada (HRSDC) for an intervention project with the following four phases: 1. professional promotion; 2. workplace integration; 3. professional development; and 4. professional standards development (see page 13 of the AILIA 2004–2006 activities report). (back to footnote reference **) *** This agreement allowed the AILIA to begin its activities before signing the first contribution agreement. (back to footnote reference ***) **** These data come from the AILIA budget and the annual report or the audited financial statements. (back to footnote reference ****) Source: AILIA annual reports.
Membership fees	$16,805	$43,114	$58,592	$58,298
Sponsorships	$26,889	$30,000	$14,200	$7,500
Activities		$23,770	$54,320	$49,749
HR FundFootnote **			$286,627	$87,150
Contract with Industry CanadaFootnote ***	$33,611
Contribution agreement with Industry Canada	$258,804	$600,000	$600,000	$543,098
Total revenue	$336,109	$696,884	$1,013,739	$745,795
Expenses	($335,272)	($698,163)	($947,302)	($699,568)
Surplus/Deficit	$837	($1,279)	$66,437	$46,227

According to the latest financial data available (2006–2007), over 73% of AILIA revenue comes from Industry Canada, while only 8% is generated through membership fees, sponsorships and activities. Industry Canada funding for the AILIA varied between 73% (2006–2007) and 87% (2003–2004) of AILIA funding. According to a manager of the Initiative, the basic AILIA operating costs total approximately $200,000.

The AILIA successfully obtained funding from other federal sources, but its membership numbers have stagnated in the last two years, which limits revenue from membership fees.

Table 11: Change in AILIA Memberships

	Sept. 1, 2004	Mar. 31, 2005	Mar. 31, 2006	Mar. 31, 2007
* Source: AILIA annual reports. (back to footnote reference *) NB: In 2005 and 2006, 90% of members renewed their membership, while only 75% did so in 2007.
Number of members	135	154	165	155
Difference		+14%	+7%	-6%
ObjectiveFootnote *			250	190

The AILIA instituted a number of measures to recruit members, including two membership drives and the hiring of a recruitment officer; however, this was insufficient. At an AILIA meeting in 2005–2006, the following reasons were given for the failure of AILIA to achieve membership recruiting objectives:

• Membership provided an inadequate concrete return on investment;
• Membership provided an insufficient number of services generating financial spinoffs; and
• The variety of services was limited compared with services offered by other associations or organizations.^{Footnote 11}

However, the AILIA is working on some promising projects, notably the standards projects, which would lead to the certification of firms.^{Footnote 12} This could result in a new source of funding for the association. For AILIA directors, funding remains the main challenge of the organization.

Survey results

The survey conducted for this evaluation sheds some light on the above-mentioned issues and, to some extent, confirms the AILIA analysis of its membership opinions. Some respondents, who were not members of the AILIA, were asked in the survey to explain their non-member status. The results are presented in the figure below. Among non-member respondents, almost half (45%) said that they were members of another association. Close to one-third (32%) of these respondents did not know the AILIA.

According to respondents who gave "others" as a reason, AILIA services were not adapted to their company's needs, were not easily accessible, or seemed irrelevant.

Other survey results provide an idea of AILIA strengths and weaknesses, hinting at other reasons for membership stagnation during the last two years. According to the figure below, although two-thirds of respondents are satisfied with reports and publications, only half were satisfied with the conferences, trade fairs or meetings organized by the association, or with other member services. Fewer than half of respondents were satisfied with AILIA promotional and advocacy activities and its efforts to develop sector standards and good practices. Members of the language training sector were slightly less likely to be satisfied with the AILIA in general (see Appendix H for the survey results by sector).

By way of comparison, the statistics from another organization, the Canadian Evaluation Society (CES), indicate that these rates are not optimal. In 2003, the CES surveyed its members and the results revealed that over 80% of members found the CES annual conferences useful.^{Footnote 13} At the CES 2007 annual conference, 84% of participants found the conference good or very good overall. Another example is the Canadian Standards Association (CSA), whose satisfaction rates are also relatively high. According to its annual member surveys, its satisfaction rates with the CSA have been approximately 90% since 2001.^{Footnote 14} (The evaluation team conducted research to obtain comparative data for other organizations. It only succeeded in obtaining results for the two above-mentioned organizations.)

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3.1.2 Have the AILIA and the LII helped to improve industry capability to meet the demand for its products and services?

General findings

Overall, the LII has had a positive impact on industry capability to meet demand, notably through contribution agreements, which have enabled several firms to attract clients abroad (especially schools) and also in Canada (especially translation firms and language technology firms). However, AILIA services have had a rather limited impact on professional development or even business development, in general.

Only a few firms said that they were unable to recruit staff in the last few years, mainly because they had difficulty finding qualified candidates.

In-depth interview results

As we have mentioned, human resources is one of the four challenges in the language industry. When the Initiative was developed, it was reported that the language industry was suffering from a shortage of qualified staff. The LII and the AILIA were to help increase industry capability to better meet demand. According to the interview results, the LII has indeed helped some firms recruit human resources. The in-depth interviews also revealed that LIP contributions had generally been useful to companies, particularly those interested in hiring human resources from abroad.

Views on the impact of the AILIA on the industry were more varied. One respondent, a representative of a language training centre, told us that AILIA activities had benefited his company. Conversely, another respondent from the language industry and a member of the AILIA had expected the association to provide information on best practices, networking, participation in events (conferences), etc., but they were disappointed.

Case study results

The case studies illustrate how the LIP could help the language industry to develop and meet demand. For example, the translation firm in the case studies successfully used the contribution program to recruit translators in France. The program helped the firm travel to France to participate in Expolangues, a major annual trade fair that brings together approximately 25,000 representatives of the various sectors of the language industry and members of the general public. During the conference, representatives of the firm met with several young graduates, freelance translators and translation firms. The firm was thus able to attract approximately a dozen new translators to Canada, most of who have been trained in computer-assisted translation. According to the firm's management, the new employees have brought new ideas, and some of them will help the firm improve its service offering in different language combinations. It is interesting to note that, according to the representatives of this firm, some of their success was attributable to the pre-travel preparations, on which it worked hard, testing and pre-selecting 50 candidates who were interviewed during Expolangues. The company also established contacts with universities in the months leading up to the event and produced pamphlets highlighting the advantages of a career in translation in Canada.

Another example comes from the technology sector. The firm in question, one of only two of its kind in Canada, designs and manufactures latest-generation language laboratories. Founded in 1984, it has offices in Latin America, Europe, Asia and the Middle East and has approximately 20 employees at its facility in Laval, Quebec. The firm has grown substantially over the last few years, going from 15 to 22 employees in 2007, and has sales of $3.5 million. The LIP contribution enabled this firm to meet with potential distributors and clients in the United States. It also participated in a mission to Chile, which resulted in several digital laboratory equipment projects, including projects with five universities (valued at $125,000) and two government departments. It is estimated that these trips produced considerable benefits—$375,000 to date and a further $200,000 in sales in the next two years.

Documentation review results

As we mentioned, the LII was developed because of a shortage of human resources. Some studies shed light on this issue. According to the Survey of Language Industry Companies in Canada (2006), only 20% of firms in the translation sector indicated they had difficulty recruiting, while the remainder had none (42.4%) or were not recruiting at the time of the survey (37.6%). The greatest difficulty recruiting was found in Quebec, where close to 24% of translation firms were experiencing difficulty. The main difficulty expressed during the survey was finding qualified workers.

In the training sector, 27.8% of firms indicated they were experiencing difficulty recruiting. Quebec firms were more likely to experience difficulty (37.4%), while Ontario was the least affected (16.9%).

Survey results

The survey indicates the extent to which the AILIA and the LIP have helped develop the industry. The survey measured to what extent AILIA members and LIP beneficiaries were able to meet their personnel needs. According to the results, 83% of respondents had been trying to hire staff since 2004 and 77% of these respondents had found all of the staff they sought. Therefore, 14% of total survey respondents did not find the staff they sought. The results indicate that those who did hire recruited eight full-time and five part-time workers. This suggests that if there is a shortage, it has had a long-term effect on only a few firms overall (14%), which reflects the literature.

The survey indicates why companies did not find the staff they sought. Of the respondents who were unsuccessful in their search for personnel (n=19 or 15% of the sample), 84% cited difficulty in finding qualified workers as a reason (particularly language technology companies); 42% indicated difficulty in meeting salary expectations (especially schools); and 21% indicated a lack of time for recruiting.

The AILIA did not contribute much to the development of human resources according to the survey. The results reveal that only 10% of respondents agreed that the AILIA had helped their organization to hire personnel, while 21% agreed that the association had supported the professional development of their company personnel. Only 30% of respondents said that the AILIA had contributed to the overall development of their organization (see the following figure). Translation firms were the least likely to say that the AILIA had contributed to their development. However, of the three sectors, translation firms were also more likely to say that the AILIA had helped them find staff.

The survey also looked at the effectiveness of AILIA and LIP contributions in helping the industry take advantage of markets. According to the survey results, the AILIA had no substantial impact on the industry in this regard. As the following figure illustrates, few members (12%) agreed that the AILIA contributed to the development of products. A minority of respondents also said that the AILIA helped their organization to find new domestic or foreign clients (18% and 20%, respectively). However, representatives of training companies were more likely to say that the AILIA helped them find clients abroad (26%).

The following figure suggests that the LIP has had a more significant impact. According to the results, a considerable majority of respondents who received contributions said that these had helped their organizations attract new students (78%), increase the demand for their products (68%) or find new business opportunities or clients in national (75%) or international (73%) markets. A majority of respondents (62%) also said that the contributions helped their organizations develop marketing or communication strategies; a minority of respondents said that the contribution helped them develop new services or products.

According to the following figures, most schools (83%) said they had attracted students. Training companies were more likely to say that the contribution allowed them to increase demand, develop new products, develop a marketing or communication strategy, or find new outlets or new international clients. However, technology and translation firms were more likely to say that the contributions allowed them to find new business opportunities or clients in national markets.

For technical reasons, the survey was not designed to measure the exact economic impacts of LIP contributions (as explained in section 2.3). However, the results indicate that most of the companies that were members of the AILIA or that received contributions saw some growth in the last five years: 72% of survey respondents confirmed that their sales figures had increased since 2004; 13% said that there had been no change in their sales, and 15% said that their sales had decreased. Over three-quarters (81%) of the respondents believed that demand for the services and products they offered would increase over the next three years, mainly because of growing demand (n=43).

By way of comparison with the language industry as a whole, in the 2006 Statistics Canada survey, 41% of respondents anticipated an increase, 45% expected stability and 14% forecast a decrease.

Lastly, the current survey measured the number of students attracted as a result of activities undertaken with funds received through contribution agreements. According to the results, contributions allowed organizations to attract an average of 46 students, a figure that is of primary importance in the cost-effectiveness calculation described later in this report.

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3.1.3 Has the LII contributed to greater awareness among industry stakeholders of national and international commercial opportunities for language industry products and services? If so, how?

General findings

Overall, the results indicate that most respondents appreciated the market studies and reports produced through the Initiative and found them to be useful for their organization (especially translation firms). The same is true for trade fairs and missions (especially on the part of schools). The LII has produced many market studies that can be found on the Industry Canada Web site. The AILIA also publishes industry information on its Web site. Moreover, the personnel of the Department and a number of LIP contribution recipients have participated in trade missions in a number of countries. The in-depth interviews revealed that these information sources and activities can help schools attract foreign students.

In-depth interviews

The LII supported the language industry in terms of providing it with information on business opportunities on three fronts: through Department research and publications, through trade missions undertaken by Department staff and through the LIP. The LII also supports the industry through the AILIA.

With regard to AILIA publications, one company representative said that employees at his organization used study results, including those of the Technology Roadmap. They also used Info-AILIA, the association's newsletter.

Employees from this organization also greatly appreciated information from the Department. Apparently, because of information from the Department and the AILIA, as well as the contribution received from the LIP, the organization's European sales more than tripled, while Canadian sales increased by 20%. Before receiving the contributions, the organization conducted no promotional activities. However, the organization's representative would have preferred higher contributions, of approximately $20,000. The representative of another company said that the LIP Web site was very user-friendly and that he had used documents produced by the LII to obtain statistics.

As is indicated further on (documentation review), a number of LIP beneficiaries accompanied the Department team on trade missions.

Case study results

The three case studies carried out for the evaluation confirm that LIP contributions had positive repercussions for their organization. In the case of the language school, for example, school trade missions abroad helped to attract foreign students. The school went on three trade missions to Asia, namely, to Japan, China and Korea. School representatives participated in (and sometimes organized) sales seminars and met with local representatives. They also met with potential clients and established a partnership with a representative in China. According to school representatives, these efforts helped increase business activities, in which the number of clients increased by between 500 and 1,000 per year in the last five years. Today, the company attracts over 6,000 students to its schools per year. However, the company acknowledged that some of these activities would have been initiated without LIP support.

Documentation review results

According to the documentation review, the market information produced by the LII is available to the industry via the Internet. The information is disseminated through the Strategis Web site. It contains the reports of all the studies produced by the LII through its Marketing and Branding component. The documentation review indicates that the LII has produced seven market studies: China, Hong Kong/Macao, Korea, Brazil, Czech Republic, Germany and Taiwan. These studies generally describe market conditions. For example, the German study gives an overview of the language training sector in Germany by focusing primarily on its education system, the key factors contributing to market growth, its characteristics and its opportunities. It also deals with the competitive environment and provides conclusions drawn from a survey and interviews.

The LII also supports the language industry portal on the Internet. The portal provides an introduction to the Canadian language industry, the AILIA and the LTRC. It also contains information bulletins (news, events, and conferences). The portal receives over 11,000 visits per year (2006–2007).

The AILIA Web site also contains information about the industry, particularly by means of the Technology Roadmap. The AILIA Web site was launched in January 2005, and its pages are viewed an average of 4,500 times a month by 1,800 visitors. Apart from the Web site, the documentation review indicates that the AILIA took part in 18 annual conferences and seven trade fairs and missions.

The recipients of LIP contributions took part in trade fairs in the following countries:

Table 12: Trade Fair Participation Rate per Year
(% of LIP Beneficiaries)

%	North America (Including Mexico)	Asia	South America	Europe	Middle East/ North Africa	Oceania	No ParticipationFootnote *
* The contribution received was used to promote or develop a Web site. (back to footnote reference *)
2003–2004	40	20		13	7		20
2004–2005	26	25	22	16	2		9
2005–2006	28	21	8	28	8		7
2006–2007	19	31	12	14	7	1	16

Survey results

According to the survey results, LII products and services are appreciated, particularly the market information products. According to the results, 66% of respondents found the market studies produced for the Marketing and Branding component useful, and 67% found the reports and publications useful. A similar percentage (65%) found the information on professions in the industry useful. Overall, 69% found the LIP useful to them.

By sector, it was found that training firms were more likely to appreciate the program (78% find it useful, versus 56% in translation and 58% in language technologies). However, more representatives from the translation sector found information on the professions useful.

According to the survey results, the training sector found trade fairs or missions more useful, with 53% rating them as useful. However, the translation sector appreciates reports and publications more, along with market studies. Finally, respondents were asked about the usefulness of the language industry Web site (portal), and there was a slightly higher proportion of language technology sector representatives who found it useful, as did respondents from the "Others" category.

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3.1.4 Has the LII contributed to greater awareness of industry products and services among potential customers in other industrial sectors in Canada and abroad?

In-depth interview results

With some exceptions, the majority of in-depth interview respondents were unable to say whether the Initiative contributed to raising awareness of industry products and services among potential clients from other industry sectors in Canada and abroad. No industry representative was able to confirm that the LII had contributed to their making contacts with clients outside of their traditional markets.

However, one program manager said that a number of companies, particularly those in the manufacturing (export) industry, have changed their opinion with respect to language services. It would appear that some companies in other sectors no longer consider language costs as an "expense", but rather as an investment. These companies have understood how language industry products and services can help them position themselves in international markets and communicate with clients.

Survey results

According to the survey results, half of LIP beneficiaries agreed with the statement that the department's contribution had helped them make contact with people outside of their industry. This is especially true for language technology and language training companies (see Appendix H).

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3.1.5 Has the LII helped to create synergies between organizations in the language industry sector? If so, how?

General findings

The results generally indicate that the LII has contributed to creating links between the AILIA and other institutions. The LIP has contributed to building links between beneficiaries and other partners, particularly among language training and language technology firms. However, a small majority of AILIA members said that the association has helped to create new contracts with people in their industry.

In-depth interview results

One of the challenges facing the sector is fragmentation. The dispersion of the industry compromises its ability to take advantage of major markets, such as those at the international level. The evaluation focussed on the impact of the LII on synergy among sector organizations.

A number of respondents of in-depth interviews gave examples of synergies created among industry organizations through the LII, such as the links it established through the AILIA with committees (including the translation committee working on the standards project) and exchanges among members. The AILIA has created links by taking a leadership role with respect to the PWGSC standing offer. Employees of the Initiative indicated that the LII had also created new synergies between the LTRC, the AILIA and the Université du Québec en Outaouais (UQO) that did not previously exist and that support industry development. The AILIA subcommittees enable discussions among committees and members. Currently, the AILIA has a Translation Committee, Human Resources Committee, Communications Committee, Technology Roadmap Committee, and four subcommittees (language processing, translation, content management and language training).

In addition, networks were created through the AILIA, according to respondents interviewed. Other examples and results of synergies:

• The Translation Bureau worked with the AILIA to develop promotional materials.
• Translation school associations and Canadian Francophone associations worked together to publish data such as the number of graduates (they also identified 13 translation programs in Canada).
• Partnerships were established between companies for the development of industry standards (e.g. for language schools, discussions on translation – international codes) (see attached case study).

For its part, the LIP enabled small firms to explore potential business development opportunities in countries that would normally be inaccessible.

One of the program managers said that, as a result of the requirement for translation companies to be incorporated to gain access to contributions, a number of self-employed translators decided to collaborate with others to become incorporated. An association representative observed that the LIP also contributed to the emergence of partnerships between training firms and technology-based firms.

Survey results

According to the survey results (see figure below), the AILIA has had a definite impact in this area. As indicated, approximately half of the respondents felt that the AILIA had enabled them to make new contacts with people in the industry. One-third of respondents said that the AILIA helped their organization build partnerships.

LIP contributions seem to have had greater impacts on contacts and partnerships with other firms. According to the results (see figure below), 71% agreed that the contributions had enabled them to make contacts with people in their industry, and just over half said that the contributions helped them build partnerships with other firms or organizations. This is consistent with statements made during the interviews.

According to the results, training and technology-based companies were more likely to build partnerships with other firms or institutions.

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3.1.6 Did the LII have unintended impacts?

In-depth interview results

Few respondents reported unexpected or unanticipated effects. The lack of cohesion between the three sectors was mentioned the most often. The sectors do not identify with each other, and one of the respondents noted that the disparity between the three sectors had almost certainly been underestimated, and that they appeared to have little in common. An observer nonetheless remarked that language technology firms serve the other two sectors.

Some respondents also said that the LIP seemed to respond to the needs of the language training sector better than to those of the translation and language technologies sectors (which was confirmed by the survey).

Two external stakeholders also stated that the Initiative was launched as part of the Action Plan for Official Languages, but it does not comply with the criteria of the plan (an observation made during the mid-term evaluation – see Appendix A). The LII was created in the wake of the APOL but was modified so that the language industry in general could benefit from it, and not just in French and English. For example, Anglophone companies are less interested in the domestic Francophone market, but more so in the international market.

As well, LIP managers noted that the work done to develop and establish a national standard was not planned for at the outset. The people questioned as part of the case study felt that this standard would have a considerable impact on the industry, particularly on its ability to export services to the international market.

Finally, survey respondents were asked overall whether the Initiative had succeeded in helping the language industry set strategic directions, strengthen links between partners, improve its capability to respond to the increasing demand for language products and services, and develop and increase its accessibility. According to 22% of respondents, this objective was achieved, while 70% felt that it was only partly achieved.

As indicated in the following figure, technology and training companies were more likely to think that the LII had met its objective.

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3.2 Cost-effectiveness

3.2.1 How cost-effectiveness were the major components of the LII (contribution to the AILIA, steering committee and related secretariat services, language industry contribution program, and marketing and positioning activities)?

General observations

A systematic comparison of management costs for the contribution agreements between the LII and the two other programs shows that the LII management costs were very high. However, estimates of revenue generated by the LIP-funded projects shows that the LIP short-term financial impacts exceed LIP costs.

The evaluation focussed on two aspects of cost-effectiveness, i.e. the cost-efficiency ratio and the cost-effectiveness ratio. The first ratio essentially deals with the proper use of resources in administering the program. In other words, it shows to what extent administrative costs are reasonable in relation to managing the program. The second ratio focuses on program impacts, in view of the investments made.

The efficiency ratios were compared with those of two other fairly similar programs, i.e. the Book Publishing Industry Development Program and Trade Routes, both Canadian Heritage programs (see Appendix G for program descriptions).

3.2.1.1 Cost-efficiency ratio

To assess the cost-efficiency ratio, we compared the administrative costs associated with managing the LIP contribution agreements, the contribution agreement with the AILIA, and the components of two contribution agreement programs of Canadian Heritage, i.e. Trade Routes and the Book Publishing Industry Development Program. The administrative costs were calculated based on the annual salaries of personnel directly involved in the management of contribution agreements, i.e. project selection, review of requests for expense reimbursement, and other monitoring work. A ratio was established between these administrative costs and the volume of contribution agreements.

The team chose to compare these ratios between the three programs for a two-year period, i.e. 2005–2006 and 2006–2007. With respect to the LII, the period of 2004–2005 was a start-up phase, to some extent. In terms of 2007–2008, it was not completed during the field work. The years 2005–2006 and 2006–2007 were therefore selected, which was also appropriate for the other program comparisons.

3.2.1.2 Analyses results of the Cost-efficiency ratio

The table below summarizes the results of the analysis.

Analyses results of the Cost-efficiency ratio

	LII – AILIA Contributions	LII – LIP Contributions	Trade Routes (Contribution Agreements)	Book Publishing Industry Development Program – Publisher Assistance	Book Publishing Industry Development Program – Community Initiatives	Book Publishing Industry Development Program – Community Initiatives	Book Publishing Industry Development Program – International Marketing Assistance
* Based on approved amounts. (back to footnote reference *) ** Some of its employeeswere provided by Industry Canada, i.e. outside the LII (back to footnote reference **)
Annual budgets dedicated to 2005–2006 and 2006–2007 contributions	$1,143,098	$1,119,716Footnote *	$4,435,867	$52,898,273	$6,689,062	$6,689,062	$9,600,000
Number of contributions, 2005–2006 and 2006–2007	2	122	233	449	195	195	Unknown
Average contribution value	$571,549	$9,178	$19,038	$117,813	$34,303	$34,303	N/A
Number of employees (full-time equivalent)	2	6Footnote **	18	14	16	16	2 plus subcontracting
Salaries (including 15% for benefits)	$161,000	$368,000	$1,046,500	$972,000	$1,294,000	$1,294,000	$1,300,000 and $161,000 (salaries)
$ Salary/ $ contribution agreement ratio	14.1%	32.9%	23.6%	18.4%	19.3%	19.3%	15.2%

Cost-efficiency analysis

According to the data, LIP administrative costs are clearly higher than those of other programs, with a ratio representing 32.9% of contribution agreement costs. This can be explained in part by the large number of contribution agreements to be managed in relation to the total budget. In fact, the average value of LIP contributions is clearly lower than that of other programs, meaning that it has a higher management cost ratio. This can also be explained by the fact that the program offered up to four rounds of funding per year. With respect to the AILIA contribution management costs, the ratio of 14.1% seems quite comparable to that of the other programs, even if the nature of the contribution is somewhat different. Moreover, it is below the generally accepted standard for program administration costs, i.e. 15% (or less).

However, as shown in the following section, the estimated generated revenue exceeds direct program costs.

3.2.1.1 Cost-effectiveness ratio: approach

The analysis of the cost-effectiveness ratio is essentially an examination of program costs versus its effects or impacts. It was not possible to obtain impact data for the other programs compared. However, the evaluation team was able to estimate the value of the revenue generated by the LIP contribution agreements by means of the survey. Program revenues and costs were compared, assuming that the objective was for revenues to exceed costs.

Calculation of revenue generated

The revenue generated can be estimated using two sources of information, i.e. case studies and the survey.

1) Revenue generated according to case studies

According to two case studies, the contributions generated considerable revenue. One of the case studies revealed that the contribution agreement allowed the company to recruit 10 translators from abroad. By estimating that each translator generated at least $25,000 in revenue for the company, the total impact is $250,000 for a single year from a $10,000 contribution, or a ratio of 25 to 1. The language technology company experienced a benefit of approximately $500,000 for participating in a fair and trade mission. The ratio in this case was also 25 to 1, given that there were two contributions.

Therefore, these cases alone generated $750,000 in revenue from an investment of $30,000.

2) Revenue generated by language schools based on the survey

The survey conducted for this evaluation did not allow us to precisely measure revenues generated, for the reasons explained earlier in the report. However, the survey measured the number of students attracted by the schools as a result of activities undertaken through the contribution agreements. According to the survey, 37 organizations attracted an average of 46 students. The revenue generated can therefore be estimated, as described below.

We assumed that one-third of the students were foreign, which is undoubtedly a very conservative estimate.^{Footnote 15}Based on this assumption, we can estimate the benefit using other sources of information. According to a survey of 1,734 foreign students conducted by the Canadian Association of Private Language Schools (CAPLS),^{Footnote 16} we can base our estimates on the following data:

• The average cost of language courses is $250 per week.
• In the case of foreign students, there will be impacts associated with living expenses, which averaged $398 per week according to the CAPLS survey.
• The survey also showed that half of the students travelled to Canada on a Canadian airline. Their travel costs could therefore be estimated at $500 per student per trip (or $1,000 per student, divided by two). Therefore, each foreign student spent an average of $898 for transportation, housing and other living expenses.

In all cases, if we consider that the LIP attracted 1,702 students (37 respondents attracting an average of 46 students) for courses lasting nine weeks (which is the average course length, according to the CAPLS survey), we can calculate the following:

Revenue generated by language schools based on the survey

Canadian students	1,135 students × $250 × 9 weeks = $2,553,750 in tuition revenue
Foreign students	567 students × $250 × 9 weeks = $1,275,750 in tuition revenue Plus: 567 students × $398 × 9 weeks = $2,030,994 in housing, transportation and living expense revenue 567 students × $500 = $283,500
Total	$6,143,994 in revenue generated for the Canadian economy

In short, for the Canadian economy as a whole, we can estimate that the LIP made it possible to generate revenue in excess of $6,000,000. This amount easily exceeds the contribution agreement costs ($400,000 per year) and salary costs ($184,000 per year), for a total of $1.7 million over three years.

The LIP cost-effectiveness ratio is therefore reasonable, particularly when we consider that our estimates are essentially based on immediate and partial benefits in one industry sector (we surveyed only about half of the population of organizations that received contribution agreements) and do not take into account the indirect impacts (which could be calculated using an input-output model). We estimate that future and non-estimated revenue will exceed investments even further.

What remains to be seen is what portion of these impacts would have occurred without the LII. This is a difficult question to answer. However, even if the estimate of impacts was overestimated by 100% (or double the actual value), the amounts would nonetheless remain substantially higher than expenses, according to our estimates.

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Footnotes

1. ¹⁰ The evaluation team conducted some additional research on the structure of some of these organizations. The CAPLS has three membership categories. Full members are firms that have operated for three or more years and that provide ESL or FSL instruction as their primary activity. Mentored members satisfy the same criteria as full members but firms need to be in operation for a minimum of one year, to a maximum of three. Associate members are firms that support ESL and FSL teaching, but that do not teach as their main activity. (back to footnote reference 10)
2. ¹¹ Minutes of the April 24, 2006, Executive Committee meeting. (back to footnote reference 11)
3. ¹² Industry standards, which have to do with services and monitoring methods, differ from professional standards in that the latter are governed by professional associations. (back to footnote reference 12)
4. ¹³ Canadian Evaluation Society Membership Survey, December 2003, Summary Report. (back to footnote reference 13)
5. ¹⁴ Perspectives (CSA newsletter), Spring 2004. (back to footnote reference 14)
6. ¹⁵ This is undoubtedly a low estimation. According to the Survey of Language Industry Companies in Canada – Translation, Interpretation and Language Training (August 2006), Canadian language schools mainly target foreign students (64% of schools). (back to footnote reference 15)
7. ¹⁶ Canadian Association of Private Language Schools — Preliminary Report, Student Profile Survey – February 2007. (back to footnote reference 16)