Last week, we met with Lionbridge CEO Rory Cowan, CFO Don Muir, and CSO Paula Shannon to discuss the company’s announcement about restructuring, its strategy, and its technology plans. But first, how is 2009 shaping up? Cowan cited a Bain report that characterized the typically slow-to-get-going first quarter as doing nothing in January, some pick-up in February, and March returning to plan in the enterprise. He told us that while the company won more business in the last quarter of 2008 and first quarter of 2009, clients have been slow to start up projects.

Cowan added that recurring business is stronger than ever and that some large multi-year deals will extend the company’s reach beyond translation and localization into authoring. He also preempted our perennial question about profitability by asserting that gross margins will remain in the low to mid-30’s until Lionbridge moves more of its business to software-as-a-service (SaaS). Cowan said that his team learned from last year’s decline of the dollar against the euro, so new contracts are much more currency-aware than before. He was happy to have kept gross margins of 30-33 percent despite a 30-70 percent increase in non-U.S. cost of sales as each euro commanded US$1.60 in 2008.

With the usual “how’s business?” details out of the way, we turned to Cowan’s three big themes for the company:

• Restructuring. Lionbridge will eliminate about eight percent of its workforce, streamline operations, and reduce fixed costs. Cowan’s goal is to remove US$18-20 million of spending per year, with expected restructuring expenses of US$13-15 million this year. For the next few quarters, he plans to pay down debt and invest in technology. Given the duplicative and inefficient back office that Lionbridge acquired when it bought Bowne in 2005, this plan strikes us as being late, but still critical to increasing the company’s margins.
• Global mobile workforce. Lionbridge was the first language service provider to combine the internet cloud with crowdsourcing. The latest play on the cloud-crowd mantra is a globally dispersed, mobile community of collaborators working on “global search query intent.” The company trains people around the world to localize search engine results — think of  somebody in Ankara googling “football” and not finding links to the New England Patriots, but rather to the Süper Lig match-up of Beşiktaş against Kayseri Erciyesspor. With no overhead or facilities to manage, this global-mobile crowd in the cloud is building new business for Lionbridge that’s not subject to commoditization — that’s good news for increasing its margins.
• Technology. In June 2008, Shannon announced Lionbridge’s plans to open its translation technology to individual translators, decouple its services and technology, and support rival LSPs. Cowan told us that the work to make the Logoport back-end ready for such heady roles had taken longer than expected. Among other things, the company re-architected Logoport for multi-tenancy, thus allowing different companies to share a single instance of the product in a SaaS model. As part of this “hardening” of its technology, Lionbridge also beefed up data security, concurrency, and vendor management prior to opening the software to translators not working for the company.

Cowan wasn’t ready to announce Logoport packaging details for non-Lionbridge users, but we expect some news during the upcoming procession of translation and localization conferences in May and June. Releasing Logoport from its currently captive state will have a major effect on the emerging market for enterprise-class translation management, forcing other LSPs with house solutions to reconsider their own business models and opening up competition with non-LSP offerings from companies like Across, MultiCorpora, and SDL (see “SDL Refines Product Roadmap“).