AI’s Improved Accuracy Squeezes Translation Industry in Japan

Half of Companies Report Lower Revenue and Profits

Tokyo Shōkō Research examined the performance of 100 Japanese translation companies whose results could be compared over five consecutive fiscal years. In fiscal 2025, the companies’ combined sales amounted to ¥39.3 billion, while their net profits totaled ¥920 million.

Compared with fiscal 2022, when sales peaked at ¥43.5 billion and profits at ¥3.1 billion, sales in fiscal 2025 were down by 9.7% and profits by 70.7%. Of the 100 companies surveyed, 32 reported higher sales and 35 higher profits, while 50 had lower sales and 47 lower profits.

Tokyo Shōkō Research offers the following analysis of the situation: “Machine translation has advanced so rapidly that simple texts can now be translated for free. Price competition is intensifying as it becomes easier to obtain translations.”

Meanwhile, the global market for AI-assisted translation is expected to expand rapidly. The US-based market research company QY Research forecasts that the market will grow from $2.6 billion in 2025 (¥415.5 billion, when calculated at ¥158 to the dollar) to $4.2 billion (¥666.6 billion) by 2032. Business Research Insights, a market research company based in India expects market growth from $4.4 billion (¥693.5 billion) in 2025 to $5.7 billion (¥904.9 billion) by 2035.

Although these estimates vary considerably, they share the assumption that the mainstream of translation will shift from human translators to AI and that the market will expand. The key to the survival of the translation industry may lie in whether translators can use AI to improve efficiency in general-purpose translation, while finding a niche in either specialized fields in which AI is less accurate or in areas that require human creativity.

Data Sources

• Data and analysis of Japanese translation industry (Japanese) from Tokyo Shōkō Research
• Forecasts for global translation industry (Japanese) from QY Research
• Data and forecasts for global translation industry from Business Research Insights

(Translated from Japanese. Banner photo © Photo AC.)