Calculating ROI in Software Localization

The most fundamental reason for a software company to localize product is to increase total revenue and net income. The logic is simple: Higher total revenue offsets larger R&D, product development and product marketing costs. Larger budgets mean better products and better odds of dominating the market space.

In 2001, 65% of all PC sales and 66% of all server sales were outside the U.S., according to IDC, and 48% of worldwide software revenues were generated in markets outside of North America. By adapting — also known as localizing — products for international markets, these companies are maximizing their revenue capture, as well as protecting or improving their global market share.

Software companies do not rely on ROI calculations alone to decide what international markets they will enter. Market research, competitive forces, sales channels, existing customer relationships, and other strategic factors also color, or determine, the outcome. But as one international product manager commented: "A strong ROI case is hard to ignore."