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Outsourcing Data Annotation Work


Many companies are stuck with the challenge of having too much data and too few resources to do anything useful with it. They often try to solve this problem by hiring more employees, but unfortunately, talent is not equally distributed, so some areas get inundated while others still lack capacity.

For many tasks in machine learning, data annotation work is required to label the content of the data. It includes specifying what concepts or entities are represented in the dataset, which relationships exist, and how each entity relates to other entities within the dataset.

Automation of any form requires some level of annotation for its training datasets. Hence, businesses need an alternative way to automate their workflows without spending too much on human resources or increasing the risk of legal liabilities.

This article will dive into the pros and cons of outsourcing data annotation work to a data annotation company. We will then select the right provider for your needs. Let’s begin with some background information.

Outsourcing Data Annotation Work

It comes down to an internal or external approach to solve your need for reliable and scalable annotation work. Outsourcing annotation tasks to a data annotation company might win out over hiring a large team inside your organization:

Benefits of Outsourcing Data Annotation Work

There are many benefits to outsourcing your data annotation work, which can be summarized into six main points: cost savings opportunities, higher quality of annotation work, better scalability, timely availability, mitigating internal bias, and increased data security.

Cost savings opportunities: The first benefit when delegating data annotation tasks is cost savings compared to hiring new employees or buying a new system for in-house use only.

Similar tasks can be outsourced at a tenth of the price of the average salary of a US worker. The cost savings potential is even more significant when large-scale annotation projects are considered.

Higher quality of annotation work: When data annotation work is outsourced to a professional service provider, the level of expertise and experience brought to the table often results in higher quality annotations.

Service providers have dedicated Quality Assurance (QA) teams who check the accuracy and completeness of all annotations before they are delivered to their clients.

Furthermore, because service providers have been doing this type of work for many years, they have developed best practices and standards that lead to more consistent and accurate annotations.

Better scalability: The number of annotators required for a project can vary greatly depending on its size and complexity. When an in-house team is hired, the number of annotators needs to increase or decrease as the project scale changes.

This can be difficult and time-consuming, especially when dealing with a small or medium-sized company. On the other hand, service providers have large teams of annotators that they can draw from as needed. This results in faster turnaround times and better scalability.

Timely availability: Another benefit of outsourcing data annotation work is that service providers can provide their services around the clock, seven days a week. In-house teams may only be available during certain hours or only on certain days. This can cause delays in getting projects completed on schedule.

Mitigate internal bias: Many in-house teams often have internal biases that can affect the quality of their work. For example, they may fail to flag certain annotations as problematic because they share a similar background with the annotator.

Service providers employ QA teams and data analysts to mitigate this issue and provide consistent annotation services across all projects.

Increased data security: Data is increasingly recognized as a company’s most valuable asset. There is also an increased awareness of how vital it is for companies to protect sensitive and confidential information properly.

When hiring in-house staff, there is always a chance that these employees will misuse or sell any data they get access to. This danger is mitigated when outsourcing annotation work to a service provider because they do not have access to sensitive data.

Drawbacks of Outsourcing Data Annotation Work

While there are many benefits to outsourcing your data annotation work, there are also a few potential drawbacks that should be considered:

With so many service providers, it is hard to choose the right one: A drawback when outsourcing annotation work to third parties is that there are numerous providers in the market, and selecting the best one for your needs can be challenging.

Another consideration that should be made is whether or not the service provider will handle all elements of an annotation project or hire subcontractors to work on it. As a rule, you should only hire a provider with a well-defined and reliable process for hiring and managing their subcontractors.

This is because service providers that have been doing this type of work for many years have developed processes that have been repeatedly demonstrated as being effective.

In addition to looking at reviews from previous customers, it is also essential to check the performance history of potential data annotation providers. The best way to do this is by checking their reviews on sites such as Clutch, TrustRadius, and G2Crowd.

These reviews will address the quality of the company’s annotation results and speed, accuracy, availability, and cost. It may also be helpful to read articles or blog posts that have been written about the provider.

There may be some language barriers that need to be overcome: When outsourcing annotation work to a service provider, it is vital to ensure that there will not be any language barriers between the annotators and the data.

This can be accomplished by ensuring that all of the service provider’s team members are fluent in the language in which the data is being annotated.

You need to give up some control over the process: When outsourcing annotation work, you need to relinquish some control over the process to the service provider. This includes specifying what type of annotations are required and formatted. In return, you will receive high-quality annotation results completed on schedule.


Outsourcing annotation work to a service provider from a data annotation company effectively reduces costs, mitigates internal bias, and increases security. You should be aware of the drawbacks of outsourcing data annotation work before you take this step so that you can select the best partner for your needs.

As previously discussed, it is vital to choose one that has been in business for many years, has a well-defined process for hiring subcontractors, and provides excellent customer service. It also helps if they have experience working with large companies that may not need their projects completed quickly or available 24/7.

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