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Outsourcing Data Entry: What It Is & How to Get Started

The ultimate guide to data entry outsourcing. Learn about outsourced data entry, why you should consider it, and how to get started for enhanced data accuracy.
Office worker performing outsourced data entry work.



Are you considering outsourcing your company’s data entry? In today’s data-driven world, the efficient handling of information is crucial for any business.

Outsourcing data entry tasks has become an increasingly popular strategy among companies looking to optimize their operations. The market for data-entry outsourcing services is anticipated to grow by 185.56 million USD, achieving a steady 6.01% annual growth rate throughout 2027.

As we dive deeper into the subject, it becomes clear why the role of outsourcing in data entry is not just a trend, but a fundamental component of modern business practices.

What is Data Entry Outsourcing?

Hands holding a sign that says data entry.

Data entry outsourcing involves hiring external specialists to handle the input, processing, and management of data for a business.

This process includes tasks such as data transcription, digitization of paper documents, and database management, performed by skilled remote teams. For example, a company might outsource the task of updating customer records, entering sales data, or converting handwritten forms into digital formats.

Here’s a closer look at the common types of data entry services that businesses typically outsource:

  • Text Data Entry: This involves inputting printed or handwritten documents into word processors or databases. It can include anything from transcribing notes to digitizing records.
  • Numeric Data Entry: Focused on the input of numerical data into spreadsheets or databases, such as financial records or statistical information.
  • Data Cleansing: Enhancing, refining, and improving raw data, which includes correcting inaccuracies, removing duplicates, and standardizing data formats.
  • Data Processing: Transforming raw data into a more usable format, including categorization, tabulation, and compilation of data for analysis and reporting.

Additionally, the outsourced data can be formatted in various output options such as ASCII text (delimited or fixed width), DBF formats, Mainframe/EBCDIC formats, Microsoft Access, Microsoft Excel, and SPSS/SAS, ensuring compatibility with different systems and requirements.

Why Outsource Data Entry?

Outsourcing data entry operations can bring numerous strategic benefits to businesses, beyond just the basic task of entering data into a system. Here are some key reasons why companies choose to outsource these tasks:

1. Cost Efficiency and Budget Control

One of the primary motivators for outsourcing data entry is the significant reduction in operational costs it offers.

By outsourcing, companies can save on expenses related to hiring, training, and maintaining an in-house data entry team. This includes salaries, benefits, and other employee-related costs.

Additionally, outsourcing converts fixed costs into variable costs, providing businesses with more flexibility in managing their budgets and reallocating resources towards core business activities that drive growth and profitability.

2. Access to Skilled Data Entry Professionals

Data entry might seem straightforward, but it requires a certain level of skill to ensure accuracy and efficiency.

Outsourcing companies specialize in data management and have teams of experienced professionals, known as data entry clerks. They are trained to handle complex data entry tasks. This helps to ensure that data is processed correctly and efficiently, reducing errors and improving the overall quality of data.

3. Scalability and Flexibility

Outsourcing data entry tasks allows businesses to easily scale their operations up or down based on current needs.

During peak periods, outsourcing partners can quickly allocate more resources to handle increased workloads, and similarly, scale down when demand decreases.

This flexibility is crucial for businesses that experience seasonal fluctuations or are in growth phases and need to adapt quickly.

4. Focus on Core Business Activities

Data entry, although critical, is a non-core activity for most businesses.

Outsourcing these tasks frees up internal resources and allows management to focus on core competencies such as product development, customer service, and strategic planning.

This focus is essential for driving innovation and maintaining competitive advantage in the market.

5. Improved Data Management and Quality Assurance

Outsourcing companies not only provide data entry services but also bring advanced technologies and methodologies to enhance data management practices.

For example, a company outsourcing its invoice processing can benefit from the service provider’s use of optical character recognition (OCR) technology. This technology ensures that data from scanned invoices is accurately captured and digitized, reducing the chances of human error and enhancing overall data quality.

Providers often use automated solutions like UiPath, Blue Prism, ABBYY FlexiCapture, and Kofax to automate and streamline data entry. Automated data entry typically achieves 99.95% to 99.99% accuracy, compared to that of 96% to 99% for human data entry.

Deciding When to Outsource Your Data Entry

Business owner frustrated with data entry

Recognizing the right time to outsource data entry operations is also important. Here are some key indicators to help you determine whether outsourcing data entry is the right move:

1. In-House Capacity Constraints

If your current staff is consistently overwhelmed with data entry tasks, leading to delays and a backlog of work, it might be time to consider outsourcing.

This is especially true if these tasks are detracting from core business activities or if scaling up in-house operations is not feasible due to space or financial limitations.

2. Increasing Error Rates and Data Issues

A rise in mistakes during data handling can indicate that your team may lack the necessary expertise or resources to manage data entry effectively. As mentioned above, outsourcing can improve your accuracy and reduce errors.

3. Need for Cost Reduction

Evaluate if the costs associated with maintaining an in-house team, including salaries, benefits, and technology investments, are becoming prohibitive. Outsourcing can significantly reduce these costs by shifting to a variable cost model that aligns more directly with your data entry needs.

4. Demand for Advanced Technology

The need for sophisticated data processing tools and technology may be a sign to outsource. If investing in advanced technologies isn’t viable, outsourcing providers who already possess these technologies can offer you the capabilities you need without the upfront investment.

5. Business Scaling

As your business grows, the volume of data processing requirements will likely increase. If your current infrastructure is not scalable or if rapid scaling is necessary, outsourcing can provide the flexibility and resources to handle increased volumes efficiently.

6. Seasonal Fluctuations

For businesses experiencing seasonal spikes in data entry workload, maintaining a year-round in-house team may not be cost-effective. Outsourcing can provide the additional resources needed during peak times without the long-term commitment of hiring permanent staff.

7. Focus on Core Competencies

If data entry is not one of your core competencies, maintaining an in-house team may divert focus and resources from areas that could drive more value for your business. Outsourcing allows you to refocus on strategic activities that offer a greater return on investment.

Choosing the Right Data Entry Service Partner

Shaking hands selecting a data entry outsourcing partner

Selecting the appropriate outsourcing partner for data entry is a critical decision. Here are key factors to consider when evaluating potential providers:

1. Reputation and Experience

Investigate the outsourcing company’s reputation within the industry. Look for reviews, testimonials, and case studies that demonstrate their capabilities and past performance. Experience in handling projects similar to yours is invaluable, as it can predict the success of your own project.

2. Technological Capabilities

Ensure that the provider uses up-to-date technology that can integrate seamlessly with your existing systems. Advanced data entry tools, automation software, and secure data transfer methods are essential for efficient and secure operations.

3. Security Measures

Data security is paramount when outsourcing data entry tasks, especially when dealing with sensitive or personal information. Verify the provider’s compliance with international data security standards such as ISO, HIPAA, and GDPR. Inquire about their data handling, storage, and destruction policies to ensure your data’s integrity and confidentiality.

4. Flexibility and Scalability

The ideal outsourcing partner should be able to scale services up or down based on your business needs. This flexibility allows you to manage business fluctuations efficiently without compromising on service quality. Check if the provider can handle varying volumes of work and meet changing requirements over time.

5. Pricing Structure

Understand the pricing models offered by the outsourcing company. Competitive pricing is important, but it should not come at the cost of quality. Evaluate whether the pricing is transparent and if there are any hidden costs. A clear and straightforward pricing model helps in planning and budgeting effectively.

6. Communication and Support

Regular and clear communication is crucial for the success of any outsourced project. The provider should have a robust system for reporting and resolving issues. Responsive customer support and a dedicated point of contact enhance the overall outsourcing experience.

Overcoming Common Outsourcing Challenges

Solving the data entry outsourcing puzzle

Outsourcing data entry, while beneficial, can present several challenges that businesses need to navigate carefully. Here are some common issues and strategic solutions to effectively manage and mitigate these potential obstacles:

1. Data Security Concerns

Solution: Ensure that your outsourcing provider adheres to stringent data security standards, such as ISO/IEC 27001. Regular audits and compliance checks should be part of the service agreement to protect sensitive information and prevent data breaches.

2. Communication Barriers

Solution: Establish clear lines of communication from the start. Use collaboration tools that allow for seamless interaction and ensure that language barriers are addressed by hiring providers with multilingual capabilities if necessary.

3. Quality Control

Solution: Set explicit quality benchmarks and performance indicators in the contract. Implement regular quality checks and allow for feedback loops to ensure that the work meets your standards consistently.

4. Cultural Differences

Solution: Be proactive about understanding the cultural nuances that might impact your interaction with the outsourcing provider. Encourage cultural exchange sessions and training to align on professional and communication styles.

5. Managing Expectations

Solution: Have a detailed and structured Service Level Agreement (SLA) that clearly outlines all expectations, deliverables, timelines, and accountability measures. This will prevent misunderstandings and ensure both parties are aligned on the project’s objectives.

6. Scaling Operations

Solution: Choose an outsourcing partner with proven scalability. They should demonstrate their ability to flexibly increase or decrease resources based on your business’s fluctuating needs.


In conclusion, outsourcing data entry can significantly enhance operational efficiency, reduce costs, and allow businesses to focus on core competencies.

By carefully selecting the right outsourcing partner, understanding when to outsource, and proactively addressing common challenges, companies can effectively manage and optimize their data entry processes.

If you are considering outsourcing data entry, please schedule a call with our growth experts to discuss our data entry talent solutions.

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