In-house vs. outsourced data labeling, Data annotation Outsourcing, Outsource data annotation

In-house vs. outsourced data labeling

Data annotation and data labeling are critical procedures in any Machine Learning or Artificial Intelligence project. In essence, data labeling involves taking raw datasets and tagging or labeling the relevant information so that machines can learn and identify it. However, this process can be both expensive and time-consuming, with businesses spending up to 80% of their time on AI projects dealing with training data and data labeling. As a solution, outsourcing data labeling can be an effective way to save time and reduce costs. (Source)

Therefore, the quality and accuracy can be compromised sometimes. However, businesses today understand the value of quality and accuracy in the data labeling process. Once you train the machines with raw data, then the ML algorithm can find patterns in it and develop complex forecasting models. Businesses with more precisely trained models are more likely to have an edge over others when it comes to capitalizing on opportunities, foreseeing threats, and gaining new clients.

What is data labeling?

Data labeling is the method of analyzing raw datasets and tagging essential and informational labels on them. The datasets can be in any type or form, such as text, images, videos and audio. A label or tag is simply an identifying factor that describes the data and the first step in developing an ML or AI model. Data annotation implements settings so that models can learn from them.

For example, in the case of training an AI or ML model to identify animals, you must tag samples with labels such as dog, cat, cow, elephant, etc in the image dataset. Data labeling can direct an AI or ML model to recognize that a particular image is of an animal, person, or car.

This is especially useful in training AI models for autonomous vehicles, such as self-driving cars. It needs to be able to recognize the difference between objects to concoct the outside world in order to create a safe journey. Data annotation helps AI to classify which words were spoken in an audio recording and what activities are performed in a video.

At first, the data labeling process starts manually as humans create highly accurate tags or labels for a collection of data to use in the ML models. This specific process is called data annotation. It teaches the AI to identify the patterns according to the target or task. Once the AI learns by examples, then it automatically leads to accurate and predictable labels of new untagged datasets from the model. A precisely labeled dataset gives correct pieces of information that models use to check their predictions for accuracy and refine their algorithms.

Ready to accelerate your AI initiatives with high-quality data annotation?


In-house vs outsourced data labeling

As Artificial Intelligence models need a large volume of annotated data before going live, thus businesses are looking to advance their machine learning algorithms. However, before that, they need to make a choice- create an in-house team or go for an established outsourcing partner. Let’s find out which one is the boon for businesses.


In-house: Most in-house data labeling teams are short in number and intended to fulfill one particular requirement. However, the demand for datasets fluctuates over time. For instance, more images need to be annotated in one month than the next. As a result, the in-house team gets overloaded with work sometimes and underworked at others. As brands grow and the demand for datasets changes, then such inefficiencies start to impact the bottom line.

Outsourcing: Handing over to a skilled & experienced annotation expert enables businesses to upscale and vice-versa in sync with the demand of ML and AI models. This ultimately eliminates inefficiencies and allows businesses to optimize their resources better.

Pricing is the key

In-house: Having a data annotation team in-house can be a costly affair. In the context of managing and building the infrastructure to train the AI and ML algorithms is a serious financial burden, especially for small businesses and startups. The expenses of hiring employees, acquiring an office space, and most importantly, buying the annotation tools can be a huge expense to incur.

Outsourcing: Data annotation outsourcing companies offer reasonable pricing for all your needs, from manually tagging data samples to training the ML algorithms. Outsourcing partners provide data annotation services that help businesses to save money without compromising on accuracy and quality.

Training of employees

In-house: Creating an in-house data labeling and annotation department involves lots of staff training. Experienced trainers must teach inexperienced and untrained employees how to operate annotation tools. Besides, they need advice on the particular obligations of the specific projects. Designing and managing training programs for annotators demands a great deal of time and heed. Therefore, it affects the allocation of staff and resources, which may have profitably been used for core business activities.

OutsourcingData labeling service providers are onboarded with trained professionals who can swiftly adapt to fluctuating demands for datasets. Additionally, they are familiar with various annotation tools and methods.

Process management

In-house: Be it large or small, managing an in-house data labeling and annotation team is a daunting task for any business. They invest their huge amount of time and resources to monitor and manage these staff. Besides, ensuring quality in training datasets and troubleshooting the tool can be an additional burden for annotators. Therefore, it can distract them from the core activity, i.e. tagging accurate information to datasets.

Outsourcing: Hiring an expert service provider for labeling datasets can be proved as a catalyst to the smooth functioning of data annotation operations. The outsourcing partners can take all your burdens in managing the annotators and frees them up to focus on creating precise data labels. Additionally, the troubleshooting of annotation tools is taken care of by experienced staff who can respond in real-time to fix any mechanical obstacle.

5 Major implementations of image annotation


Types of data labeling and annotation to outsource

To overcome the in-house challenges, businesses are looking forward to outsourcing their annotation services. Below, we have pointed out the most commonly outsourced data annotation services that bring lucrative advantages and empower your budget.

Image annotation

In the case of image annotation outsourcing, expert annotators tag datasets manually to help AL and ML models to identify specific objects. However, it needs substantial training. Outsourced partners use advanced software for accurate reading and correct results.

Text annotation

Text annotation can include training of chatbots for websites, applications, etc. Tagging precise information allows the AI and ML models to identify words, phrases, synonyms, and paraphrasing of text. This helps chatbots respond correctly to the customers’ concerns.

Voice annotation

The utilization of digital voice assistants is increasing and businesses are training their virtual assistants to learn voice communication. The data-hungry ML models need a large volume of the dataset to train the AI for accurate voice identification.

Video annotation

To train an AI or ML vision model, humans are required to distinguish and label the dataset by outlining all the pixels containing it. One practical example of this is the use of video annotation in traffic control by the government, where it helps to identify car license plates or faces in a video feed or image.


Three primary things define a sound data labeling team.

  • Quality
  • Speed
  • Pricing

An in-house data annotation team allows control over the process, however, it becomes a burden to manage such perplex operation. Therefore, the business has to sacrifice quality and speed- while the cost remains relative.

Outsourcing to an expert data annotation service provider can eliminate the in-house bottlenecks and does the heavy lifting for you. Maxicus renders professionally managed data labeling and annotation services that satisfy your needs for accuracy, flexibility, and affordability. Get in touch!

Contact us

Tell us about your workforce and the staff you need to outsource

How many seats do you need to outsource?

1 of 4

Tell us about your company

How many employees do you have?

2 of 4

Tell us about your company

What industry is your business in?*

What roles are you looking to outsource?*

3 of 4

Where do we contact you?

4 of 4

Latest Post

Explore maxicus solutions

Are you ready to scale your business?

Get in Touch
We are using cookies to enhance user experience. Click Accept to give us your permission.
Accept Decline