Why Do You Need to Outsource Data Management Services?

Data Visualization

Specialised data solutions are the need of the hour. This is the primary reason why today’s businesses prefer extracting values through outsourcers. If you consider data management, third-party vendors can free up internal resources and allow businesses to focus on their core competencies. This can improve overall business efficiency and productivity.

If you consider a report by Technavio, the global data entry outsourcing market is projected to expand by USD 1.45 billion from 2020 to 2024. It is driven by the increasing demand for data analytics and the need for accurate and timely data.

The reasons for these happenings are the leverages and advantages that the third-party vendors provide.        

Expertise is Key

Data management is a critical process, which requires specialised knowledge and expertise in the domain of data analytics, database management, and data security. Outsourcing data management services to a third-party provider can give businesses access to specialised expertise and knowledge that may not be available in-house. Here is how you can discover the expertise of the prospective outsourcer: 

Industry Knowledge: Check the expertise of the prospective outsourcer in the specific industry or domain in which your business operates. They should have a deep understanding of prospective hurdles and regulatory requirements that are specific to your industry.

Technology Expertise: An outsourcer should have expertise in the specific technologies and tools that your business uses for data management. Check if it is familiar with the latest data management software, platforms, and tools, and has experience in implementing and customising these solutions.

Data Quality and Accuracy: A data management outsourcer should have expertise in ensuring data quality and accuracy, including the accuracy of data entry with a quick turnaround. They should have processes and procedures in place for data validation, cleansing, and enrichment, and should be able to demonstrate their ability to deliver high-quality data.

Data Analysis and Reporting: The vendor should be able to help your business gain insights from your data, and should have experience in developing custom reports and dashboards to meet your specific business needs.

Project Management: Managing the project should be like a walkover for the data management specialists. They should have established processes and procedures for managing data management projects and should be able to demonstrate their ability to deliver projects on time and within budget.

Cost Savings Should Be There

Contracting with a third party for data management can often be more cost-effective than building an in-house team. This is simply because data management providers can leverage economies of scale to provide services at a lower cost. 

Key factors to consider before finalising the cost of the data streamlining project: 

  • Type and Complexity of Data: The type and complexity of the data play a significant role in defining the cost. Highly complex or sensitive data may require more specialised skillsets, which can increase the cost.
  • Volume of Data: Larger volumes of data may require more resources and time to manage, which can add to the overall cost.  
  • Frequency of Data Management: Frequent requirements can impact the cost of outsourcing. More frequent data management tasks may require ongoing support, which often add expenses.
  • Level of Expertise Required: The level of expertise also scrolls up or down the cost of outsourcing. Highly specialised expertise or technical knowledge, such as data analytics or data mining, will typically command a higher rate.
  • Geographic Location of the Provider: This factor also rises the cost of the data management process, which can be turned affordable by hiring providers in countries with lower labor costs.
  • Service Level Agreement (SLA): The SLA between the outsourcing provider and the client will also increase or decrease outsourcing. A higher level of service, such as faster turnaround times or 24/7 support will typically come at a higher cost.

Scope for Scalability

Hiring a third party for managing data can provide businesses with greater scalability. It means that businesses can easily scale up or down their data management needs as their business grows or changes. 

  • Pay-As-You-Go Model: With this model, businesses typically pay a set rate per unit of data managed, or per task completed. This can be an effective alternative for businesses that have unpredictable records management needs, or for those that need to manage a large amount of data on a periodic basis, such as during a seasonal peak.
  • Infrastructure and Technology: The infrastructure and technology cast a deep impact, as the vendor should have the necessary hardware, software, and network capabilities to handle large volumes of data.
  • Staffing and Resources: The third-party data entry specialist or data management expert should have the necessary staffing and resources to handle increasing volumes of data. This includes having a pool of trained staff that can be quickly mobilized to support additional workloads.
  • Processes and Procedures: The outsourcing partner should have the experience to smoothly handle increasing volumes of data. This includes having a scalable workflow and quality control processes to ensure accurate and timely data management.
  • Security and Compliance: The outsourcing partner should have security arrangements like robust security protocols, backup and recovery processes, and compliance with relevant regulations and standards.
  • Communication and Collaboration: The outsourcing partner should have a clear communication plan and reporting structure in place to ensure that the business is informed of progress and any issues that arise.


 Many industries have strict data compliance regulations that businesses must comply with. Outsourcing data management services to a provider with specialized expertise in compliance can help businesses avoid costly fines or legal issues.

There are certain key compliance certificates that should be there with a third-party vendor, which mostly include: 

  • ISO 27001: It represents an international standard for information security management systems (ISMS). Having it means that the outsourcer has set up and implemented a framework of policies and procedures to effectively manage and protect sensitive information.
  • GDPR Compliance: The General Data Protection Regulation (GDPR) is a European Union (EU) regulation that sets out data protection requirements for businesses operating within the EU. If your business operates within the EU, it is important to ensure that your outsourcing partner is GDPR compliant.
  • HIPAA Compliance: The Health Insurance Portability and Accountability Act (HIPAA) is a US-based law that regulates the handling of protected health information (PHI). It regulates the security of the health information of the patient. 
  • PCI DSS Compliance: The Payment Card Industry Data Security Standard (PCI DSS) is a set of security standards for businesses that accept credit card payments. It is for the outsourcers that accept credit card payments. 
  • SOC 2 Compliance: It represents a set of auditing standards developed by the American Institute of Certified Public Accountants (AICPA). SOC 2 certification demonstrates that an outsourcing partner has established and implemented controls for security, availability, processing integrity, confidentiality, and privacy.


Outsourcing data management services can provide businesses with access to specialized expertise, cost savings, scalability, improved focus, enhanced security, and compliance. These benefits can help businesses streamline operations and achieve their business goals.


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