Data Processing


The desire to increase shareholder value has driven the pursuit of finding new ways to organize management activities and as a result many new management models have emerged. The nineties have seen global companies move to a ‘core competence' business model focusing on areas of strength and outsourcing many non-core activities.

Industries such as Banks, Airlines require large-scale data entry and revenue accounting work to be done. For revenue accounting and other back office accounting operations, paper documents / raw data are sent to remote locations, which are used for data entry and necessary reconciliation. Using high-speed datacom links for their back office and data processing operations, these banks, airlines and other organisations with extensive data turnover and customer interface, are able to save costs and valuable resources. The prime concern of these companies is availability of data and 100% uptime of facilities. In other words, such a set up could be realised simply as an offshore extension of existing information and backoffice operations promising constant availability.

Over the last few years, there has been a growing trend to outsource these services to major IT service providers with contracts running into decades. The primary criteria for such projects is quality of organisational processes, availability of abundant manpower and ability to dedicate resources to client's needs.

In this chapter, we examine the basics of data processing and advantages of undertaking such initiatives from India.

What is data processing?

Data Processing is a category of IT Enabled Services pertaining to capture, digitisation and processing of data emanating from various sources. Traditional data processing services comprise punching data from manually filled forms, images or publications; preparing databases and integrating them. However, with the advent of multimedia and internet, sources have widened to include manually printed documents, images, sounds and video as well. Equally diverse are the new output media which include databases on servers and management of records emanating from internet based queries.

Data Processing has acquired significance in the last decade as information has become a critical resource for most enterprises/industries. These industries have to make internal decisions, swiftly respond to a customer query, present reports, or perform functions pertaining to any other use driven by information availability. Importantly, there is an increasing comfort level with outsourcing such services. Using high speed datacom links for their backoffice and data processing operations, organisations with extensive data turnover and customer interface are able to save costs and valuable resources.

The Process

The clients for Data Processing services are companies / organisations receiving or generating large quantities of forms that are handwritten or typed and time intensive. These forms can be sent either physically or can be scanned and transmitted to vendor's facility. The processing may be done using; automated systems reading check-boxes, bar codes, and most of data slots that is variable on a form. Forms can be processed from a hard copy or  scanned copies through fax.

Many companies enter it manually (from image or paper) or through computer assisted data capturing tool using O.C.R. (optical character recognition), I.C.R. (intelligent character recognition) and Bar code. Information is checked by validation routines including table look-ups, data/range checks, and relationship validation. Processed documents are then sent to verification stations where experienced operators verify the accuracy of processed information. This product is then turned into properly formatted Data (record layout) which is then quickly transmitted to the client's computer.

Some vendors also use this as a stage in the complete value chain and provide further enhanced services. These include database search, database integration and establishing dedicated backoffice operations for large customers.

Range of Services

The following are an indicative range of services that are typically offered as part of data processing services:

  • Document Preparation
  • Data Entry
  • Image Capturing
  • Image Keying
  • OCR & ICR Processing
  • Image Storage & Retrieval
  • Data entry front end edits
  • ASCII format for upload to your database
  • Forms are imaged and transferred to CD ROM
  • Custom reports
  • Statistical analysis
  • Outcome studies

Who are the potential customers?

Potential customers are those industries or sectors that have high information turnover coupled with need for efficient archiving of records and their frequent access. Some of the prominent potential clients would be from industries in:

  • Insurance
  • Banking
  • Public utilities
  • Telecom
  • Legal
  • Transportation
  • Manufacturing
  • Publishing
  • Police departments
  • Government agencies
  • Municipalities
  • Hospital

Essentials for setting operations

Investments and logistics for establishing a Data Processing Venture in India are a function of the intended services portfolio, scale of operations and size of customers' operations. Therefore, there may be a start up company carrying out data punching, editing and compilation for an international publication. There may be an unit acting as an offshore data processing centre for a large overseas customer, offering services ranging from data entry to database maintenance. Higher up the value chain, a company with well established practices may act as a back office operation for a customer having high dependence on IT infrastructure and making frequent pitch to high level decisions, such as responding to customer queries, determining daily sales movements, tracking customers, etc. Such a service company may offer services in the complete value chain ranging from data punching to database development, integration and frequent maintenance. In other words, this service outfit takes complete responsibility for managing the back office operations i.e end-to-end services.

Costs for a simple data processing unit may vary from Rs one crore to two crores with seat capacity of about 50-60 people per shift. Depending on customers' needs and ability to manage internal efficiency, vendor may opt for two or three shifts. This would translate into installed capacity of at least 50 PCs. Also, depending upon your customer needs, 100% uptime of communications lines is not essential, company may opt for dial up ISDN connections which ensures minimum disruption and packets loss, while highly improving throughput. Equipment requirement would include:

  • PCs (50) and Servers (2-3)
  • Word Processing Software (depending on number of PCs)
  • Networking and Dial-up communication facility
  • Database Software
  • Database gateways
  • Connectivity (Internet / ISDN)

As regards workforce requirement, you need data entry operators, Project/Group Leaders, Quality Experts/Editors, and senior management consisting of heads of functional organisations for marketing, finance, administration, Human Resource, Quality Assurance and New Process Development.


For a small scale operation, a company may start as a subcontractor for an already operational company in USA or Europe , probably UK or Germany . These markets offer tremendous potential for services in publishing, bills processing, and other forms of data processing. There is growing trend in these markets to build up order book, and appoint a number of affiliates to subcontract their projects. However, in the initial stage, the main vendors share the operational control in appointed affiliates and also take responsibility for quality control. To find vendors in export markets, internet and directories of chambers of commerce and other official corporate publications could form the beginning point.

With maturity in revenues, internal organisation and ability to benchmark against globally accepted service standards, companies in India can begin to build services higher up the value chain and thus build internal marketing organisations, preferably with an office in US. This would help to establish local interface and establish direct customer relationship. The businesses to validate such a set up would include backoffice operations that help to tie up with customers with extensive data needs. Service Providers may consider establishing their solutions portfolio that meet scaling needs for diverse range of businesses. For instance, one may consider having separate business lines for companies having upto 500 employees, for more than 500 employees and upto 1000 employees, and for companies with more than 1000 employees.