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The ultimate guide of data labeling services - 2023

Two topics- data and algorithms regularly come up in conversations on AI and machine learning around the world.

If we were to succinctly summarize their relationship, AI models employ algorithms to acquire knowledge from what is referred to as training data and then utilize that information to achieve the model's goals.

Satellites, unmanned drones, self-driving cars, consumer electronics, and smartphone apps are just a few examples of the modern technology that incorporates machine learning.

The machine learning industry is expected to increase from $15.50 billion in 2021 to $152.24 billion in 2028, indicating a CAGR of 38.6% during the 2021–2028 decade, according to a survey of 76% of firms. The techniques and tools needed to enable ML initiatives are expanding as companies and organizations increase their investments in AI globally.

What is data labeling and data annotation?

The majority of the data produced, nearly 95% is unstructured. Unstructured data is just data that is not adequately described and can be found everywhere. When developing an AI model, you must provide data to an algorithm so that it can process it, produce outputs, and draw conclusions. It is only when the algorithm fully understands and categorizes the data that is provided to it can this process take place.

Data labeling is the process of locating items in unprocessed data, such as picture, video, text, or LIDAR, and assigning them labels that can aid your machine learning model in making precise predictions and estimates. Now, in theory, it should be simple to recognize objects in raw data. In actuality, it is more about meticulously highlighting things of interest with the appropriate annotation tools, allowing as little margin for error as conceivable in a dataset with thousands of elements.

An AI model could determine the format of the data it receives—audio, video, text, images, or a combination of formats—by using data annotation. The program would then categorize the information and continue with carrying out its responsibilities in accordance with the functionality and parameters assigned.

When data labeling is used?

For supervised learning models, labeled datasets are extremely important since they enable the model to fully absorb and comprehend the incoming data. The predictions either fit the goal of your model or don't when the patterns in the data are examined. This is also the point at which you decide if your model needs more testing and tuning.

When entered into the model and used for training, data annotation can assist with a variety of tasks, including assisting digital assistants in voice recognition, security cameras in spotting suspicious activity, and stopping autonomous vehicles at pedestrian crossings. 

We are aware that computers are able to deliver final findings that are not only precise but also appropriate and timely. But how can a machine acquire such efficiency in its delivery? Data annotation is what made this possible. In order to improve the decision-making and object identification capabilities of a machine learning module, it is given tons of AI training data while it is still in development. Otherwise every image would be identical for machines without data annotation since they lack any intrinsic understanding or information about the outside world.

How does data annotation work? 

Data gathering:

Getting the proper quantity and diversity of data to meet your model's needs is the first step in the process. Begin by gathering a sizable amount of material, such as pictures, movies, audio files, texts, etc. In comparison to a little amount of data, a vast and varied amount ensures more reliable results.

Data tagging:

Data tagging is the process of employing a data labeling platform and human labelers to find items in unlabeled data. They can be instructed to spot a vehicle in a picture or locate a person in a video. A training dataset for your algorithm is produced as a result of each of these operations.

Quality control:

To build top-performing ML models, your labeled data must be reliable and informative. If you don't have a very good quality control  mechanism in place to verify the quality of your labeled data, your machine learning (ML) model won't work as intended. Also when it comes to how people perceive objects or text that has been annotated, it's important to always remember that cultural context and geographic location matter. Make sure your remote, multinational crew of annotators has received the appropriate training to ensure uniformity in contextualizing and comprehending project parameters.

Model Training:

You must provide the ML algorithm with labeled data that contains the right response in order to train the model. You can successfully forecast the outcome of a new collection of data using your recently trained model. But in order to provide prediction/output accuracy, there are a number of questions you should ask yourself both before and after training:

1) Do I have adequate information?

2) Did I achieve the desired results?

3) How can I track and assess the performance of the model?

4) What is the ground truth?

5) How can I tell if the model is accurate?

6) Where can I locate these cases?

7) Should I seek out better samples using active learning?

8)Which ones should I select to label once more?

9) How do I determine whether the model is ultimately successful?

Keep in mind that simply deploying your model in production is not sufficient. You will also need to monitor its effectiveness.

Which data are annotated? 

Data can be annotated in a variety of ways. This comprises written text, audio, and visual media. Let's examine each one in turn.

Image Annotation:

From the datasets they were trained on, machine learning algorithms are able to quickly and accurately distinguish between your eyes, nose, and eyelashes as well as between your eyebrow and your eyelashes. Because of this, the filters you use fit precisely no matter what your face looks like, how near you are to the camera, or anything else. Image annotation, as you already know, is crucial in systems that deal with face recognition, computer vision, robotic vision, and much more. These models are trained by AI professionals who give their images titles, tags, and keywords. The algorithms then recognize and comprehend from these characteristics and self-learn.

Text Annotation:

Today, the majority of organizations rely on text-based data to provide distinctive insight and information. Text now can be anything from a social media comment to user reviews on an app. Text also has a lot of semantics, in contrast to visuals and films, which typically convey intents that are straightforward.

As humans, our brains are wired to understand the context of a phrase, the definition of each word, sentence, and phrase, tie them to a particular circumstance or discussion, and then discover the overall meaning behind a remark. On the other hand, machines are unable to perform this at accurate levels. Because they don't understand abstract concepts like irony and humor, text data classification becomes more challenging for them. Because of this, text annotation includes some more advanced levels, such as:

  • Intent Annotation
  • Semantic Annotation
  • Entity Annotation- consisting of named entity recognition and entity linking
  • Text Categorization

Audio Annotation:

Even more dynamics are associated with audio data than to visual data. An audio file is affected by a number of variables, including but not restricted to language, speaker demographics, accents, tone, intention, emotion, and attitude. All these variables should be detected and tagged by methods like timestamping, audio labeling, and more for algorithms to be effective in processing. For computers to comprehend it completely, non-verbal indicators like silence, breaths, and even ambient sound could be annotated along with verbal cues.

Video Annotation:

A video is a collection of photos that gives the impression that something is moving, whereas an image is always stationary. Now, each picture in this collection is referred to as a frame. When it comes to video annotation, the procedure entails adding key points, polygons, or bounding boxes in order to annotate different items in the subject area in each frame. The AI models could learn movement, behavior, patterns, and more when these frames are pieced together. Only with video annotation can ideas like object tracking, motion blur, and localisation be integrated into systems.

What are the data labeling use cases?

1. Image Classification:

Labeling images with keywords, metadata, and categories to help machines recognize and distinguish different objects in an image.

2. Object Detection:

Labeling images with bounding boxes around objects to identify and localize objects in an image.

3. Text Classification:

Labeling text with tags and categories to help machines classify text into different topics.

4. Natural Language Processing (NLP):

Labeling text with entities, intentions, and sentiment to help machines understand the context of the text.In order to quickly extract insights from textual input, computational linguistics, machine learning, and deep learning have now converged in natural language processing (NLP). Data labeling for NLP is a little different in that you either tag the file or draw bounding boxes around the text portion you want to label (usually you have the option to annotate files in pdf, txt, html formats). Different methods of data labeling for NLP exist, and they are frequently divided into syntactic and semantic categories. 

5. Video Annotation:

Labeling videos with frames, objects, and actions to help machines recognize and distinguish different objects in a video.

6. Audio Annotation:

Labeling audio with labels and categories to help machines classify audio into different topics.

Why is data labeling important? 

 Data labeling is a crucial step in the preprocessing of data for machine learning, especially for supervised learning, where input and output data are both labeled for categorization to serve as a learning foundation for subsequent data processing. 

Data labeling helps to train machine learning models to identify specific elements within a dataset. It is also used to create rules and algorithms that can be used to classify data. Labeling data allows machines to understand the context and meaning of the data so that they can make decisions about how to interact with it. By providing labels to data, humans are able to make sense of the data and develop insights from it.

What is a data annotation specialist?

A Data Annotation Specialist is a professional who is responsible for providing accurate and consistent annotations of data. These specialists rely on powerful and accurate tools and/or a large trained and supervised work force to annotate the data. Please find below our top 5 data annotation specialists : 

1. Isahit : Isahit is the only agile data labeling service, socially responsible, powered by human intelligence. They offer powerful annotation tools that cover all types of image, text and video annotation as well as data processing and marketplace content management. 

Beyond annotation tools, isahit has built a unique strength: a diverse, skilled and committed workforce that can handle complex projects across multiple industries and cover many use cases: from skin to food recognition through predictive maintenance and chatbot development. For 5 years now, they have been supporting nearly 350 clients worldwide and generating a real positive impact on their workforce. BCorp certified since 2021, isahit is revolutionizing the world of data labeling and outsourcing by making it ethical.

2. Humans in the Loop: Humans in the Loop, based in Bulgaria, offers services for machine learning model training and testing that are moral and free of bias.They focus on enhancing models continuously through human input. Their offerings include dataset gathering, output verification, error analysis, and annotation of 2D and 3D images and videos..

3. DignifAI: Colombia-based DignifAI is an AI data services company with a focus on social impact. The recruitment, training, and distribution of AI annotation duties to the migrant population and their vulnerable host communities is the operational foundation of DignifAI. They specialize in computer vision dataset curation and annotation as well as Spanish language NLP tagging.

4. CloudFactory: The UK-based company CloudFactory provides scalable human-in-the-loop data analysis for AI, digitization, and operational optimization. It also has offices in the US, Nepal, and Kenya. Through its unique workforce management technology, their expertly supervised and trained teams operate with great precision utilizing practically any labeling equipment.

5. iMerit: Imerit is an Indian corporation that offers technology services. They are currently collaborating with annotators stationed in Bhutan, Bhutan, and Europe. In many different areas, including Medical AI, AgriTech, Aerial imaging, and others, they provide data enrichment and labeling solutions in natural language processing and computer vision processing.

What are the data labeling types?

1. Manual Labeling:

Manual labeling is the process of assigning labels to data by hand. It is the most common type of labeling and is often used for text and image data.

2. Automated Labeling:

Automated labeling is the process of using specialized software or algorithms to automatically label data. This type of labeling is often used for large datasets with complex features.

3. Semi-Automatic Labeling:

Semi-automatic labeling is a combination of manual and automated labeling. It uses a combination of human input and automated algorithms to label data.

4. Crowdsourcing Labeling:

Crowdsourcing labeling is the process of using a crowd of people to label data. This type of labeling is often used for audio and video data, where it can be difficult to develop automated algorithms.

Who annotates the data ? 

Several cases are possible in the manual annotation. 

Internal annotation with an Internal workforce:

Some businesses decide to try and handle their own internal demands for data annotation. This might be a fantastic choice for tiny, simple-to-annotate datasets. But many businesses frequently give their data scientists and engineers this tedious work, which is a poor use of their time. While hiring annotators internally has advantages in process control and quality assurance, it is more expensive overall. This approach is typically not scalable because you have to spend money on hiring, supervising, and training staff, even if your data requirements may change drastically over time. Teams who attempt to automate these tasks or develop in-house technological solutions frequently discover that they are diverting important development teams with tasks that are more effectively outsourced.

External workforce:

There are numerous companies that specialize in data annotation, many of which are headquartered in low-cost nations like India. Some providers use specific ML models to speed up the process and conduct quality assurance. By using external annotators, these companies will be able to offer their customers the ability to annotate a larger volume of data and guarantee the quality of annotations through regular and accurate monitoring. 

How can data labeling be done efficiently?

As you can see, manually tagging data can be long and laborious. There are several best practices you may use to get over the difficulties and maximize the process.

1. Get quality raw data:

High raw data quality is a key step towards your machine learning model producing correct outcomes. Make sure the data is appropriate for the task, adequately cleansed, and balanced before assigning any annotations. If you're creating a model to separate photographs including cats and dogs, for instance, unlabeled data must contain both animals in an equal number and free of noisy components. Although highly specialized to the problem statement, the data should be diverse. While keeping specificity lowers the possibility of errors, diverse data enables us to build ML models in a variety of real-world circumstances. Similar to how suitable bias tests prevents the model from overfitting to a specific case.

2. Find subject matter experts:

The annotators' knowledge of the topic affects the success of data labeling projects to a great extent. It is always preferable to hire industry professionals that have in-depth knowledge of the field and can tag data more precisely and quickly.

3. Make an annotation guide:

Choose your annotation methods and standards, then compile all of the crucial information into a manual. There could be examples of edge tags that are correct, erroneous, and properly discussed. Writing detailed, understandable, and succinct annotation standards pays off in today's competitive AI and machine learning ecosystem more than you could possibly imagine. In fact, annotation instructions aid in preventing potential errors during data labeling before they have an impact on the training data.

4. Create a QA process:

To evaluate the labels' quality and ensure project success, incorporate a QA process into your project pipeline. Never undervalue the value of quality assurance testing. To ensure that labeling follows defined guidelines and errors are promptly fixed, you should include QA procedures into your data labeling workflow.

5. Choose the best annotation pipeline:

To enhance efficiency and cut down on delivery time, put in place an annotation pipeline that suits the requirements of your project. To prevent annotators from wasting time looking for a label, you could place the most common label at the beginning of the list, for instance.

6. Use Active Learning:

By utilizing machine learning to find the most useful data that has to be classified by humans, active learning aims to increase the efficiency of data labeling.

7. Continue to communicate:

It can be challenging to stay in touch with supervised data labeling teams. There is more potential for miscommunication or excluding key stakeholders, particularly if the team is distributed remotely. Establishing a reliable and user-friendly channel of communication with the personnel is the first step toward increasing productivity and project efficiency. Create group channels and schedule frequent meetings to quickly communicate important information.

8. Conduct a test project:

Always do your research before diving in. Run a pilot project to test your personnel, annotation policies, and project procedures. Before beginning your project, this will assist you in estimating the completion time, assessing the effectiveness of your labelers and quality assurance personnel, and improving your guidelines and procedures. After your pilot is finished, use the performance data to establish fair worker goals as your project moves forward. Also, running a pilot project or not depends greatly on how complicated the task is. Nevertheless, complicated projects frequently benefit more from a pilot project because it allows you to assess the project's financial viability.

How much does it cost to labeling your data ?

The process of data labeling is not only important but also time-consuming. It produces training data sets for the creation of AI and machine learning models. And the price of such training data is likewise based on the cost-labeled data that is available for such requirements. Additionally, the cost of data annotations and labeling is determined after taking into account a number of variables, including the amount and complexity of the data sets. The cost of the overall data annotation project depends on the types of annotation, such as text, photographs, or videos, as well as the types of annotation techniques used.

Bounding box annotation takes much less time and effort than semantic segmentation for example, which needs more skill and extra care to make an image recognizable to computers through computer vision for deep learning training. There are several ways to label or annotate data and the cost of the overall data labeling project is determined by the total number of samples needed to train an ML algorithm, whereas the rate for each image is constant. However, when a large amount of data is required, the costs can be negotiated based on the buying and selling power of the parties. 


One of the main obstacles to widespread AI integration in companies is the labeling and annotation of data. An important component of every successful ML project is accurate and thorough data annotation, which can showcase the best in any ML model. 

AI is transforming how we conduct business, and your company should embrace it as soon as possible. A wide range of industries, including agriculture, medicine, sports, and more, are becoming smarter because of AI's limitless potential. The very first step towards innovation is data annotation. With this knowledge, you can choose a data annotation platform wisely for your business and advance your operations. You also understand what data labeling is, how it functions, its best practices, and what you should look for.

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