Human in the Loop: Leverage Crowdsourcing for AI Data Labeling

The global data labeling market is projected to reach $8.7 billion by 2026, driven by the rising need for large, well-labeled datasets to train increasingly complex AI models. This growing demand for fast and accurate labeling is becoming too much for in-house teams to handle, leading many companies to rely on external solutions to scale efficiently.

That’s why many companies are turning to crowdsourcing. Crowdsourcing offers flexibility, allowing companies to quickly adjust the size of their workforce based on project needs, while also tapping into a diverse talent pool with varied perspectives. By hiring contractors from around the world, they can scale their data labeling operations efficiently. 

This global approach helps cut costs and speeds up data annotation, helping companies stay competitive in this rapidly growing field. However, managing contractors across different countries brings a set of its own challenges. 

Importance of crowdsourcing for data labeling

Crowdsourcing has emerged as the go-to solution for AI companies looking to scale their data labeling. The real power of crowdsourcing lies in its ability to match the scale and speed required for modern AI projects, which depend on vast amounts of labeled data. 

Here’s how crowdsourcing solves the key challenges for the industry:

• Global talent at scale: Crowdsourcing quickly opens up a vast pool of talent from around the world. This approach enables AI data labeling companies to hire hundreds or even thousands of labelers simultaneously, which is very helpful when dealing with large datasets. By leveraging a global network, companies gain hiring flexibility. As a result, delivering high-quality labeled data on tight deadlines without the need for a lengthy hiring process becomes their operational standard.
• Continuous workflow: With talent spread across different time zones, data labeling can continue around the clock. This continuous workflow significantly reduces project timelines and ensures faster model development. For instance, while one team in Asia finishes their workday, another team in Europe can pick up where they left off, ensuring a seamless flow of tasks without downtime.
• Diverse perspectives: Global contractors bring diverse viewpoints, which is important for labeling tasks that require cultural, linguistic, or contextual nuances, particularly in natural language processing or sentiment analysis. In India, for example, hundreds of regional languages and dialects affect how people speak, even when conversing in English. Local labelers can annotate and transcribe speech data with a deep understanding of these regional variations, improving model performance in voice assistants and transcription services tailored to specific locales.
• Cost flexibility: Crowdsourcing allows AI data labeling companies to adjust their workforce as needed. This approach helps keep costs in check by avoiding the overhead associated with a fixed workforce, allowing businesses to adapt quickly without long-term commitments.
• Reduced administrative burden: Deel simplifies contractor management by streamlining onboarding, payments, and compliance. Data labeling companies can focus on delivering high-quality annotations without getting bogged down by the complexities of managing a global workforce.

See also: 2024 Guide On Hiring And Managing Remote Workers

How to hire global contractors for data labeling

Hiring global contractors at scale requires a clear, structured approach. Here’s how it typically unfolds:

Defining the job requirements 

As the first step, outline specific tasks contractors will handle. Data labeling could include labeling images, annotating text, or classifying data for machine learning models. Clarify technical skills (e.g., experience with specific annotation platforms) and expertise (e.g., linguistic knowledge for NLP tasks or familiarity with specific cultural nuances).

Sourcing candidates

Many AI data labeling companies primarily source contractors by running targeted ads on LinkedIn and social media platforms to recruit labelers globally. This approach allows them to reach a vast and diverse talent pool quickly. Additionally, industry-specific platforms like Scale AI and CloudFactory can be used for large-scale projects, offering pre-vetted talent experienced in data labeling.

Creating a robust contractor agreement 

Once you’ve selected your candidates, draft a clear contractor agreement. The agreement should define the scope of work, deadlines, ownership of the labeled data, and confidentiality clauses. This protects your business, secures intellectual property, and ensures fair treatment of the contractor while maintaining compliance with local laws.

Screening and vetting candidates 

Depending on the nature of the data labeling task, vet contractors by reviewing their previous work or having them complete a small test project. For tasks requiring cultural or linguistic sensitivity, prioritize candidates with experience in specific regions or languages. Deel offers background checks and identity verification in 160+ countries to help you find contractors that meet your standards. 

Onboarding contractors

Provide contractors with access to the necessary tools (e.g. data labeling platforms), training materials, and detailed instructions about the project. Automate onboarding with platforms like Deel to handle contract signing, tax documentation, and compliance. This minimizes delays and ensures contractors are fully equipped to start working immediately.

See also: Hiring and Managing Contractors: A Global Client's Guide

How to pay international contractors for data labeling

Paying large teams of international contractors in AI data labeling requires flexible payment methods and bulk payment capabilities to scale operations efficiently. Multi-currency options, PayPal, and cryptocurrency ensure contractors are paid quickly and according to their preferences. Solutions like bulk payments allow companies to quickly pay hundreds of contractors at once, reducing administrative effort and keeping projects on track.

Payment schedules

In AI data labeling, payment schedules typically revolve around milestone-based or hourly payments. 

• Milestone/project completion payments: Ideal for larger data labeling projects, payments are made after reaching certain milestones or upon project completion. This balances security between the contractor and the company.
• Hourly payments: Contractors can be paid hourly for ongoing or long-term data labeling tasks. In these cases, it's important to define a clear payment schedule—weekly, bi-weekly, or monthly—so contractors know when to expect their payments.

Bulk payments

Deel offers a bulk payment feature for contractors, which allows clients to pay their entire team in one click. This feature is designed to streamline the payment process for companies managing multiple contractors.

This bulk payment capability is one of the advantages Deel has over some contractor payment providers, as it simplifies the process of managing payments for multiple contractors simultaneously. It's part of Deel's integrated approach to contractor management, which includes features like automated invoicing and comprehensive contract management.

Payment methods

It’s important to offer multiple payment methods to accommodate the preferences and accessibility of contractors in different regions. Some of the best options include:

• Wise (formerly TransferWise) - offers direct transfers to local bank accounts with minimal fees and transparent exchange rates. It avoids the high costs associated with traditional bank transfers and ensures contractors receive more of their earnings. It’s best suited for contractors who need frequent, smaller payments. It’s an excellent choice for ongoing data labeling tasks where contractors bill hourly or weekly.
• Payoneer - contractors can withdraw funds directly to their local bank accounts or through a prepaid Payoneer Mastercard. Payoneer is accessible in over 200 countries, making it ideal for contractors working in regions where traditional banking is less developed. It’s best for larger payments or contractors who need flexibility in how they access their funds. It’s especially useful for long-term projects where contractors may want multiple payout options.
• PayPal - Paypal is widely accepted, offering a fast and convenient way to send payments globally. However, it comes with higher transaction fees (up to 3.9% for international transfers) and currency conversion fees, which may reduce the contractor’s earnings. It’s best for quick, smaller payments or contractors in countries where PayPal is easily accessible. It’s an option favored for its simplicity but can be expensive for high-value projects.
• SWIFT transfers - they are reliable for sending large payments securely. However, they come with high fees and can take several days to complete. SWIFT is best for one-off, high-value transactions rather than recurring payments. It’s best for large-scale data labeling projects where payments are tied to major milestones or upon project completion. It’s ideal for contractors handling large volumes of work where security and guaranteed payment are prioritized.
• Digital wallets - they allow contractors to receive payments instantly and withdraw funds to local accounts or use them directly from their wallets. Platforms like Revolut have lower transaction fees and are popular in regions with less developed banking systems. This method works best for contractors in regions where traditional banking options may be limited or where real-time access to funds is critical. These wallets are ideal for smaller, frequent payments for ongoing tasks.
• Cryptocurrency - platforms like Deel support payments in Bitcoin and Ethereum, providing contractors with a fast, decentralized way to receive funds. This method bypasses banks and currency conversion fees, though it comes with volatility. This works best for contractors comfortable with cryptocurrency, particularly in regions with unstable banking systems or high transfer fees.

See also: How to Pay International Contractors in 2024: A Complete Guide

How to avoid compliance risks when managing a global contractor workforce

Managing a global contractor workforce comes with legal and compliance challenges, particularly around worker classification, taxes, and local labor laws. Here are some tips that will help you to effectively avoid putting your business in danger of non-compliance.

Classify workers correctly 

Misclassifying contractors can lead to fines and penalties. To avoid this, implement a formal classification process by regularly assessing the degree of control over the contractor’s work. Ask yourself: Does the contractor have autonomy over their hours, tools, and methods? Use tools like Deel’s misclassification assessment to ensure your contractors are classified correctly according to local regulations. Conduct annual reviews to ensure all classifications are up-to-date as laws or project scopes change​

Draft detailed, location-specific contracts 

A solid contractor agreement is essential for legal protection. Contracts should clearly outline the nature of the work, deadlines, intellectual property rights, and independent status. More importantly, the contracts need to be tailored to the country’s labor laws. For example, countries like France have specific rules on overtime and dismissal periods. Use legal services or contractor management platforms to customize contracts for each country, ensuring the terms comply with local laws

Monitor local employment law updates 

Staying compliant requires proactive monitoring of local labor laws, which vary widely across countries. One way to manage this is by subscribing to legal updates from reliable sources, using global compliance platforms like Deel’s Compliance Hub, or working with local legal advisors in each region. Automate notifications for regulatory changes and implement ongoing reviews to ensure contracts and operations align with new regulations. For instance, if tax withholding laws change in a contractor’s country, make the necessary adjustments to your payment processes immediately​

Set up a global tax compliance process 

International tax laws are complex, so it's crucial to create a centralized system for managing taxes. This involves collecting the correct tax forms (e.g., in the US the W-8BEN for foreign contractors), issuing tax documents at the year’s end, and maintaining proper records. Use global payroll platforms or hire international tax advisors to manage this process and ensure you are following the tax laws in both your country and your contractor’s. Automating the collection of tax forms and reporting deadlines helps you avoid costly mistakes​

See also: 7 Challenges Facing Global Companies When Hiring Independent Contractors

Benefits of using a contractor management platform

Managing a large number of contractors across multiple regions is complex, but the right contractor management platform helps you scale efficiently and stay in control. Here’s how it can your high-volume hiring and management needs:

• Flexibility and scalability: A powerful platform adapts to your growing data labeling needs, allowing you to quickly onboard and manage hundreds or even thousands of contractors without bottlenecks. Customizable workflows and real-time project updates keep your operations running smoothly, even as demands shift.
• Streamlined onboarding: A robust platform automates onboarding, letting contractors submit documents digitally. With features like automatic task assignment based on location or department, and detailed progress tracking, platforms like Deel make it easy to onboard large teams quickly. This automation helps ensure compliance and minimizes manual effort, which is crucial for efficiently scaling your workforce.
• Global payment processing: Easily manage payments to large, international teams using a platform that supports multi-currency transactions. Offer contractors flexible payment methods—like bank transfers, PayPal, or cryptocurrency—while maintaining clear payment schedules and minimizing fees.
• Automated compliance: Managing large-scale contractor workforces across multiple regions can be risky without proper compliance. A robust platform automatically handles adherence to local labor laws, worker classification, and tax regulations, protecting you from legal complications while freeing up your resources.

Scale your global workforce with Deel

Deel simplifies large-scale hiring for AI data labeling companies by streamlining the recruitment and onboarding of international contractors. With automated workflows and task assignment, you can quickly scale up your workforce without bottlenecks. Deel also ensures seamless payroll management by supporting bulk payments, and multi-currency transactions, offering contractors flexible payment options like bank transfers, PayPal, or cryptocurrency. This makes managing global teams easier than ever before.

Schedule a call with our experts today to see Deel in action and take the first step towards efficient and compliant international workforce management.