The psychological phenomenon is that of the endowment effect, wherein individuals attach greater worth to certain items based solely on the basis of ownership of these particular items, in contrast to the worth that they attach to such items had these not been theirs. This can be seen even in some unexpected places, for instance, the attitude of business owners towards their own internal process of data entry.

Why Your Own Process Feels Better Than It Is

If you developed the process you use for data entry, even if it is a poorly thought out process, there will be an inherent bias towards seeing your process more positively than someone who looks at it from the outside. You are familiar with the process and know the history behind it and any inefficiencies within it.

That isn't to say it is a flawed judgment, but that you are inherently biased because of this knowledge. That means that when weighing your current process against outsourcing data entry to India, you are deciding from a biased perspective.

How This Bias Shows Up in Real Decisions

The reluctance to outsource may not arise from a calculation of costs against benefits, but rather from the fact that the present method, however faulty it is, belongs to the business owner personally, and letting it go feels like losing something of value, even though the objective facts say otherwise.

It is important to highlight this explicitly, since it points to a phenomenon which is not mentioned in general guides on how to outsource work: the resistance may be unrelated to any cost factor, and simply a result of ownership.

A Useful Thought Experiment

One test for whether your decision-making process is affected by the endowment effect is this: Consider how you would advise a friend in the same data entry position as you, except that this is not their own problem but a legacy of a previous employer. Are you going to encourage them to put up with the struggle, or would you recommend they consider data entry services from Indian companies?

People tend to provide much more objective advice to other people than to themselves, and the reason is that they lack the emotional stake in the latter. If there is a difference between what you would say to your friend and what you're doing now, consider this discrepancy carefully.

Separating Ownership From Effectiveness

It can be useful to distinguish two separate questions here: Is this my process, and is this a good process? The endowment effect causes these to merge, leading to the belief that “my” implies “good,” or even “keep.” However, ownership and quality are two distinct aspects, and one’s process can definitely be not only one’s own but also ineffective.

The objective realization of what data entry job duties involve will allow for this distinction. Having realized the essence of the job independently of how it is performed on one’s particular team allows one to determine whether the current process is really the most effective possible.

Why This Matters More as Businesses Grow

The problem with the endowment effect is that its costs tend to increase as a company expands. A slightly inferior procedure may be of no consequence when you are dealing with only a small amount of information. However, as the amount of information increases, the difference between the inefficient procedure and a superior one, which uses outsourced data entry services, increases tremendously even though your feeling of attachment to your own procedure does not change.

It is the growing mismatch that becomes a problem – the costs of your present procedure are rising, but your reluctance to change does not.

A Way to Test Objectively

In case you think the endowment effect is playing a role in your decision, then try this objective method:

• Put down on paper the real time and accuracy rate of your process, without any commentary or explanation

• Get a quote or trial from an external vendor working in the field of data entry outsourcing

• Compare the two based on numbers alone and not on how attached you are to your current process

• If numbers clearly support outsourcing, then see if there is any lingering attachment and question yourself whether that attachment is logical

Final Thought

What you have built could really be the best option for you – or it might just be the one you think you prefer because you built it yourself. There is no substitute for honest, numbers-based comparison when it is you deciding to go outsource data entry work to India – or stay with your current set-up.