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OCR Explained: How it works and what it’s for

Delve into the nuanced landscape of OCR, examining its benefits, limitations, underlying technology, and practical applications.

Jan 9, 2024
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In the dynamic landscape of document processing, two transformative technologies—Optical Character Recognition (OCR) and Intelligent Document Processing (IDP)—take center stage, reshaping how we interact with textual information. 

OCR, a technological marvel, converts scanned paper, PDFs, or images into editable and searchable data, revolutionizing tasks from preserving historical manuscripts to automating business data entry. 

Beyond OCR, IDP adds a layer of sophistication by integrating machine learning and natural language processing, enabling it to comprehend context and meaning in documents, ushering in a new era of automated comprehension.

In this exploration, we'll delve into the intricacies of OCR, unraveling its stages—from image scanning to character recognition and conversion. We'll navigate through the challenges OCR faces, including accuracy and understanding limitations as well as the benefits and use cases such as data entry automation and significant cost savings.

What is OCR and IDP?

Optical Character Recognition (OCR)

OCR, short for Optical Character Recognition, is a technology designed to convert different types of documents—such as scanned paper documents, PDFs, or images captured by a digital camera—into editable and searchable data. This transformative process allows computers to recognize and extract text from images, making it possible to edit, search, and analyze the content within those documents. OCR has widespread applications, ranging from digitizing historical manuscripts to automating data entry tasks in business environments.

Person scanning a book with phone

Intelligent Document Processing (IDP)

Intelligent Document Processing (IDP) takes document processing a step further by combining OCR with advanced technologies like machine learning (ML) and natural language processing (NLP). IDP goes beyond simply extracting text; it comprehends the context and meaning of the information. This enables the system to automate complex tasks that involve understanding and interpreting documents, such as claims processing and form extraction.

How does OCR work?

OCR is a complex process that involves several stages. At a high level, OCR works by first scanning an image of text, then identifying individual characters, and finally converting those characters into digital text. To achieve this, OCR relies on a combination of pattern recognition, machine learning, and artificial intelligence algorithms.

OCR Scanning

The process begins with scanning an image of text. This image could be a scanned document, a photograph, or even a screenshot. This way a digital copy of the text has been created.

Cleaning the image.

Next, in order to isolate the relevant text from everything else on the background, OCR engines use several techniques to emphasize the contrast between text and non-text components and remove non-text components like stains, speckles or smudges. This way it ignores the noise, and focuses solely on the text.

Character Recognition

After scanning the image, OCR software analyzes pixels to identify individual characters using pattern recognition algorithms. This process includes comparing the shapes and patterns of characters in the scanned image with a library of known characters. The OCR software incorporates a library containing known character sets, fonts, and patterns, serving as a reference to effectively compare and recognize the identified characters during the character conversion process.

Character Conversion

After the characters are recognized, they are often compared with Unicode values. Unicode is a standardized system that assigns a unique code to each character in different languages. This comparison helps accurately convert the identified characters into digital text.

Limitations of OCR

In many instances, OCR software is employed to extract data from image-based documents. Nevertheless, the surge in scanned documents exhibiting diverse formats, fonts, styles, and colors has resulted in several limitations for OCR, including:

  • Accuracy: OCR is highly dependent on the quality and clarity of the input image. Distorted, low-resolution, or poorly scanned images can lead to inaccuracies in character recognition.
  • Handwriting Recognition Difficulty: Deciphering handwritten text remains a significant challenge for OCR. Unlike printed text, which follows specific fonts and structures, handwriting can vary widely, making accurate recognition more complex.
  • Formatting Issues: OCR may struggle with preserving the original formatting of documents, especially in cases where layout, fonts, or spacing are crucial. This can affect the visual integrity of the digitized text.
  • Language and Font Variability: OCR systems may face difficulties with languages or fonts they are not trained on. Uncommon languages or fonts may pose challenges in accurate character recognition.
  • Sensitive to Noise: Despite image cleaning techniques, some backgrounds might be too noisy and include watermarks, or other visual interference that can impact OCR performance.
  • Contextual Understanding Limitations: While OCR excels at character recognition, it may not fully grasp the context or meaning of the text.

Benefits of using OCR

Embracing OCR technology can also bring forth a multitude of benefits, including:

Efficiency: By rapidly scanning and extracting text from documents, OCR eliminates the need for time-consuming manual data entry. This not only accelerates the overall processing speed but also allows organizations to handle large volumes of documents more efficiently.

Increased Productivity: OCR speeds up document processing, allowing for faster retrieval of information from scanned documents. This can enhance overall productivity in various industries.

Data Accessibility: By converting paper documents into digital formats, OCR makes information easily accessible and searchable, improving data retrieval and reducing the need for physical storage space.

Text Searchability: OCR enables text-based searches within scanned documents, making it easier to locate specific information, keywords, or phrases in large volumes of text.

Cost Savings: Automating data entry and document processing through OCR can lead to cost savings by reducing the need for manual labor and improving overall operational efficiency.

OCR use cases

Why do people use OCR? Below, we’ve listed a few recognizable use cases:

  • Document Digitization
  • Data Entry Automation
  • Passport and ID Scanning
  • Automatic Number Plate Recognition (ANPR)
  • Book Scanning and Archiving
  • Invoice Processing

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