In signal processing, data compression, source coding,or bit-rate reduction involves encoding information using fewer bits than the original representation. Compression can be either lossy or lossless. Lossless compression reduces bits by identifying and eliminating statistical redundancy. No information is lost in lossless compression. Lossy compression reduces bits by removing unnecessary or less important information.The process of reducing the size of a data file is referred to as data compression. In the context of data transmission, it is called source coding (encoding done at the source of the data before it is stored or transmitted) in opposition to channel coding.