Extensible Markup Language (XML) is a markup language that defines a set of rules for encoding documents in the format which is readable by humans as well as machines. Many application programming interfaces (APIs) has been developed to use the XML data, providing an aid to software developers in XML processing. The main reason behind it is that XML provides key advantages of extensibility, expressiveness, flexibility and platform-neutrality.The feature of interoperability causes significant increase in the size of XML document as compared to other documents with same contents. This results in higher memory requirements for local storage and increased transfer time that ultimately limits the performance. This research presents an optimized encoding mechanism to encode the XML document prior to its parsing. The aim is to reduce the parsing process overhead. The main research focus is on analysis and optimization of XML parsing on single-processor based system.