Introduction to Service Level Agreements (SLA)

In layman's terms, a service level agreement (SLA) details the responsibilities of the outsourcing client and service provider, as well as the consequences if said requirements are not met.  It's used in outsourcing contracts to specify guaranteed performance. It can be applied to any service, and used often because it’s easy to measure.

However, before you go on and list all the things you want from your provider to the smallest detail, here are important questions to answer.

What are your business goals?

 

Do you require a specific amount of work, or desired outcome? The former would focus on tasks, while the latter would focus on results.

Is your SLA aligned with your business goals?  

 

SLAs fail because they don't support the business' strategy and goals. The most common example is the call centre.

For instance, your goal is to provide great customer service. If the SLA focuses on a stringent volume of work, the service provider - and consequently the customer service representatives – would concentrate on the speed of handling and resolution.

This will distract them from what should have been the right focus for great customer service – desired results that increase productivity and customer satisfaction. This leads to fewer and escalated calls. 


There are plenty of technicalities when it comes to determining the right SLAs but these questions serve as a good starting point to evaluate what you really need from your outsourcing partner.