Outsourcing is now a common business strategy, offering convenience, profitability, and quick returns. Many established companies outsource specific functions to affiliated partners to achieve superior results.
When contracting with an outsourcing provider, the primary objectives often include improving service quality, enhancing reputation, increasing customer satisfaction, optimizing costs, and fine-tuning marketing communications.
Today’s outsourcing firms offer a comprehensive suite of services, ensuring thorough oversight of results through system regulation and customer expectation stages. Effective management of outsourced functions is crucial for reaching these goals. Thus, businesses should select providers that excel in meeting set objectives. A solid service-level agreement (SLA) is crucial. Companies need assurance that the SLA aligns with their needs and outlines clear payment and performance standards. Embedding penalties in contracts for underperformance can further ensure the quality of services from the outsourcing partner.
An SLA, or service-level agreement, is a contractual document that defines the expectations and responsibilities between an outsourcing company and its client. For instance, in a call center context, an SLA might specify the standards for call processing quality that the outsourcing company is expected to maintain.
The SLA originated from network service providers. Now, this agreement has diffused in the entire IT world. Even it is reaching beyond the IT world and penetrating the performance of every outsourced service.
The three primary types of service-level agreements (SLAs) are:
This type of SLA is tailored for a specific customer or group of customers. For example, a telecommunications company might have an SLA with its end customers covering the availability and performance of internet service and the response times for customer inquiries and complaints.
This SLA is centered around a specific service rather than a client. This means the terms defined in this SLA apply to all customers using the service. For instance, if a service provider offers web hosting, the SLA will detail uptime, downtime, and maintenance specifics for every client who signs up for that service.
This type splits the agreement into different levels, each addressing different sets of customers for the same services in the same SLA. It can be divided into:
Each type of SLA addresses different needs and operational constraints, ensuring clarity and mutual understanding between service providers and their customers.
Many businesses today might overlook the importance of an SLA, viewing it as unnecessary or cumbersome. However, SLAs grant businesses a vital competitive edge.
Service-level agreements offer businesses a systematic way to ensure quality standards are met. In our experience at Simply Contact, we've found that while constantly monitoring a contractor's actions can be demanding and doesn't always guarantee outcomes, SLAs serve as a practical tool to gauge the quality of a business service.
Apart from the service providers, customers can also take advantage of SLAs. The contract explains the service. The customer can compare the services of one vendor's SLAs with another.
The SLA is one of the two fundamental agreements of service providers. Many service providers build a master service agreement to establish the terms and conditions that will apply to the customers.
In the service provider's master service agreement, the SLA is incorporated by reference. The SLA adds specificity regarding the services provided. Additionally, it also covers metrics that will be adopted to measure performance.
By adopting an SLA, companies are setting clear customer service standards. It's essential that every employee, from contact center specialists to sales assistants, understand and strictly adhere to these guidelines. While one might assume employees will naturally follow these standards, formalizing them through an SLA emphasizes their significance. At Simply Contact, our emphasis on robust SLAs has been pivotal in ensuring our clients consistently deliver high-quality service.
The key components of a service-level agreement (SLA) typically include:
This section provides an introduction to the contract. It includes basic details such as the start date, the parties involved, and a general description of the services covered by the agreement.
This section outlines the services being offered, including turnaround times and specific conditions or circumstances under which services are provided. Key details typically include:
This section lists any services not covered by the SLA. By clearly defining exclusions, potential confusion is avoided later.
Performance metrics are defined in this section. Both the service provider and the client agree on key performance indicators (KPIs) to measure service levels. These metrics are used to assess the provider's performance over time.
This section outlines the compensation and remedies if the service provider fails to meet the SLA’s agreed terms. It ensures that both parties are protected in case of service shortcomings.
The agreement specifies all parties involved, making it clear who is responsible for addressing issues and questions related to the SLA.
This section defines the security measures to be implemented by the service provider. It may include agreements related to anti-poaching, non-disclosure agreements (NDAs), and IT security protocols.
Clear guidelines for risk management and disaster recovery are established to mitigate future uncertainties. This section ensures both parties are aligned on how to handle potential risks.
This section outlines how service performance will be tracked, the reporting structure, and who will be responsible for reviewing the reports.
The SLA should include a process for periodically reviewing and adjusting key performance indicators (KPIs). This ensures the agreement remains relevant and practical as business needs evolve.
This section defines the terms and conditions under which the SLA can be terminated, including the required notice period for termination or expiration.
The agreement concludes with the signatures of all authorized stakeholders, signifying approval and acknowledgment of the terms and conditions.
Simply Contact provides unparalleled BPO services across various verticals. Our solutions are designed to deliver results that exceed client expectations, with SLA alignment as a top priority.
Book a consultation
Business process outsourcing (BPO) is a strategy where companies delegate specific operations to external providers to optimize their processes. It goes beyond mere business interactions, fostering a comprehensive partnership between the client and the outsourcing entity.
While traditional outsourcing aims to reduce costs and enhance outcomes by utilizing specialized vendors, BPO emphasizes long-term collaboration and typically involves more thorough initial preparations. Companies often opt for BPO for cost-saving and predictable expenditures, as the service level agreement outlines.
SLAs detail productivity benchmarks in sectors like contact-center services, where performance metrics are pivotal. Such firms continually refine their client engagement strategies, monitoring how various communication methods affect customer responses and ensuring they select the best outsourcing partners based on these metrics.
Service level is a key metric in the call center industry, commonly represented by the 80/20 ratio. This indicates that 80% of incoming calls should be answered within 20 seconds. However, this is not a strict standard, as the ratio can shift based on specific call details and other factors, leading to variations like 90/20, 70/40, or 60/60.
To assess productivity, contact centers analyze data daily. Their service level evaluation typically encompasses:
There is also a convenient common formula for determining the Service Level:
| Service Level = the number of accepted calls / overall call number * 100 and the obtained result to ASA or AWT ratio |
Average Speed of Answer (ASA) measures the average time it takes for a call center specialist to answer a call. This indicator includes the overall client’s waiting time in the line before being answered, disregarding the time spent in the IVR navigation process.
The Average Waiting Time (AWT) is the client’s average time in line before being answered. This indicator includes only the accepted calls. Cases when clients hang up before being answered and when they are waiting are not considered.
Other vital metrics include Average Talking Time (ATT), which monitors the operator's active conversation duration, and After Call Work (ACW), detailing tasks completed post-call. Average Time to Abandon (ATA) gauges the average time before a call is dropped without an answer.
Call centers employ numerous formulas to evaluate their success rate, team performance, and client communication strategies. A team must meet those standards if it commits to a service-level agreement.
A call center's ability to promptly address a client's issue enhances the customer's experience, fosters loyalty, and reduces costs. To obtain feedback on service quality, companies can utilize IVR post-call surveys or direct phone interviews conducted shortly after the initial interaction.
Currently, call centers seek innovative strategies to maximize their results. Metrics like Service Level provide valuable data for analyzing business processes, offering insights into customer service quality and guiding future strategies.
Monitoring the performance of your service provider is critical. An SLA outlines specific metrics to assess this performance. However, it’s important to hold the provider accountable only for the metrics they have agreed to fulfill.
Service-level agreements set clear customer expectations, aligning them with the service provider’s performance and quality.
Service availability measures how often the service is accessible to customers, typically represented by uptime percentage. This is recorded, billed, and reported monthly. It also includes data center resources, database availability, and network uptime. If the agreed uptime is not met, penalties may be applied to discourage downtime.
Error rates assess the reliability of the SLA. These include production failures, missed deadlines, coding errors, and incomplete backups. Calculating the error percentage helps determine whether the service meets its promised standards.
Technical quality measures the efficiency of the SLA through factors like code defects and program size. This metric is often evaluated using commercial research methods to examine technical performance.
Security is a top priority in today’s digital environment, where data breaches are common. This metric evaluates how well the service provider handles unresolved or undisclosed vulnerabilities. In case of an incident, the provider should demonstrate their ability to take preventive measures.
Business outcomes are used to monitor SLA efficiency. Adopting existing metrics, particularly Key Performance Indicators (KPIs), provides a reliable way to measure performance. KPIs gauge whether the provider’s team meets the agreed-upon standards.
Parties involved:
Agreement overview: This SLA, effective from [Effective date], is an agreement between the client and the service provider. It extends a previously established contract and outlines the standards and expectations for the services provided.
Key provisions:
Signatures:
Conclusion: This SLA serves as a testament to the commitment between the client and the service provider, ensuring clarity in expectations and standards for the services rendered.
Staying on top of new technologies, methods, and potential collaboration opportunities is crucial. Outsourcing has become a practical and cost-effective strategy for businesses looking to optimize operational costs.
However, when choosing a BPO partner, transparency is key. A transparent partner helps ensure that expectations are clear from the start, fostering trust and strong collaboration. Clients can feel confident knowing that the service provider is open about capabilities, performance, and challenges, leading to better results and smoother partnerships.
At the same time, companies want assurance that the services they receive meet high standards. Service level agreements (SLAs) offer clear benefits to both sides: they give clients transparency about service quality, while providers benefit from having specific, well-defined expectations. With these clear advantages, it’s easy to see why incorporating an SLA is a smart choice for businesses.
Reach out to Simply Contact for expert insights and solutions.
Get fast answers to any remaining questions
Thank you.
Your request has been sent successfully.
