Avoid Outsourcing Failure by Understanding the Service Level Agreement Document
September 2, 2008 · Print This Article
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By Yuan Yudistira
What is Service Level Agreement (SLA) ? And Why SLA has something to do with the success/failure rate of your outsourcing process?
Please remember that Offshore outsourcing does not mean you gave total control to the outsourcing service provider. A certain level of controlling is a must. And Service Level Agreement or SLA is an effective tool that can be used to control outsourcing process.
Outsourcing involves the transfer of responsibility from an organization to a supplier. The management of this new arrangement is through a contract that may include a Service Level Agreement (SLA).
The contract may involve financial penalties and the right to terminate if SLAs are consistently missed.
Setting, tracking and managing SLAs is an important part of Outsourcing Relationship Management (ORM) discipline. It is typical that specific SLAs are negotiated up front as part of the outsourcing contract and they are utilized as one of the primary tools of outsourcing governance.
According to "Offshoring IT, The Good, The Bad And The Ugly " (2004:69-70), Bill blunden define SLA as follows:
"A service-level agreement (SLA) is a contract between the recipient and provider that dictates the terms of service. It specifies the needs of the recipient, and establishes a set of shares expectations. An SLA is intended to help minimize disputes and moderate them they occur."
A good SLA at least consist of things like :
* What tasks will be performed
* What the time frame is for completion of the task
* What metrics will be used to track performance
* What acceptable thresholds are for these metrics
* How these metrics will be tracked and reported
* How dispute will be resolved
* Under what circumstance service will be terminated
* How operations will be shifted back to the recipient
Service Level Agreement document For software project sometimes include :
* a list of deliverables
* a road map specifying release dates
* the hourly rate to be paid, with a ceiling on total billable hours
* conditions for payment on meeting project milestones
SLA is a legal document that detail incentive, penalties to protect recipient and force outsourcing service provider deliver results.
Outsourcing provider like ITStaff.asia always propose a Service Level Agreement document to make sure that our client is protected and benefit from our service.
Please make sure, you read and understand the SLA document that your service provider offer.
Other technical jargon you may want to understand is SLS (Service Level Specification), this is a technical specification of SLA.
Yuan Yudistira, CEO of ITStaff.asia - an IT outsourcing service provider company based in Jakarta - Indonesia. We are offering the reader to check out our site. Our IT Staff outsourcing service will be the best investment of your business.
This is nice post, it describes SLA however just to add on while Outsourcing every company signs SLA with their partner or the company they are outsourcing to, Companies keep track of SLA's on a monthly basis and if they feel that provider's do not meet their expectation then they take their business back. Nowdays every BPO company works on the SLA matrics and for that they put an extra effort to meet the target. Companies like http://www.cleaveglobal.com have met their all SLA'S and that's why they have been choosen best BPO/ITES Company.