Avoid Outsourcing Failure by Understanding the Service Level Agreement Document

Outsourcing does not mean that you have given complete control to the outsourcing service provider. Some level of control is mandatory. Service level agreements or SLAs backed services are an effective tool that can be used to manage an outsourced process.

Outsourcing involves shifting responsibility from an organization to a provider. These new agreements are administered by contract, which may include a Service Level Agreement (SLA).

The contract may include financial penalties and the right to terminate if the SLA is permanently missed. Setting up, tracking, and managing SLAs is an essential part of the Outsourcing Relationship Management (ORM) discipline. 

Usually, certain SLAs are negotiated in advance as part of the outsourcing contract and are used as one of the main tools for outsourcing management. A Service Level Agreement (SLA) is a contract between a recipient and a provider that specifies the terms of use.

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It establishes the recipient's needs and sets expectations for the shares. SLAs are intended to help minimize and reduce disputes. 

Service Level Agreement Documents For software projects, sometimes include:

  • List of results

  • Road map with a release date

  • Hourly rates payable with an upper limit to the total hours payable

  • Payment terms in the project implementation stage

An SLA is a legal document that outlines incentives and penalties to protect recipients and compels outsourced service providers to deliver results.

Outsourcing providers always offer Service Level Agreement documents to ensure that our customers are protected and benefit from our services. Please ensure that you have read and understood the SLA documents offered by your service provider.