What is Service Level Agreement (SLA) ? And Why SLA has something connected with the success/failure rate of one’s outsourcing process?

Please do not forget that Offshore outsourcing doesn’t mean you gave total control for the outsourcing supplier. A certain volume of controlling is essential. And Service Level Agreement or SLA is an excellent tool which can be used to control outsourcing process.

Outsourcing necessitates the transfer of responsibility from a company to a supplier. The treating this new arrangement is from a contract which will include a Service Level Agreement (SLA).

The contract may involve financial penalties plus the right to terminate if SLAs are consistently missed.

Setting, tracking and managing SLAs is an integral part of Outsourcing Relationship Management (ORM) discipline. It is typical that specific SLAs are negotiated beforehand as part of the outsourcing contract plus they are utilized among 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 binding agreement between the recipient and provider that dictates the terms of use. It specifies the requirements the recipient, and establishes a few shares expectations. An SLA is supposed to help minimize disputes and moderate them they occur.”

A good SLA at the very least consist of things such as :

What tasks will likely be performed
What enough time frame is made for completion of the task
What metrics will likely be used to track performance
What acceptable thresholds are of those metrics
How these metrics will likely be tracked and reported
How dispute will likely be resolved
Under what circumstance service will likely be terminated
How operations are going to be shifted back to your recipient

Service Level Agreement document For software project sometimes include :

a report on deliverables
a guide specifying release dates
the hourly rate being paid, using a ceiling on total billable hours
conditions for payment on meeting project milestones

SLA is really a legal document that detail incentive, penalties to shield recipient and force outsourcing vendor deliver results.

Outsourcing provider like ITStaff.asia always propose a Service Level Agreement document to ensure that our client is protected and make use of our service.