“SLA or Service Legal Agreement is an integral part of IT vendor contract” is how the saying goes and it is proven that companies who maintain SLAs see higher ROI from their outsourcing strategy.

But what is SLA and how does it function? Why is it important to every outsource customer service agency?
Before we start with its importance, let’s start with the definition and functions.


What is SLA in a business?

Traditionally, a service level agreement (SLA) serves as a contract between the service provider and the customer. These documents manage client expectations and highlight the services the provider must abide by.

Not just between call center outsourcing services and business partners, SLAs are maintained in several industries and even within departments.

SLAs prove beneficial to clients as they get to compare services they signed up for and the services received. Contracts act as reminders to help rectify service gaps and issues that may appear with time.

What is an SLA model?

To understand an effective SLA model, it is essential to understand its attributes that are evaluated. The SLA model has the following specific components:

  • The service guidelines the vendor has committed to providing.
  • The availability of service, uptime promised and performance benchmarks.
  • The obligations common to clients and vendors like reporting, payment cycle must be fulfilled.
  • The ability to resolve issues and problems in time.
  • The penalty in terms of inability of fulfilling the obligations.

The three major types of SLA:

SLAs provided by outsource customer service agencies are categorized into three basic categories:

  1. Customer Service Legal Agreement:

This is exactly what it sounds like, an agreement including all the type and quality of assistance outsource customer service providers must deliver to a client. This agreement applies to an individual client as it is based on their specific requirements and when there is a change of service policy or demand, a new SLA is either created or the old SLA is amended.

  1. Service-oriented Legal Agreements:

This type of agreement addresses a single type of service provided, common to all clients. Most clients are comfortable with this SLA agreement as it is default and applicable to all clients.

  1. Multiple level Legal Agreements:

SLA contracts with customization features are called multiple level Legal Agreements. With the multi-level SLA document, it is easy to maintain or strike out conditions to form a final version that benefits both parties.

What is considered as a good SLA?

Regardless of the categories, all types of SLAs hold a similar quality. The following components are binding to a good agreement:

  • Service management and contract
  • Precise documentation
  • Defined strategies
  • Shareholders
  • Regular assessment and required changes

As per the service goals, every, outsource customer service provider works for their clients as your 24/7 virtual assistant. Essential components of the SLA are maintained by them are deemed reliable.

What is KPI? How is it different from SLA?

KPI or Key Performance Indicator helps evaluate the performances of employees and organizations. Strategic goals are followed to estimate the efficiency level. So, for a KPI evaluation, goals have to be set first.

KPI evaluation defines how long it will take a team to accomplish the target and how to achieve maximum efficiency.

While an SLA contract jots down the objective for a team to follow, KPI measures the quality of service and improves efficiency to complete the mentioned objectives.

Why is SLA critical in an outsourcing contract?

Hiring an outsource customer service provider reduces the overall cost and solutions can be developed faster. And an SLA is an essential component of outsourcing and IT vendor contracts.

Why? Because it sets up expectations for both the parties and provides a target to be fulfilled. There is no hard and fast rule that every vendor must maintain SLAs but this helps them measure customer demands and deliver appropriately.

It guarantees a vendor’s effective support as a 24/7 virtual assistant. When accurately crafted, SLAs can benefit both the end of the bargain.

So, to summarize, this is why SLAs are essential for:

  • Transparent Expectation – This means no surprise element in times of delivery from either end.
  • Focused serviced – SLAs help clients determine their demands and help vendors sort out what is doable and what is not.
  • Establish standards – SLAs help set standards for vendor performance.
  • Penalize unsatisfactory performance – SLA can penalize vendors for unfulfilled commitment as well as provide incentives for fulfilling them.

How to improve Service Legal Agreements (SLA) Standards?

When planning to build a successful SLA as an outsource eCommerce service provider, you may need a lawyer to help explain the legal terms and skimping on the budget is not advisable. An accurately built SLA can help nurture customer client relationship. Here are some tips and tricks to enhance your SLA standards:


  1. Set Achievable goals – SLA’s are an effective way to demonstrate the company’s value. This legally binding agreement outlines the extent of your services and also what’s excluded. The clause must be crystal clear, devoid of misconceptions. Let your clients know how effectively you are going to support them and how your assistance looks like, perhaps a free trial period can help them judge the quality of your service. Creating over the line expectation and not achieving those represents bad practice and impacts company image.


  1. Maintain Honesty – Be honest with yourself and your client when setting up the agreement. Instead of sugarcoating statement, be clear with the functionality of your services. Your clients are not here for guesswork, they are here for a purpose and benefit.


  1. Get your staff ready – Companies providing outsource customer support should first train their staff in following the SLA protocols and perform above expectations. Depending on their expertise they must be made responsible of their duties and performance metric.


  1. Consult the client when structuring the SLA – Developing an SLA has multiple processes and collaboration between the client and vendor helps in building a realistic and attainable service level agreement.

To wrap up, Service Legal Agreements make a good company a great one. They help formalize the client vendor relationship outlining ways the services are provided to the clients making both parties effective and successful in their endeavors.