Home » Glossary » Service Level Agreement (SLA)

Service Level Agreement (SLA)

Definition

What is a service level agreement (SLA)?

Service Level Agreements (SLA) are formal or informal documents that outline the expectations between a provider and end-user. Originating from internet service providers, it has become a standard tool, not only in business process outsourcing but even within corporate structures. The key benefit of an SLA is that it provides clear, measurable outcomes that are subject to periodic review by designated representatives.

Characteristics of a good Service Level Agreement

The characteristics of a good SLA are as follows:

  • It describes the services to be provided;
  • It sets expectations for the reliability, availability, and responsiveness of the service;
  • A clear metric for measuring and monitoring service levels is articulated and a format for a performance report is agreed to;
  • A standard reporting procedure is agreed to by both sides to raise issues and concerns with the service;
  • A timeframe for issue resolution is established;
  • Penalties are set for failure to meet expectations; and
  • A timeframe for a periodic review of the service and the service level agreement is established.

Service level agreement call center

Outsource Accelerator is the most trusted source for independent information & advisory for Business Process Outsourcing (BPO). We have over 5,000 articles, 350+ podcast episodes, and a comprehensive directory with 2500 BPOs… all designed to make it easier for clients to learn about, and engage with outsourcing and having effective service level agreements with companies or call centers.

Service level agreement call center
Service level agreement call center

SLA in BPO

An SLA is a measuring instrument that determines the BPO company’s baseline performance levels. It includes a description of the services to be delivered and the criteria by which the services will be measured. 

In addition, the hiring and BPO company’s roles and obligations, the remedies and penalties for violation, and instructions in the case that the agreed-upon SLA has to be amended or adjusted.

SLA call center

The SLA call center is a set of internally defined criteria that management uses to make decisions. Decisions may be made and implemented based on these guiding factors to increase efficiency, save money, and improve customer satisfaction.

Each call center must determine its own SLAs and how to best meet them. The call center service level is the rate at which the goals are accomplished.

It might be difficult to determine the measurements. Each company must be able to identify abandoned calls, calculate realistic time intervals for each phase of the customer experience, and track everything.

​​What are the types of Service Level Agreements?

Here are the three main types of Service Level Management, namely:

Customer Service Level Agreement

A customer Service Level Agreement is an agreement between a vendor and a specific customer to provide a specified level of service. 

Internal Service Level Agreement

An internal Service Level Agreement solely applies to corporate employees and does not apply to consumers. While a company may have a SLA in place with each of its customers. It can also have a separate SLA in place with its sales and marketing teams.

Multilevel Service-Level Agreement

Multilevel Service level agreements come in various shapes and sizes. Customers or other internal departments of a company can benefit from this type of agreement. 

If there is more than one service provider and one end-user, this type of SLA is used to define what is expected in each party.

The importance of Service Level Agreements in the customer service industry

In the customer service sector, a Service Level Agreement (SLA) acts as a framework for the service the provider allows us to develop and safeguard the company’s assets and reputation, which are absolutely crucial.

Three reasons why your company should have a Service Level Agreement in place with its technical customer support services provided are listed below.

Helps establish measurable guidelines

A Service Level Agreement is essential for ensuring that you and your service provider are on the same page when it comes to standards and service.

You and your provider can figure out your needs expectations and guarantee you receive what you invest for by drafting a service level agreement.

Setting clear and measurable standards is essential as it manages expectations and ensures that your technical support services provider is held accountable.

Provides protection for uncertainty

If your service provider fails to fulfill its responsibilities, it can have significant impacts on your company’s reputation and end result.

If performance indicators are not fulfilled, you should include a backup plan in your Service Level Agreement. You might implement monetary penalties that could help your company if it suffers losses. This will help you in protecting your company in times of uncertainty.

Provides satisfaction

Those seeking the services of a technical customer support services provider can have a sense of security with a mutually agreed upon a contract in the form of a Service Level Agreement. 

A service level agreement helps you to hold your service provider account and establishes the level of service you may demand.

If agreed-upon requirements aren’t met, you can reduce some of the consequences by requiring your supplier to make up the difference. SLAs are also preferred by service providers since they help retain consumers.

Excellent customer service supported by great SLAs is one method for service providers to distinguish out from the competitors. 

Outsourcing FAQ

What is a Call Center?

What is a call center?

A Call center may refer to a physical center where an outsourcing company conducts various customer contact services that act as a front liner to customers. Call centers comprise of a team of agents who are trained for the product or service being offered. A call center may also refer to a type of BPO setup where a client gets a remote team to handle its customer service hotlines and attend the client’s customers in its behalf.

In call centers, agents often does inbound or outbound call handling. The former talks about customer service, order processing or technical support. The latter focuses more on telemarketing, promotions or selling. In this setup, it is the call center agent who initiates the call to potential customers.

Call center outsourcing

A call center employs agents who act as representatives of their client’s behalf to deal with questions, concerns, and complaints of the customers. Aside from that, call centers can also function as sales hotlines and telemarketing teams. Outsource Accelerator provides you the best call center outsourcing companies in the Philippines, where you can save up-to 70% on staffing cost.

What is Employee Satisfaction (ESAT)?

What is employee satisfaction (ESAT)?

Employee satisfaction (ESAT) measures how content and happy employees are with their current positions. The computation is quite simple. Companies use ESAT surveys to compute this metric. 

Although this metric is not an ultimate tool to determine employee satisfaction at the deeper level, it is enough as a start, especially if your business is experiencing fast turnover. 

Many factors affect employee satisfaction. These factors may include compensation, team environment, workload, management perception, and among other things. 

You can add all of these elements to the survey to determine your ESAT score. Alternatively, you can use an individual survey for each factor.

Aside from quantitative aspects, qualitative evaluation of the survey is also crucial in determining whether your employees are satisfied or not. For example, one employee scores a good to a perfect rating for all other factors except for management perception.

This exception should be a good indicator that something’s not good at the management level or maybe conflict is rising that you might want to investigate.

ESAT score 

Every team requires engaged members for the business’ high performance and stability. ESAT score is a great way to tell if your employees genuinely like the team that they are working with. 

When employees do not feel involved with their jobs or their colleagues, happiness levels tend to decline. Often, it negatively affects the productivity of the whole company.

A 2020 Gallup poll found out that when workers felt actively engaged, productivity and profitability increased by 18% and 23% respectively.

Due to these, you and your team should always discuss the overall ESAT score regardless of the outcome. This can be treated as an opportunity for everyone to give their feedback, share their sentiments, and learn collectively from the insights of everyone.

Your team could also get to the root cause of the low ESAT ratings and share ideas on how to improve things in your team. This move could enhance employee relationships and improve everyone’s engagement within the team.

Employee satisfaction and outsourcing

Outsource Accelerator has over 5,000 articles, 350+ podcast episodes, and a comprehensive directory with 2500 BPOs… all designed to make it easier for clients to learn more about managing an outsourcing team and ensuring that ESAT is consistently high.

What is Customer Satisfaction Rating (CSAT)?

What is customer satisfaction (CSAT)?

Customer Satisfaction Score (CSAT) is a popular key performance indicator that tracks customer satisfaction. The process involves a survey question or a set of questions. 

The customers answer by indicating their level of satisfaction. The most popular scale is 1 to 10, with 1 being the least satisfied and 10 as the most satisfying level.

The result gives a business the necessary output whether or not to improve customer service right there and then. However, the possible ambiguity might be a disadvantage, especially if a customer is dissatisfied with the service.

Why is CSAT important

CSAT tells a business about how satisfied their customers are with their services. From this, they can also understand the needs of their customers through feedback and comments they give in each survey. 

The best timing to use this methodology is after-sales, before the renewal of subscription, and after customer support. These times are crucial especially for repeat customers.

With this, a business should have first-hand knowledge of its customer satisfaction. A simple interview or a feedback form after a sale would do. 

How to calculate CSAT?

Calculating a CSAT score is pretty straightforward. 

All you have to do is add the positive responses together, divide them by the total number of responses collected,  then multiplied by 100. The outcome leaves you with the overall percentage of customer satisfaction in your business.

For example, if 50 people took part in your survey and 30 of them gave positive feedback — your CSAT score would then be 60%

See here:

(30 positive responses / 50 total responses = .60 x 100 = 60%).

This indicates that while the majority of your clients are satisfied with your service, you can still improve it to better serve your customers.

CSAT in outsourcing

Customer satisfaction score might be the simplest metric but it’s a powerful tool for all businesses. It closes the loop on first customer interaction and helps businesses move on to the next level. 

Computation is quick and easy. You add up all the ratings and divide the total score by the number of respondents. Most likely, you’ll get a percentage. 

Get your customer satisfaction score a notch higher by outsourcing your customer service team. Check out Outsource Accelerator’s extensive list of outsourcing companies in the Philippines.

What is Business Process Outsourcing (BPO)?

What is Business Process Outsourcing BPO?

Business Process Outsourcing (BPO) is the engagement of services from a third-party provider. BPO uses various technology-enabled services to hasten the delivery of services. The business activities could be back-office such as, but not limited to, payroll, accounting, human resources, or front office jobs like customer service, sales, and marketing, etc. In the case of content providers, these business activities could mean hiring writers, remote editors, or virtual assistants.

BPO speeds up processes and enhances efficiency. Companies that outsource some of their business activities use their time on core services and competencies. With this shift in focus, companies improve their current processes that may result in improved customer satisfaction. BPO helps companies divert their resources to more critical business strategies. Often, companies find it impractical to hire a full-time position in-house because of the cost associated with doing so.

How does Business Process Outsourcing work?

When a business engages an external specialist to manage and operate some of its internal processes, it's referred to as business process outsourcing. Such ‘processes’ include customer service, accounting and finance, or sales. It is different from hiring an agency to do specific tasks, as the outsourcing provider (BPO) is more concerned with the ongoing production of labour-intensive tasks, instead of the higher-level strategy and guidance.

Now, business process outsourcing has broadened and is more akin to staff augmentation, or staff leasing.

What are the benefits of business process outsourcing?

There are many benefits to outsourcing, as well as some downsides and risks. The common benefits include:

Cost savings: significant savings of up to 70%, leveraging the lower global salaries Global market: access to a bigger employment pool of talent Global presence: having operational across the globe increases trade opportunities Flexible workforce: reduces internal local labour and employment compliance obligations Leverage skill: leveraging the skills of other specialist companies Focus: enables the client company to focus on their core functions

 

Business process outsourcing examples

The business process outsourcing sector is a vast industry, generating over $200bn annually, and employing many millions of people worldwide. Some examples include:

Big enterprise

Facebook and Uber outsource many of their operational functions, including content moderation for Facebook, and customer service for Uber

Medium-size businesses

A medium business with 50-500 staff might outsource the labour-intensive accounting and finance functions to a team in the Philippines.

Small business and entrepreneur

It is common for small business owners to have a Virtual Assistant (VA) working for hem full time, remotely from the Philippines.

What are the different types of BPO?

The type of business process outsourcing can be characterised by their specialisation, location, and size.

Generalist or specialist BPOs

Business process outsourcing is in the human resources and professional services sector. However, their services extend across all industries. The majority of BPOs are generalist, in that they offer a full range of professional services, although some specialise in certain verticals (ie accounting, or animation).

Location

Business process outsourcing typically operates form developing nations such as the Philippines, India, and Colombia. They typically have cheaper cost-of-living and bigger populations. Different locations offer different advantages.

Size of BPO

The bigger BPOs employ more than 250,000 people. They are huge, global operations. Medium-sized BPOs range from 500-5,000 staff and offer a full range of services. The smaller BPOs might have 1-500 people.

Functions of business process outsourcing

Collectively, business process outsourcing provides any kind of staffing solution. Common functions of BPO include:

Finance and accounting: operational, technical and specialist functions Healthcare: various functions of the backend of the healthcare and health-insurance industries Creative and content: everything from post-production of Hollywood movies to newspaper and website content Tech, IT and development: network management, web and app development and maintenance Sales & customer support: ongoing sales and customer operational support and delivery Marketing: ongoing marketing, communication and branding activities Talent and HR: externalising the management of company HR, recruitment and compliance Administration: general business administration and operational activities Top BPO companies in the world's top outsourcing hubs

A wide range of BPO companies in different parts of the world provide utmost services to their Western and local clients. Many of them have even earned awards and recognitions by award-giving bodies due to their performance on both the roles they take and on their way of taking care of the employees.

Check out the top BPO companies in several outsourcing destinations below:

Top BPO companies in the Philippines Top Indian BPO companies Top South African BPO companies Business Process Outsourcing (BPO) services

Outsource Accelerator is the most trusted source for independent information & advisory for Business Process Outsourcing (BPO). We have over 4,000 articles, 200+ podcast episodes, and a comprehensive directory with 700+ BPOs… all designed to make it easier for clients to learn about, and engage with, business process outsourcing.

Start your
journey today

  • Independent
  • Secure
  • Transparent

About OA

Outsource Accelerator is the trusted source of independent information, advisory and expert implementation of Business Process Outsourcing (BPO).

The #1 outsourcing authority

Outsource Accelerator offers the world’s leading aggregator marketplace for outsourcing. It specifically provides the conduit between world-leading outsourcing suppliers and the businesses – clients – across the globe.

The Outsource Accelerator website has over 5,000 articles, 350+ podcast episodes, and a comprehensive directory with 900+ BPO companies… all designed to make it easier for clients to learn about – and engage with – outsourcing.

About Derek Gallimore

Derek Gallimore has been in business for 20 years, outsourcing for over eight years, and has been living in Manila (the heart of global outsourcing) since 2014. Derek is the founder and CEO of Outsource Accelerator, and is regarded as a leading expert on all things outsourcing.