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The Right Service Level Agreement (SLAs) Metrics in BPO

Author

Eric Liebross

https://www.linkedin.com/in/eric-liebross-2b41242/
eric.liebross@auxis.com

Senior Managing Director of Business Transformation, Auxis

A well-written service level agreement (SLA) stands as a critical component of the relationship between a client and a BPO (Business Process Outsourcing) provider. At its simplest level, it ensures everyone is on the same page – protecting the client and provider with mutually agreed-upon terms, guidelines, and metrics that enable everyone to meet expectations and work productively. 

But confusion often swirls over the difference between contractual SLA metrics and the broader canvas of key performance indicators (KPIs) that BPO providers can also use to monitor operations – and why it’s important to have both.

SLAs in the BPO industry are ultimately determined by the unique needs of an organization and the metrics that matter most to its success.  There really is no “one size fits all” set of metrics.  But in this blog, we will provide insight into valuable service level agreement metrics that organizations can consider as part of their BPO contracts.

What are the SLAs in BPO?

The most effective SLAs in BPO measure an outsourcer’s performance through one or two carefully chosen metrics for every function in a contract. Holding the BPO provider contractually accountable to the most critical objectives ensures that items companies care about most remain the top priority.

It also keeps performance assessments from getting muddled because too many factors are at play.  SLAs are typically reviewed annually, so they remain aligned with company priorities.  

When done properly, SLAs in BPO ensure that both parties understand their responsibilities and focus on the right areas, while laying out the metrics that will be used to measure service.  They also create accountability and communication, establishing a dialog on key issues that occur within the operation and detailing remedies and actions if agreed-upon service levels aren’t achieved.

And perhaps most importantly, they set the stage for a strong working relationship between a business and its BPO provider by reducing the potential for conflict.  When objectives are clear to both sides, people spend less time debating and more time solving problems. SLAs also ensure clients understand their role in supporting SLA targets, such as issuing timely approvals on pending items.

Service level metrics help put issues into perspective as well.  While the root cause still may need to be addressed, five improperly processed invoices become less alarming when it’s clear that 20,000 others were handled correctly in the same period.  On the other hand, a sudden spike in mistakes requires deeper analysis.

SLAs also facilitate communication through monthly service level reviews (SLRs) that enable stakeholders to get to the bottom of issues so they can be easily corrected.  For instance, a marked increase in the length of customer service calls can help uncover product issues before they cause reputational harm to the business.