BPO. KPI. SLA. You will see these words alongside the word outsourcing. But what do these stand for and what do they mean?
BPO stands for Business Process Outsourcing. KPI means Key Performance Indicators. And SLA stands for Service Level Agreement.
In definition, BPO is a business practice where an organization contracts another company to perform business functions on their behalf necessary for them to succeed. The metrics used to measure performance is called the KPIs. The KPIs committed to by the two parties is called the SLA.
What is an SLA?
An SLA is the measurement tool which establishes the baseline performance levels of the BPO company. It contains the description of the services to be provided, the metrics by which the services will be measured, duties and responsibilities of both the hiring and the BPO company, the remedies and penalties for breach, and instructions in the event you need to make amendments or adjustment to the agreed SLA.
Components of an SLA
As with standard contracts, there are components found in an SLA. The usual ones can be enumerated as follows:
The Service Expected from the BPO company
This lists the exact services that will set the standards of the deliverables. This way, any miscommunication or confusion is avoided at the onset. The hiring company has a clear set of guidelines of what to expect to get out of the partnership.
Responsibility of Both Parties
Related to the first component, the responsibilities of the hiring company must also be clearly communicated in the agreement. It is critical that both parties are aware of what is expected from one another so that no one feels taken advantage of.
A definite time element must also be agreed upon. For example, if an email is received from a customer, what is the expected timeframe for the customer to receive an answer. If customer service through phone, how fast should an incoming call be picked up.
How Disputes are Handled
There must also be an agreed outline or procedure in the event any disagreement may arise. Even though there may not be clear-cut guidelines as disagreements can vary depending on the situation, it gives both parties assurance and direction on how to resolve a conflict.
Corresponding Consequences if Service Expectations are Not Met
Setting a defined penalty if service levels are not met, assures the hiring company that they will get quality service from their BPO partner while at the same time, sets the bar of the quality of service to be provided as well as a goal for the BPO partner to achieve.
The payments terms agreed upon by both parties give a clear guideline of when to expect payment and the repercussions if payment is not done or received on time.
Importance of SLAs
SLA’s are essential as it aligns both parties expectations and responsibilities. It is especially helpful when a conflict arises as it acts as a compass to both parties
Looking for a reliable company to outsource your business processes to but don’t want to be tied down to a long-term service contract?
At Executive Boutique, we offer flexible packages – may it be ongoing monthly support or on a per-project basis. We will even work with you to identify business process outsourcing solutions to help you save on time and cost. Contact us today to find out more and request for a free quote!