What you see is what you get': The Service Level Agreement.

Selecting an offshore outsourcing partner is always a rigorous exercise. When processes are outsourced, every client organisation scrutinises the prospective partners across several parameters. Typically, the checklist would include domain expertise, robustness of methodology, maturity of processes, track record, financial performance, among other factors.

After the outsourcer is identified, one of the major milestones in the relationship is drafting a comprehensive Service Level Agreement (SLA) along with the contract. An SLA sets the context of the project and defines the performance and service delivery. As it sets the agenda and articulates expectations in black and white, SLAs need to addressed with due diligence.

The ground rule for preparing an effective SLA is a single-minded focus on the business goals of the project. As no two projects have identical specifications and desired outcomes, an SLA must take into account the key drivers of the project.

For a mission-critical application, quality becomes a critical business imperative. If the application is in the realm of product development, time-to-market is a key factor. Accordingly, the corresponding SLA must be oriented towards quality aspects.

In a project situation where customer service delivery is a key consideration, the SLA must be customer-centric. Invariably, the relevant issues would be query response time, 24/7 service and the like. All the factors that are instrumental in ‘customer delight’ must be identified and addressed clearly.

While quantitative measures are a definitive benchmark, it’s the qualitative areas that deserve a special mention in SLAs. So it’s imperative to agree on quality definition to safeguard the interests of all parties concerned.

Projects differ in scope and scale. So the learning of one SLA may not necessarily contribute to drafting another SLA. Be that as it may, here are some key factors that you should consider in an SLA:

The devil is in the details
Every clause must be spelled out elaborately. An SLA must embrace the scope of the project without leaving any room for interpretation.

Tackle unforeseen circumstances
Ensure a Continuity of Business provision that mitigates risks and safeguards the project from disruption.

Use the Penalty and Remedy clause only to optimise performance
SLAs are designed to meet business goals of the project. A Penalty provision should function as positive reinforcement. If the project does not pan out to expectations, ensure that you can effectively remedy the situation.

Incorporate the role of Third Parties
Define how the involvement of third parties and infrastructure will impact the project SLA.

Boundaries of the SLA
Define the boundaries where SLA are applicable and identify the scenarios where SLA compliance cannot be expected.

Reporting and Escalation procedures
Effective SLA management must have an escalation mechanism. It must define hierarchies on both sides (client and outsourcer) and establish reporting protocol to ensure channels of communication are always open. A dedicated SLA manager should drive the complete process.

KISS (Keep It Short and Simple)
Avoid technicalities and jargon. Focus on results. The efficacy of an SLA lies in its simplicity and ease of implementation.

Legal eagle and wordsmith skills
An SLA must be worded carefully. Being a legal document, it must reflect the laws of the land(s) under whose jurisdiction it falls.

Win-win situation
An SLA must spell out objectives that are realistic. It requires the concurrence of the client and outsourcer to ensure project success.

Indeed, an SLA is a key lever in the success of projects and the viability of an outsourcing relationship. An effective SLA is one that balances the rigour of details with the pragmatism of business goals.

Neelima Sahani, a Senior Consultant at Mastek has over 14 years of experience in software analysis and design, project management and quality management. Ms. Sahani is a key member of the Mastek Global Management group and specialises in application offshore outsourcing engagements.