Service Level Agreement

What an SLA contains

A usable SLA answers six questions:

1. What service is covered? Scope, channels, hours of operation, languages, volumes the provider is expected to handle.
2. What are the targets? Each metric with its exact definition, target and measurement period.
3. How is it measured? Data source, formula, exclusions and who calculates it.
4. How is it reported? Frequency, format and review meetings.
5. What happens when targets are missed? Service credits, penalties, corrective action plans and, eventually, termination rights. Some SLAs also include earn-backs or bonuses for exceeding targets.
6. What are each side's obligations? Forecasts, system access, training content, timely escalation handling and process approvals from the customer.

In outsourcing, the SLA usually sits under a master service agreement that covers legal terms, with one statement of work and SLA per program.

SLAs in BPO and contact center outsourcing

When a company outsources customer service to a BPO, the SLA is how it keeps control of quality without managing agents directly. Typical contact center SLA metrics:

• [Service level](/glossary/service-level/): for example 80% of calls answered within 30 seconds, measured by interval or day and reported monthly.
• Abandonment rate: for example under 5%.
• Quality score: for example 90% average on the client-approved QA form, with calibration sessions to agree scoring.
• First contact resolution or repeat contact rate.
• Customer satisfaction from post-contact surveys.
• Response time for email and messaging, such as 95% within 24 hours.
• Accuracy for back-office work, such as 99% of processed items error free.

Many client contracts now add people and readiness metrics: training completion before go-live, agent attrition caps, a minimum share of agents at proficiency, and staffing to forecast (for example, scheduled hours within 95% to 105% of the client's requested hours). These matter because attrition and undertrained agents are the root cause of most SLA misses.

Example: an SLA clause and service credit

A regional insurer outsources first-level member calls. Its SLA states that monthly service level must be at least 80% of calls answered within 30 seconds, calculated as calls answered within 30 seconds divided by calls answered plus calls abandoned after 30 seconds. If the monthly figure falls below 80%, the provider credits 2% of that month's invoice for each full percentage point below target, capped at 10%. The target does not apply on days when actual call volume exceeds the client's forecast by more than 15%.

In September the program bills $420,000 and service level is 76.6%. That is three full points below target, so the credit is 6%, or $25,200. The volume exception clause matters: if one week's volume ran 20% over forecast because of a claims system outage on the client side, those days are excluded and the recalculated figure may meet the target.

SLA vs KPI vs service level

These are related but not the same.

• Service level is one specific contact center metric: the share of calls answered within a target time.
• A KPI is any key metric a team uses to manage performance. Many KPIs never appear in a contract.
• An SLA is the agreement. It selects a few KPIs, fixes their definitions and targets, and attaches consequences.

A practical rule: put fewer metrics in the SLA than in the operational dashboard. An SLA with 25 metrics becomes a negotiation about measurement instead of a tool for improvement. Five to eight well-defined measures, plus a broader set of tracked but non-penalized KPIs, works better.

Internal SLAs in recruiting and HR

SLAs are not only for vendors. Recruiting and HR teams use internal SLAs to make turnaround times explicit between teams. Common examples in high-volume hiring:

• Recruiter screens new applicants within 24 hours.
• Hiring managers give interview feedback within 24 hours.
• Offers are approved within 48 hours of the final interview.
• Background checks are initiated the same day an offer is accepted.

Staffing agencies and RPO providers also sign SLAs with clients covering time to submit, fill rate, quality of submittals and candidate experience measures. As with contact center SLAs, the useful ones are short, measurable and reviewed every month.

Common SLA mistakes

• Vague definitions. "Answer calls promptly" cannot be measured. Write the formula, data source and measurement period.
• No customer obligations. If the provider is measured against a forecast, the client must provide an accurate one on time. Without that, missed targets turn into arguments.
• Monthly averages only. A monthly service level can be met while specific days or intervals are very poor. Consider interval or daily minimums for critical queues.
• Penalties without improvement plans. Credits compensate the client but do not fix anything. Require root cause analysis and an action plan after any miss.
• Ignoring staffing and training. Most service failures start with understaffing, attrition or weak onboarding. Include readiness and attrition reporting, even if not penalized.
• Never revisiting targets. Review the SLA at least yearly as volumes, channels and customer expectations change.