Learn about practical components in sample service level agreement documentation that protects both overseas clients and their outsourcing service providers

International organization consultant Naomi Karten explains that a service level agreement (SLA) is a dynamic communications tool designed to clarify responsibilities, manage expectations, improve communications and strengthen relationships throughout the project life cycle.

Karten’s approach is particularly beneficial when parties to the agreement, namely the service provider and the client, are located in different countries.

SLA Service Elements

Partially based on boilerplate wordings, most SLA documents provide background information on service delivery, detail services and define service standards. Below are excerpts for two service-related sections from a popular software application, the SLA Toolkit.

1.0 INTRODUCTION

1. Purpose and Objectives
2. Parties to the Agreement
3. Commencement Date
4. Duration of the Agreement
5. Non-exclusive Agreement
6. Definitions

2.0 SCOPE OF WORK

1. Standard Services
2. Non-standard Services
3. Service Availability
4. Place of Service Delivery
5. Changes to Services
6. Client Delays

As in most project plans, the SLA must precisely define the scope of work to be done. Service delivery template wordings must be customized to clearly define what services are provided, and just as important, those excluded. Negotiating an SLA agreement with an international audience must be sensitive to those services clients from another culture might assume are available. All services must be itemized, vetted by all parties and then clearly communicated in the SLA document.

SLA Management Control Elements

A service level agreement can only serve as an effective foundation for a successful long-term outsourcing relationship if the SLA document also contains clearly defined management controls. International outsourcers use these operational tools to assess service effectiveness and continuously resolve problems.

Effective SLA management control elements must:

• Identify how service effectiveness is evaluated and reported
• Define mechanisms that encourage ongoing communication between outsourcing service provider and client
• Provide tracking, monitoring and reporting to ensure service standards are consistently met.

Below are examples of management control components.

3.0 PERFORMANCE, TRACKING & REPORTING

1. Key Personnel Changes
2. How Each Individual Service Will Be Monitored
3. Benchmarks, Targets And Metrics To Be Used
4. Service Level Reporting
5. Service Level Meetings

4.0 PROBLEM MANAGEMENT

1. Support And Service Desk Services
2. Problem Definition
3. Problem Escalation

Penalties are also defined for when the outsourcing service provider fails to meet performance benchmarks.

7.0 WARRANTIES AND REMEDIES

1. Quality of Services
2. Indemnification for Supplier Neglect
3. Warranty for Copyrights, Patents and Trade Secrets
4. Client Errors Contributing to Infringements to Third-Party Copyrights, Patents or Trade Secrets
5. Remedies for Breaches
6. Force Majeure Clause

SLA Change Management Elements

Regardless of the business environment, an SLA document offers a dynamic way to manage change. Particularly in international environments, changes happen so often and fast that often parts of an SLA document are outdated even before the agreement is published.

Effective SLA processes for gathering content include formal mechanisms that enable parties to change details that often affect project scope. In the sample excerpt under Service Elements above, the all-important SCOPE OF WORK section includes the subsection Changes to Services covered under our example SLA.

In addition, many service providers write a subsection like the one below. This ensures that all parties understand the formal procedures required to implement changes to the agreement.

12.0 GENERAL

1. Procedures for Making Changes to the SLA

International Intellectual Property and Confidentiality

Although an overseas client may rule out reasonable physical access to client facilities, a service provider can still include a clause that requires reasonable technical access to client data via the Internet. Typically, the outsourcer is also responsible for disaster recovery and business continuity procedures.

Trademarks, copyrights and confidentiality are even more imperative in an international environment. Service providers must be legally bound to ensure that strictly private information is not disseminated to third parties.

9.0 INTELLECTUAL PROPERTY RIGHTS AND CONFIDENTIAL INFORMATION

1. Intellectual Property Rights
2. Instructions on How to Treat Confidential Information
3. Court Orders for Release of Information
4. Confidential Records on Termination

The problem in many trademark disputes is that local jurisdictions are often much more forgiving on domestic companies that copy foreign products or ideas. Disputes can be tied up in the courts for years. Therefore, an effective SLA defines precisely the courts of which jurisdiction will have the final say in determining liability for legal actions from outsourcing issues.

10.0 LEGAL COMPLIANCE & RESOLUTION OF DISPUTES

1. Legal Jurisdiction Specified
2. Export Law Compliance
3. Informal Resolution of Disputes
4. Arbitration
5. Limitation of Actions
6. Limitation of Liability Clause

If kept updated with the needs of all international parties, a clear and thorough Service Level Agreement ensures that clients receive the services they pay for while enabling the outsourcing service provider to identify, measure and correct gaps in service performance.