Service Level Agreement

A service level agreement (SLA) is a written agreement between a service provider and a client that specifies the services that are required as well as the quality of service that is expected. The agreement differs depending on the vendor, service, and industry.
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SLAs are an essential part of any outsourcing or technology vendor contract. An SLA provides remedies when requirements are not met, in addition to listing service type and quality expectations. There are three basic types of SLAs: customer, internal and multilevel service-level agreements.

Key components of an SLA
  • Description of services: The SLA must include detailed descriptions of every service offered under all possible circumstances, as well as turnaround times.
  • Exclusions: Specific services that are not provided should also be explicitly stated to avoid any misunderstandings and to eliminate the possibility of other parties making assumptions.
  • Service performance: Metrics for measuring performance and performance levels have been established. Both the customer and the service provider should agree on a list of all the measures that will be used to assess the provider's service levels.
  • Redressing: If a provider fails to meet its SLA, compensation or payment should be defined.
  • Stakeholders: The parties to the agreement are clearly defined, and their obligations are established.
  • Security: All security precautions that the service provider will take are outlined. Antipoaching, IT security, and nondisclosure agreements are common examples of what this involves.
  • Risk management and disaster recovery: Processes for risk management and a disaster recovery plan have been created and are well-communicated.
  • Service tracking and reporting: The reporting structure, tracking intervals, and stakeholders participating in the agreement are all defined in this section.
  • Periodic review and change processes: The SLA and any defined key performance indicators (KPIs) should be evaluated on a regular basis. This procedure, as well as the proper method for making adjustments, is specified.
  • Termination process: The SLA should specify the conditions under which the agreement can be cancelled or expires. The notification period should be determined on both sides.

Benefits of Service Level Agreement

Enhances customer service:

Enhances customer service. Cycle times (the amount of time it takes to settle issues) will be drastically reduced.

Facilitates communication:

In two methods, the IT service desk staff will be able to set customer expectations (i.e. your workers). To begin, they can go to the SLA agreement for definitions on how priorities are determined and the maximum amount of time the IT service desk has to handle the issue. Second, they may use monthly performance reports to tell consumers about how well the support group is working.

Negotiated and mutually accepted:

Because the SLA was established collaboratively by customers and the support centre, all customers will be more likely to accept it.

Defines procedures:

Procedures must be developed and adhered to by both IT service groups and workers.

The SLA can be used as a written reference when there is a dispute or disagreement.

Service Level Agreement

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Frequently Asked Questions

SLAs are an essential component of every IT vendor contract. An SLA compiles information on all contractual services as well as their agreed-upon expected reliability into a single document. They explicitly explain measurements, duties, and expectations so that neither party can claim ignorance if there are problems with the service. It guarantees that both parties have a common knowledge of the needs.
The SLA should include not just a description of the services to be delivered and their expected performance levels, but also metrics for measuring the services, each party's obligations and responsibilities, remedies or consequences for violation, and a procedure for adding and removing metrics.
An indemnity clause is a crucial condition in which the service provider commits to compensate the customer firm for any breaches of its guarantees. Indemnification means that the provider must reimburse the client for any third-party litigation costs incurred as a result of the provider's breach of the warranties.
If the service provider is purchased or merged with another firm, the client may believe that its SLA will remain in effect, however this may not be the case. The contract may need to be renegotiated. Make no assumptions; nevertheless, keep in mind that the new owner may opt to honour current SLAs in order not to alienate existing customers.
Customers can develop joint KPIs for various service providers that account for cross-supplier implications as well as the influence that the vendor may have on processes that are not covered by their contract.
A Master Service Agreement (or MSA) is a typical contract between two parties that lists out the terms that govern all of their future transactions or future agreements. On the other hand, a Service Level Agreement (SLA) is an agreement specifically between the service provider and a client / a service user.