Positioning Statement

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2 Table of Contents Positioning Statement Introduction Negotiating SLAs with Overseas Outsourcing Companies SLA Structure Distinguishing The Good From The Bad Getting A Favorable SLA Negotiation Challenges Negotiating A Favorable SLA Effective Tips And Strategies Get a legal opinion first Get a SLA proposal from the outsourcing service provider, if possible Does the "Credits" system really works? Think it over Lobby for variable service and performance metrics What happens when non-compliance occurs for new performance metrics Do the homework right Never leave things for the eleventh hour Conclusion

3 Positioning Statement Once considered a trivial formality, SLAs (Service Level Agreements) now play a critical role in determining the scope, sustainability and success of outsourced projects. The ever-increasing importance of SLAs can be traced to the realization that the existing contractual framework provides little help in influencing the performance of outsourcing companies. The importance is certainly not being overemphasized because today almost all reputable consultants and lawyers recommend businesses to include SLAs in their outsourcing contracts. Designing appropriate SLAs is however not easy and what is even more difficult is the negotiation of SLA terms and conditions with outsourcing service providers. Apart from others, these are some of the main topics covered by this whitepaper. It intends to enlist and highlight effective tips and strategies that businesses can use for getting the most favorable terms and conditions while negotiating SLAs with overseas outsourcing companies. Introduction SLAs, in outsourcing, can be defined as a set of service standards and performance metrics identified by a business, which the outsourcing service provider should achieve or exceed. SLAs also enumerate the legal options available to a business in case the outsourcing service provider fails to meet quality or performance levels as stipulated in the SLAs. Most SLAs usually provide businesses the right to demand credits for future invoices and also to terminate outsourcing contracts midway in extreme cases when a recovery may not be possible or when the integrity of the outsourcing service provider may be in doubt. Apart from these, SLAs may also include information about incentives and bonuses that will accrue automatically in case the outsourcing service providers exceeds specified goals and targets.

4 SLA Structure Distinguishing The Good From The Bad The definitions as to what comprises a good or bad SLA structure may vary depending on the specific outsourcing domain and the needs and requirements of the business. However, there are some common yardsticks having universal applicability that can be used by almost all businesses for designing favorable SLAs. Here's some of them. A favorable SLA will have a dedicated section containing detailed information about all deliverables such as quantity, quality, performance etc. It will have detailed information about the type of credits that the business will be entitled to & the circumstances that will result in such credits. It will provide the right options to cover risks arising out of hidden yet critical service or performance metrics that may not have been identified and may not have been included in the outsourcing contract.

5 Getting A Favorable SLA Negotiation Challenges Negotiating SLAs with outsourcing service providers has become a necessity because there are business interests to be taken care of on both sides. Not many outsourcing service providers appear to be proactive when it comes to contributing their part in designing a suitable SLA, something that also makes it necessary for businesses to initialize the negotiation process. It may turn out that the outsourcing service provider might just be playing a waiting game and when something like this happens, it becomes necessary for businesses to nudge the service provider towards the negotiations table. Getting a favorable SLA is however a totally different ballgame and it will depend a lot on the prevailing demand-supply situation in the outsourcing market. If the demand for outsourcing services is increasing, outsourcing service providers may not respond well to proposed SLA terms and conditions, especially those terms and conditions that they can do without by choosing other available outsourcing projects. The response to proposed SLA terms and conditions will be just the opposite when the demand for outsourcing services might be witnessing a downward trend. External factors, however, are not the only variables that create problems in getting a favorable SLA. Sometimes, it is also the high expectations of businesses, which results in the overmeasuring of service and performance metrics. Outsourcing service providers work for profit just like any other business and it's highly unlikely that they will agree to terms and conditions that do not suit their requirements. This is why it is necessary that businesses propose achievable terms and conditions, those that create a win-win for all. Negotiation is the art of persuasion and perseverance and that's what businesses need to practice more often.

6 Negotiating A Favorable SLA Effective Tips And Strategies Negotiating a favorable SLA was never easy and probably never will be. That however should not dissuade businesses from giving it their best shot because in spite of the challenges, many businesses have in fact managed to get favorable SLA terms and conditions. It's just a matter of identifying the tips and strategies deployed by these successful businesses and making a sincere effort to implement the same while negotiating SLAs with overseas outsourcing companies. Here's what most businesses can do for negotiating a favorable SLA.

7 1. Get a legal opinion first A business may have highly-qualified and intelligent managers, quite capable of designing SLAs on their own, but still it is necessary to get legal advice. That's because even though managers might have intelligence and experience on their side, they may not be able to decipher the inherent technical intricacies that act as the basic framework for all types of business contracts including SLAs. Even a small slip can create problems in the future and that's why it's always better to leave it to the sharp eyes of a reputed lawyer. Getting a legal opinion is recommended for all types of outsourcing contracts because it irons out inherent flaws as applicable to terms and conditions stipulated in a SLA. The role of a lawyer becomes even more important when counter proposals are designed and presented by the outsourcing service provider. Since there is a strong possibility that these might contain some objectionable terms and conditions hidden in the fine print, it becomes necessary that the services of a reputed lawyer be procured. It's only the trained eye that can spot things that look good only on paper.

8 2. Get a SLA proposal from the outsourcing service provider, if possible Outsourcing service providers may not be all that forthcoming when asked to design and present a SLA for the proposed outsourcing project. However, businesses should not shy away from giving it a try because if the outsourcing service provider agrees, it can provide a critical advantage. When a SLA is designed by outsourcing companies, it automatically reduces the risk of over-measuring or under-measuring service and performance metrics. A SLA designed by an outsourcing company is bound to be more realistic because both overestimation and under-estimation will harm the company's business interests. If performance metrics are under-estimated, the service provider will run the risk of losing the outsourcing contract and if they are over-estimated, it might create implementation problems in the future. A realistic SLA proposal will provide businesses the right platform to work on and carry out the necessary tweaks for creating a near-perfect SLA.

9 3. Does the "Credits" system really works? Think it over Not many will recommend carrying out changes in the basic structure of SLAs, but that should not deter businesses from making intelligent decisions and debating the effectiveness of old concepts and systems. The "credits" system which entitles a business to receive credits for future invoices in case of non-compliance of prescribed service and performance metrics, is one of those old systems that are currently under the scanner and are being debated by experts worldwide for its effectiveness. The "credits" system may still be widely used in SLAs, but that is anticipated to change very soon. There are businesses that have completely done away with the "credits" system and are instead focusing on more effective strategies such as incentives and bonuses. These businesses believe that the "credits" system does not provide the right motivation to outsourcing service providers to curtail their bad performance. And they are not wrong since their success rate is lower than the industry average. Other factors may also be responsible, but it does provide the rationale to do a rethink of the "credits" system.

10 4. Lobby for variable service and performance metrics Traditionally, the standard practice while designing SLAs was to identify and fix performance metrics for the entire duration of the proposed outsourcing contract. It may still be necessary for providing the right start, but it would be better still if a business can get the nod from the outsourcing service provider for variable service and performance metrics. Not many will agree, but if the right motivation is provided such as incentives and bonus programs, things can be made to work in favor of variable service and performance metrics. Including variable service and performance metrics in SLAs has become a necessity due to the fast-changing business environment and increasing competition. Performance metrics that are adequate today may become redundant in the next 6 to 18 months time frame and that's why it has become essential to have variable service and performance metrics. If done in the right manner, it can create a win-win for all.

11 5. What happens when non-compliance occurs for new performance metrics Variable service and performance metrics may have its benefits, but just like any other concept, it too has certain flaws. For example what happens when a consistent performer fails to achieve new goals and targets as prescribed under the variable service and performance metrics? Will it be right to penalize the outsourcing service provider when other factors may be responsible for non-compliance of service and performance metrics? Wouldn't such incidents create roadblocks for forging business relations with the same service provider in the future? These are some urgent questions that businesses need to answer before they actually implement a variable service and performance metrics. To overcome these problems, businesses need to take a realistic view of things and set aside the stipulated terms and conditions, at least for a while. They need to delve deeper into the matter and try to identify the real culprit instead of pointing fingers towards the outsourcing service provider. Such initiatives will make the right impressions on the service provider, something that will pave the way for future SLAs having the variable performance metrics option.

12 6. Do the homework right For dominating SLA negotiations, it is necessary that businesses do their homework right, i.e. carry out extensive market research and have data and statistics ready. If this is not done, businesses will be at a loss when counter proposals are made or when terms and conditions are being debated. On the other hand, if the required market intelligence data is available, the same can be provided to the outsourcing service provider and can be used as leverage to get a favorable SLA. Before actually going over to the negotiation table, businesses thus need to contact as many outsourcing service providers as possible and seek quotes that include service and performance metrics among others. Collected data will provide a realistic view of prevailing conditions, something that will make it easier for businesses to get the mostappropriate terms and conditions for their SLAs.

13 7. Never leave things for the eleventh hour If there are doubts, issues, problems, disagreements, the negotiation table is the place to sort them out. Businesses should never set aside something for the future, no matter how insignificant the problem or issue might be. Even small issues have the potential to create huge roadblocks and that's why each one of them needs to be sorted out right there at the negotiation table. When everything is settled prior to the initialization of the outsourcing project, it ensures that the business will be able to exercise full control over the proceedings for the entire length of the outsourcing contract. It does not harm outsourcing service providers either because they too benefit from the smooth implementation and progress of outsourced projects.

14 Conclusion SLAs are the backbone of outsourcing contracts and that's why it's necessary for businesses to get them right the first time and make them work in their favor. It's necessary also because it's the only effective option available that can provide adequate cover for risks associated with offshore outsourcing projects. The structure of SLAs is however evolving at a fast rate and it necessitates that businesses act in a proactive manner and rely more on their intelligence and business acumen rather than blindly following standard practices while designing and negotiating SLAs with overseas outsourcing companies. Using creativity and thinking out of the box can also help businesses get the desired terms and conditions for their SLAs.

15 About Telegenisys Inc. Telegenisys Inc., is one of the leading providers of Business Process Outsourcing (BPO) services, offering a wide range of back office, customer care & support and telemarketing outsourcing solutions to clients worldwide. Aided by world-class infrastructure, business competencies, domain knowledge & expertise and a dedicated group of highly skilled and trained professionals, we are able to provide the highest quality outsourcing services to clients. Our core competencies include services such as customer care & support, B2C & B2B telemarketing, data entry & data conversion, web promotion, content development, accounting and financial services, tax consultancy, medical records retrieval, market research, database creations, document scanning & sorting, infomercial sales services, and insurance claims. Contacts: Telegenisys Inc., 5055 Business Center Drive, Suite Fairfield, CA Phone: (800) Fax: (866)