How to add XLAs to your outsourcing contract

Organizations usually face the same questions concerning XLAs: What should we measure, who owns the data, how should incentives work, and how will this change provider behavior after signature. There are no easy answers either, but after advising clients in MSP relationships with major providers, I’ve seen what works and what doesn’t. Successful XLA programs rarely start with massive transformation, nor rely on perfection before adding experience accountability to the contract. Start with the right metrics The first concern I hear is what to measure. MSPs often steer that discussion toward metrics already in their reporting stack. That’s a trap. Unlike SLAs, which measure operational outputs, XLAs should focus on employee experience and business outcomes . The strongest programs start with three to five high-signal metrics tied to the employee journeys creating the most friction. More than that and the program loses focus before it gains traction. I typically recommend starting with employee satisfaction scores, perceived lost productivity time, repeat incident rates, task completion success, and ease of getting support. Then focus early measurement on common employee experiences like service desk interactions, employee onboarding, application reliability, and device performance. Trying to measure everything is understandable, but it’s also one of the fastest ways to stall an XLA program. Precisely define roles and responsibilities This is the part of XLA contract design where I spend the most time with clients, and it’s the part that major MSPs are most likely to leave vague if you let them. Accenture and TCS both have mature commercial teams skilled at agreeing to things in principle while avoiding specific accountability in writing. Don’t let that happen here. Employee experience isn’t solely the vendor’s responsibility. It’s genuinely shared, which is a more productive framing than pure vendor accountability, but only if the split is clearly spelled out. This is what I’ve found works in practice. Customer responsibilities Selecting tools and platforms Managing data infrastructure Sharing experience data openly with the provider Supporting internal improvement initiatives that the provider flags Vendor responsibilities Running the measurement cadence Delivering monthly experience reporting Identifying and surfacing improvement opportunities from the data Executing operational improvements within agreed timelines Without this level of specificity, XLA programs almost always become reporting exercises. The data gets collected, the scorecard gets presented, and nothing actually changes. Build flexible targets One of the biggest mistakes in XLA design is treating experience targets like traditional SLAs, setting once at contract signing and left unchanged for years. Employee expectations, workforce patterns, and technology environments, after all, evolve constantly. A target that feels ambitious in year one may become meaningless by year three. The strongest XLA contracts include formal reviews every three to six months to recalibrate targets, align with business priorities, and raise expectations as experience improves. This prevents providers from locking in easy wins and coasting. When providers resist review cycles, it’s often a sign they believe the targets can be met on autopilot, a red flag in any XLA program. Use the right scoring method One overlooked XLA best practice is how experience scores are calculated. Point-in-time scores can be distorted by outages, isolated incidents, or low survey participation, and providers sometimes exploit that volatility. I advise clients to calculate official XLA scores using rolling two-month averages instead of snapshots. It creates a more stable and accurate view of experience trends, and makes operational timing games much harder. Most importantly, define the scoring methodology explicitly in the contract. Don’t leave it to be worked out operationally after signing. Structure incentives carefully Relying on penalty-only incentives is one of the most expensive XLA mistakes. On paper, the model is simple: miss the target, pay the penalty. In practice, it drives the wrong behavior. Providers focus on protecting themselves instead of improving employee experience, optimizing survey timing, and managing averages rather than solving problems collaboratively. I’ve seen this repeatedly in Infosys, HCL, and TCS relationships. The strongest XLA structures combine risk and reward where providers earn meaningful upside for exceeding targets, innovating, and improving outcomes. Penalties still matter, especially in mature programs, but they can’t be the only lever otherwise the contract becomes another SLA model with better branding. Define escalation processes When experience scores fall below threshold, the contract needs to specify what happens next. This sounds obvious, but I’ve reviewed many service delivery measurement frameworks in clients’ incumbent MPS contracts that specify financial consequences without defining any collaborative process to address the underlying problem. The escalation language I push clients to include specifies: a joint review process triggered when scores fall below threshold. root cause analysis expectations and timelines. remediation planning requirements with named owners on both sides. timelines for corrective action and progress reporting. The framing matters as much as the mechanics. Escalation should be positioned as collaborative problem-solving, not blame assignment. Contracts that turn every missed score into a commercial dispute damage the relationship when provider engagement matters most. The best MSPs treat escalation as a shared diagnostic exercise, not a contractual confrontation. Establish an operating rhythm Signing the contract is the beginning, not the end. In my experience, the organizations that get the most out of XLA programs are those that build a disciplined operating cadence and stick to it. The ones that treat XLAs as a reporting exercise almost never see meaningful improvement. This is the cadence I recommend: Daily : Both parties maintain live dashboards showing experience trends, application performance, regional issues, and persona-specific insights to catch emerging issues. Weekly : Customer and vendor teams hold focused working sessions to determine what improved experience this week, what hurt it, which remediation actions were completed, and what’s the priority for next week. Monthly : Formal governance meetings to review experience scores, improvement actions, root cause discussions, and cross-functional issues that need escalation. Biannually : Leadership steering meetings to assess overall experience performance, recalibrate targets, and align the XLA program with evolving business priorities to honestly evaluate whether or not the program is driving the outcomes the organization actually cares about. Common mistakes organizations make After working through XLA design and implementation with clients across their MSP relationships, the failure modes are predictable. Here’s what to watch for. Setting targets before establishing a baseline Rushing into targets before understanding your current state is one of the fastest ways to create disputes. Spend the first three to six months gathering baseline data, then negotiate targets based on evidence rather than guesswork. Measuring too much More metrics don’t create more insight. Frameworks with 20 data points rarely survive operational reality. Start focused and expand gradually. Hiding the data Transparency is foundational to XLAs. Providers who obscure poor scores, especially when controlling the measurement platform, undermine the entire model. Clients who weaponize the data create the same problem. Build mutual transparency obligations into the contract. Over-relying on penalties Penalty-only structures recreate legacy SLA behaviors. Balanced incentives drive better long-term outcomes. Treating XLAs as static Employee expectations, technology, and business priorities evolve constantly. Without formal review cycles, XLA programs quickly become irrelevant . Start smaller than you think you need to The organizations that get XLAs right are rarely the ones with the most sophisticated tooling. They’re the ones that stopped waiting for a perfect program and introduced real accountability into the contract with what they had. The most effective starting points are often simple: agree on a focused set of experience metrics, establish a six-month review cycle, commit to shared visibility and data transparency, and create joint accountability for continuous improvement. From there, maturity develops over time. Governance builds trust, data becomes more actionable, and targets evolve alongside business priorities. The relationship shifts from compliance management to outcome-driven partnership. In my experience, the organizations that succeed are the ones that stopped accepting green scorecards at face value and demanded something more meaningful.