Definition:
During the contract writing process, clauses may be added to pay the outsourcing vendor additional money for exceeding the targets stated in the service level agreement (SLA) section of the contract. A "contract incentive" is designed to drive a higher level of performance than the minimum required to meet the contract requirements.
Incentives can be provided for any or all performance metrics (on-time-delivery, volume of work, etc.), or for other items separate from the metrics (building the full staff size before a given date, keeping staff turnover below a certain level, etc.).
During the contract writing process, clauses may be added to pay the outsourcing vendor additional money for exceeding the targets stated in the service level agreement (SLA) section of the contract. A "contract incentive" is designed to drive a higher level of performance than the minimum required to meet the contract requirements.
Incentives can be provided for any or all performance metrics (on-time-delivery, volume of work, etc.), or for other items separate from the metrics (building the full staff size before a given date, keeping staff turnover below a certain level, etc.).