Why it matters for your business
Latency matters most where a person is waiting. A voice agent that pauses too long sounds broken and a chat assistant that takes many seconds feels slow, while a back-office workflow that processes invoices overnight can tolerate long response times. Each extra model call, tool lookup or agent handoff adds delay, so multi-step agents can feel sluggish even when each step is fast. Common fixes include smaller models for simple steps, streaming responses as they generate, prompt caching, running independent steps in parallel and trimming prompt length.
Example
A home services company tests an AI phone receptionist and finds callers talking over it during long pauses. The team streams speech output as soon as the first words are generated, runs the service-area lookup while the caller is still speaking, and uses a smaller, faster model for the greeting and simple questions. The conversation feels much more natural.