VERMILLION, S.D. (AP) — A Minnesota company will bring 1,000 information technology consultant jobs to South Dakota as part of an effort to keep high-tech positions from being shipped overseas, Gov. Dennis Daugaard and company officials announced Wednesday.
Eagle Creek Software Services, provides Web and app development and technical support to large health care, financial services and other companies, plans to build a new $10 million, 200-employee office in Vermillion and partner with the University of South Dakota to help train its potential hires, said Chief Executive Ken Behrendt.
Daugaard said state economic development officials often include training money in incentive packages, but directing the training money to a university in the form of tuition and fees for students who want to take the classes is a new approach.
"We're not only helping Eagle Creek, but we're using those economic development dollars to help the USD and the students who come here," Daugaard said during a news conference Wednesday. "So it's really a unique arrangement."
Behrendt said the partnership allows for expansion of Eagle Creek's Dakota model, which uses U.S.-based project centers in lower-cost areas such as South Dakota and North Dakota as an alternative to providing IT support from India or other overseas locations.
The company says it can competitively provide consulting services out of South Dakota as opposed to an overseas location because it's a business-friendly state with no corporate or income tax.
Behrendt said there are numerous hidden costs with sending development jobs overseas. In addition to avoiding language, cultural and time-zone issues that arise with overseas support teams, U.S.-based project centers work better when a company needs continuous interaction with their consultants or want techs to speak to their customers.
"Actually, it's cheaper to do work in South Dakota than it is in Chennai, India, when you really get down to it," Behrendt said. "That's what the business and corporate world is realizing."
Eagle Creek has wanted to expand in the Dakotas, but the company had been having trouble finding qualified people to fill consultant positions. So it called the state Governor's Office of Economic Development for help.
Officials worked with the state Board of Regents to create a four-course certificate at the University of South Dakota geared to the software skills Eagle Creek was seeking, allowing the company to spend less time on in-house training, said Mel Ustad, the office's director of commercialization.
"We see this as a great opportunity to create the quality jobs for college graduates and to continue to increase the number of grads who stay in South Dakota," Ustad said.
Students opting for the IT Consultant Academy certificate will take two software engineering courses, project management and data management.
Laurie Becvar, the university's senior associate provost, said the school is looking for students with a background in computer science, business or science and engineering and a high technical aptitude. The candidates should also want to work in South Dakota.
"It's a strategy to grow professional and competitive jobs in South Dakota and to grow our own workforce," Becvar said. "It's a great example of a university customizing higher education to meet the needs of business and industry."
The academy also offers paid internships with Eagle Creek that can lead to potential employment in IT consultant jobs that pay $40,000 to $45,000 per year.
Eagle Creek's partnership with the University of South Dakota in Vermillion led the company to choose the city of about 10,000 for its newest project center.
Steve Howe, executive director of the Vermillion Area Chamber of Commerce, said the specialized courses and new office to employ students opting for the certificate will boost the local economy.
"Over time you can just create a direct pipeline," Howe said. "So having the center here in Vermillion makes a lot of sense."
Eagle Creek will also add jobs at the company's project centers in Pierre and Valley City, N.D., bringing those centers up to 150 and 100 employees, respectively. The company plans to add other South Dakota locations later.
A more consistent supply of trained workers will help Eagle Creek better prepare for growth if a customer suddenly needs to ramp up, Behrendt said.
"If we're at a major health care organization and they ask us, 'Can you scale up 50 or 100 or 200 people?' that becomes the issue," he said. "What you need are trained individuals."
Companies since the recession of 2007-2009 are investing more in technology and are looking to get closer to their customers, whether through mobile apps or social media. All of those efforts are underpinned with technology, so companies want their contract IT consultants to better understand their businesses, said Behrendt, who has a 25-year background in offshore services.
That's difficult with faraway consultants, so a growing number of companies that are expanding are now demanding U.S.-based help.
Behrendt said Eagle Creek's model has worked well in the Dakotas, so the company is committed to the two states.
"The pendulum is swinging back, and it's creating a supply and demand issue in the United States," he said. "Our approach to it is South Dakota is as good as any place in the United States to provide these jobs."
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