VERMILLION, S.D. | Two hundred information technology consulting positions are coming to Vermillion as part of a Minnesota-based company's strategy to keeping the jobs from being sent overseas.
Eagle Creek Software Services, which provide Web and app development and technical support to Fortune 1500 firms, will create 200 jobs in a $10 million technology center in Vermillion, where the company also will partner with the University of South Dakota to help train potential hirees.
Eagle Creek's tech center, planned for a three-acre site in Vermillion's Riverbend Business Park, along the Highway 50 bypass, is expected to open this spring. Construction has begun on the new center, and 40 to 50 people are already working for Eagle Creek out of temporary space at the university, said Simon Boardman of Minneapolis, vice president-marketing for Eagle Creek.
“We’ll be taking delivery in May or June,” he said, noting that the grand opening will be held later, possibly in July
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Gov. Dennis Daugaard joined Eagle Creek CEO Ken Behrendt in announcing the project on March 13, 2013.
While state incentive packages often include training money, Daugaard said 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 USD and the students who come here," Daugaard said during a news conference in Vermillion.
The project is an expansion of Eagle Creek's "Dakota" model of doing business in the lower-cost states of South Dakota and North Dakota as an alternative to businesses outsourcing IT to India or other overseas sites.
“What we’re seeing,” Boardman said, “is that demand is swinging back somewhat to the U.S. in terms of being able to provide the technical and consulting expertise that has been associated more with offshore locations. So we’re able to be more competitive by how we partnered with all the investors like the state and communities and be an example in the community of Vermillion and the university and the university system. They provided us with a skilled workforce that is able to provide the consulting and technical expertise.”
Behrendt said there are numerous hidden costs associated with sending development jobs overseas. Besides 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 its consultants or wants 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 at the new conference. "That's what the business and corporate world is realizing."
As part of its expansion, Eagle Creek will add 150 and 100 jobs at its centers in Pierre, S.D., and Valley City, N.D. Additional positions will be added in other South Dakota cities over the next three to five years, he said.
The Pierre center, which opened in 2008, started Eagle Creek's relationship with the state of South Dakota that led to development of the USD and Vermillion project. The Governor's Office of Economic Development, the state Board of Regents, USD and Vermillion Area Chamber of Commerce all collaborated on it.
The newly formed IT Consultant Academy at USD will offer eligible students scholarships and a path to full-time employment with Eagle Creek. Beginning this fall, the academy will offer a four-course certificate program for undergraduates and a two- and three-year master's degree.
Lauire Becva, the university's senior associate provost, said prospective students should have a background in computer science, business or science and engineering and a high technical aptitude.
"It's a strategy to grow professional and competitive jobs in South Dakota and to grow our own work force," Becvar said. "It's a great example of a university customizing higher eduction to meet the needs of business and industry."
Graduates of the certificate program will be eligible for free tuition and fees, three-month paid internship and a job interview. The IT consultant positions pay between $40,000 and $45,000 annually. Graduates of the master's program could command salaries between $50,000 and $60,000.
For the new Vermillion jobs, Behrendt said, Eagle Creek will recruit graduates from colleges from around the country. New hires must complete the company's own training, which lasts four to six months.
In Pierre, he said, about 80 percent of the company's workforce was recruited from outside the region, Behrendt said he expects that percentage to be somewhat lower.
Steve Howe, executive director of the Vermillion Area Chamber and Development Co., said the project will bring multiple benefits to the city of about 10,700. Among others, it has the potential to redefine the local economy, creating more white-collar job opportunities for USD undergraduates.
"Being able to maintain those students in the community after they graduate is what we really need," Howe said.
Journal Business Editor Dave Dreeszen and The Associated Press contributed to this story.
