News Feature

IT Outsourcing Services Offered by American Indians

By Tom Field

October 01, 2001 — CIO —

In Belcourt, N.D., just south of Canada, the Turtle Mountain Band of Chippewa Indians sells data-entry services to the U.S. Department of the Treasury and the Internal Revenue Service.

On the open prairie in Eagle Butte, S.D., the Cheyenne River Sioux digitize old medical journals for the National Library of Medicine.

And in Fort Duchesne, Utah, due east of Provo, the Northern Ute Indian Tribe has partnered with Oracle to sell software and services to federal and commercial clients.

Onshore outsourcing options?that’s what these American Indian tribes are offering (see "Homegrown Talent," Page 94). It’s the same low-cost and high-value work (we’re talking data processing, imaging and call center support, mainly) that is traditionally found only offshore in such places as India, Ireland and the Philippines. These tribes have emerged as perhaps the only viable onshore alternative for CIOs seeking bargain-basement

IT services. Fortified by sound IT infrastructure and a desire to do the IT grunt work that larger onshore outsourcing vendors overlook, these tribal-owned businesses offer all the advantages of the offshore companies?without the challenge of language barriers, remote management or security-sensitive work that can’t be sent overseas.

They’ve also got a hell of a marketing angle: historically disadvantaged people make good. No fewer than four consulting companies?just as many as there are Indian outsourcing vendors?are out drumming up business for the tribes. They argue that outsourcing to the reservations isn’t just an opportunity to get baseline IT services cheap; it’s a chance to bridge the digital divide, create jobs, build communities and raise aspirations for these American Indians, who were forced onto reservations 100 years ago.

And the pitch is working. Quietly, American Indian outsourcers are scoring significant contracts with federal agencies that are encouraged (but not required) by policy to hire minority-owned companies, and they’re even racking up commercial deals with businesses that see no other onshore option and are swayed by the value proposition and the social arguments. "From a human perspective, it feels good doing something for the Indian reservations," says Virginia Callahan, senior practice director with Oracle’s federal consulting group, which has served as a mentor and partner to the Northern Ute Tribe’s year-old Uinta River Technology (URT) company.

But the challenge for the tribes is twofold: proving their capabilities in the cutthroat outsourcing marketplace and overcoming people’s preconceptions of what the American Indians can and cannot do.

Offshore/Onshore Pioneers

Bill Lewis, senior international liaison for The LexisNexis Group, the global multimedia provider of news and information, is preparing to bring some work back onshore and into the hands of the American Indian outsourcers. Conversion engineering?transferring information from a variety of print and electronic origins to a standard, Web-based format?is the bulk of the work that the Miamisburg, Ohio-based company outsources. Originally, this work went overseas to India, where the company realized savings of 40 percent to 60 percent because of the lower labor cost. But management of the offshore contracts was made difficult by language and time barriers. Also, because of security restrictions, some of LexisNexis’s legal and government information simply could not be sent offshore, forcing the company to retain that conversion engineering in-house.