According to a report by Fairfax newspapers, MacDonnell Shire Council has planned to use an Indian call centre to deal with local administration for territory communities.
It has reportedly committed Australian dollar 100,000 for the centre to monitor rent and rubbish collection.
Council chief executive Graham Taylor has confirmed that the Chennai-based company will manage housing maintenance, tenancy, outstation, electricity and waste services for the next two years, but said it was not a call centre, an ABC report said on Monday.
Taylor said foreign staff were cheaper and it prevented council from having to seek handouts from other levels of government.
He said the shire does concentrate employment in the local area and 77 per cent of its staff are indigenous.
However, Federal Indigenous Affairs Minister Jenny Macklin said she was extremely concerned, while Northern Territory Minister for Local Government Malarndirri McCarthy said she does not support the plan to outsource some of its administrative functions to foreign companies.
McCarthy said the shire should take immediate action to review this proposal and focus on the development of its local workforce.
McCarthy said her department is investigating whether the shire has breached its procurement processes and taking immediate action to review the proposal.