can we give limited Admin access to external organization accounts to create users for their entity?
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If by external organization you mean someone who is trying to access the Appian data using APIs, then creating a process model and starting that model from an API that is triggered by the Ext Org will be the way to go.
If the Ext Org is just another user who can log in to Appian, then also you will have to create a PM and add a way to trigger it from the front end. Maybe a record action or something.