10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2005

or

¨ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 0-20807

ICT GROUP, INC.

(Exact name of registrant as specified in its charter.)

Pennsylvania	23-2458937
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
100 Brandywine Boulevard Newtown, PA	18940
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number including area code: (267) 685-5000

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $.01

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    YES  ¨    NO  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    YES  ¨    NO  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    YES  x    NO  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Exchange Act Rule 12b-2).

Large Accelerated Filer  ¨            Accelerated Filer  x            Non-accelerated Filer  ¨

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    YES  ¨    NO  x

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2005 was approximately $42,234,265. Such aggregate market value was computed by reference to the closing price of the Common Stock as reported on the National Market of The Nasdaq Stock Market on June 30, 2005. For purposes of this calculation only, the registrant has defined affiliates as consisting of solely all directors, executive officers and beneficial owners of more than ten percent of the common stock of the Company. In making such calculation, registrant is not making a determination of the affiliate or non-affiliate status of any holders of shares of Common Stock. The number of shares of the registrant’s Common Stock outstanding as of March 1, 2006 was 12,795,210.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive Proxy Statement relating to its 2006 Annual Meeting of Shareholders, to be filed no later than April 14, 2006 are incorporated by reference in Part III hereof.

Unless the context indicates otherwise, “ICT Group,” “ICT,” the “Company,” “we,” “our,” and “us” refer to ICT Group, Inc. and where appropriate, one or more of its subsidiaries.

ICT GROUP, INC.

FORM 10-K ANNUAL REPORT

For Fiscal Year Ended December 31, 2005

TABLE OF CONTENTS

PART I		1
ITEM 1.	Business	1
ITEM 1A.	Risk factors	8
ITEM 1B.	Unresolved staff comments	14
ITEM 2.	Properties	14
ITEM 3.	Legal proceedings	14
ITEM 4.	Submission of matters to a vote of security holders	15
PART II		16
ITEM 5.	Market for registrant’s common equity, related stockholder matters and issuer purchases of equity securities	16
ITEM 6.	Selected financial data	16
ITEM 7.	Management’s discussion and analysis of financial condition and results of operations	17
ITEM 7A.	Quantitative and qualitative disclosures about market risk	29
ITEM 8.	Financial statements and supplementary data	30
ITEM 9.	Changes in and disagreements with accountants on accounting and financial disclosure	30
ITEM 9A.	Controls and procedures	30
ITEM 9B.	Other information	30
PART III		30
ITEM 10.	Directors and executive officers of the registrant	30
ITEM 11.	Executive compensation	30
ITEM 12.	Security ownership of certain beneficial owners and management and related stockholder matters.	30
ITEM 13.	Certain relationships and related transactions	31
ITEM 14.	Principal accountant fees and services	31
PART IV		31
ITEM 15.	Exhibits and financial statement schedules	31
	Signatures	35
	Exhibit Index	36

This document contains certain forward-looking statements that are subject to risks and uncertainties. Forward-looking statements include statements relating to the appropriateness of our reserves for contingencies, the realizability of our deferred tax assets, our belief regarding our accounting policies, our ability to finance our operations and capital requirements into 2007, our ability to finance our long-term commitments, certain information relating to outsourcing trends as well as other trends in the outsourced business services industry and the overall domestic economy, our business strategy including the markets in which we operate, the services we provide, our ability to attract new clients and customers, the benefits of certain technologies we have acquired or plan to acquire and the investment we plan to make in technology, our plans regarding international expansion, the implementation of quality standards, the seasonality of our business, variations in operating results and liquidity, as well as information contained elsewhere in this document where statements are preceded by, followed by or include the words “will,” “should,” “believes,” “plans,” “intends,” “expects,” “anticipates” or similar expressions. For such statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The forward-looking statements in this document are subject to risks and uncertainties that could cause the assumptions underlying such forward-looking statements and the actual results to differ materially from those expressed in or implied by the statements.

All forward-looking statements included in this report are based on information available to us as of the date of this report, and we assume no obligation to update these cautionary statements or any forward-looking statements.

PART I

ITEM 1. BUSINESS

We are a leading global provider of outsourced customer management and business process outsourcing solutions. Our comprehensive, balanced mix of sales, service, marketing and technology solutions includes: customer care/retention, technical support and customer acquisition, cross-selling/upselling as well as market research, database marketing, data capture/collection, e-mail management, collections and other back-office business processing services.

We also offer a comprehensive suite of Customer Relationship Management (CRM) technologies, which are available on a hosted basis, for use by clients at their own in-house facilities, or on a co-sourced basis, in conjunction with ICT Group’s fully integrated, Web-enabled contact centers. These technologies include: automatic call distribution (ACD) voice processing, interactive voice response (IVR) and advanced speech recognition (ASR), Voice over Internet Protocol (VoIP), contact management, automated e-mail management and processing, sales force and marketing automation, alert notification and Web self-help, for the delivery of consistent, quality customer care across multiple channels.

Industry Overview

Outsourced business services have evolved significantly in recent years. Competitive pressures, advancements in technology and an accelerating trend toward outsourcing have resulted in the demand for more complex, interactive and highly customized customer management solutions, using a combination of onshore, near-shore and offshore facilities. Outsourced service providers are now expected to serve more as a business “partner,” offering their clients value-added strategies rather than traditional commodity-based customer interaction and sales and service support applications.

Our Approach

We have distinguished ourselves in the industry by having a balanced growth strategy, vertical industry expertise, a customer-centric focus, a comprehensive portfolio of services, and substantial resources across global operations and technology infrastructure to support future expansion. We continue to expand our worldwide network of state-of-the-art operations centers in order to deliver globally integrated, end-to-end customer sales, service, marketing, technology and business services solutions to meet the specific needs of our clients.

With over 20 years’ expertise in outsourced customer management services, ICT Group is well positioned for continued growth in a sizeable and growing market. By leveraging our experienced management team, proven business model, global infrastructure, operating and technology investments and expertise in target industries, management intends to advance our position as a leading global supplier of integrated customer management and business process outsourcing solutions by:

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• Growing Services that Leverage Infrastructure. Large multinational companies are looking for a broader complement of services from their external service providers. We will focus on expanding our higher-margin, value-added services, helping to differentiate ICT Group from our competitors, and continue to develop our back-office business process outsourcing capabilities, to include such end-to-end services as claims processing, member enrollment, welcome services and other industry-specific back-office business support services across targeted vertical industries. We continue to increase revenue from our IVR services for both inbound response and outbound alert applications. We also provide back-office data capture, document imaging, mail processing and time-sensitive transaction printing and fulfillment services. We plan to grow these services as well as develop or acquire new services to expand opportunities with both existing and prospective clients.

• Focusing on Targeted Vertical Markets. We will focus on exploiting opportunities in the financial services, healthcare, telecommunications, technology, energy services, business and consumer and government markets. We will pursue opportunities both directly as well as through strategic relationships to develop opportunities in these targeted verticals as well as explore and develop new vertical markets.

• Increasing International Presence. We plan to continue expanding our offshore operations in the Philippines. As of the end of 2005, we had two contact centers in the Philippines and began operations in a third facility in early 2006. Our offshore services in the Philippines provide a significant cost savings for our clients and will help us continue to attract business from new and existing customers. We currently provide services to customers in the United States, Europe, Mexico, Canada and Australia. We intend to expand our operations in these areas, as well as explore additional geographic markets in Latin and South America, Europe and Asia.

• Developing Strategic Alliances and Acquisitions. We intend to continue considering strategic alliances with, and acquisitions of, domestic and international businesses that provide complementary outsourced business marketing and technology-based services. This will enable us to provide a broader mix of services to our clients while minimizing investment considerations.

• Maintaining Technology Investment. We intend to continue making substantial investments in technology to maintain our information technology (“IT”) competitive advantage. We have been an industry leader in the implementation of innovative contact center and CRM technologies resulting in improved operating efficiencies and cost savings for our clients. We have centralized our contact center technologies in North America into three major hubs, which allows us to provide additional security and redundancy, regardless of where clients programs are operated. We will continue this focus on leading-edge technology, helping to further streamline clients’ operations and yield improved operating margins and performance.

• Continuing Commitment to Quality Service. We have consistently emphasized quality service and extensive employee training by investing in quality assurance personnel and procedures. We intend to continue our commitment to providing quality service as well as our quality-focused service process engineering and continuous process development initiatives, as demonstrated by our certification with ISO-9001:2000 standards.

Our Services

Our services are provided through contact centers located across the globe and include customer care/retention, technical support and customer acquisition, cross-selling/upselling as well as market research, database marketing, data capture/collection, e-mail management, collections and other back-office business processing services and CRM technology hosting on behalf of customers operating in our target industries. Recent technological advancements have allowed us to better manage production output at each operations center by routing customer interactions to different centers depending on required skills and capacity. The technology assets may be located at a different physical location or country than the contact center. Accordingly, many of our contact centers are not limited to performing only one of the above-mentioned services. Rather, they can perform a variety of different services for a number of different customers/programs.

We offer the following services to our clients:

Customer Care Services. We provide outsourced customer care support services across a broad range of industries. Depending on client needs, we will assume sole or shared responsibility for the management of a client’s customer care operation – at the client’s facility or at one of our contact centers. As of December 31, 2005, we operated contact centers in the U.S., Canada, England, Ireland, Australia and the Philippines, which provided customer care services for our clients. Certain contact centers in the U.S. provide bilingual English and Spanish services to the Spanish-American marketplace. Our contact centers in Canada provide bilingual English and French services. Our contact centers in Ireland and England provide pan-European, multilingual services supporting the European marketplace.

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Technical Support Services. We provide Tier 1 and Tier II technical support services for IT, telecommunications and consumer electronics companies and computer hardware/peripheral manufacturers, supporting both business- and consumer-based customers. Microsoft Certified Service Engineers (MCSEs) and other non-certified technical support and customer service representatives are utilized, depending upon the complexity of the programs/applications. As of December 31, 2005 we operated contact centers in the U.S., Canada and the Philippines, which provided technical support services for our clients.

Telesales. Our telesales business operation provides telesales support activities primarily for clients in the insurance, financial services and telecommunications industries. As of December 31, 2005 this business is supported by contact centers located throughout the U.S., Canada, Ireland, England, Australia, Mexico, Barbados and the Philippines. Through our network of contact centers in the U.S. we are also able to provide bilingual English and Spanish telesales to the Spanish-American marketplace. Our contact centers in Canada provide bilingual English and French telesales. Our contact centers in Ireland and England provide pan-European, multilingual telesales supporting the European marketplace.

Financial Marketing Services. Through this business organization, we provide vertical industry-specific sales, service and marketing support for retail banking, mortgage and other financial services institutions. As of December 31, 2005, this organization supported our clients from contact centers located in the U.S., Canada and the Philippines.

Medical Marketing Services. Through this business organization, we provide a range of services for the increasingly complex needs of healthcare and pharmaceutical clients. This organization is staffed by dedicated personnel to meet the sophisticated product and customer profiles of specific clients. As of December 31, 2005, this business organization supported clients from multiple contact centers located throughout the U.S.

Marketing Research and Database Marketing Services. This business organization supports other businesses across a range of industries with marketing research, data collection and database marketing services. As of December 31, 2005, this organization supported clients from contact centers in the U.S., Canada and the Philippines.

CRM Technology Services. This business organization provides a comprehensive suite of CRM technologies, including IVR and advanced speech recognition, ACD voice processing, e-mail management and processing, alert notification and other contact management technologies. This organization’s services are available on a hosted basis for use by clients at their own in-house facilities or on a co-sourced basis in conjunction with our fully integrated state-of-the-art customer contact centers.

Additional financial information regarding our segment and geographic areas is presented in Note 15 to our consolidated financial statements included in this Annual Report on Form 10-K.

Target Industries

Our domestic salesforce is organized by specific vertical industries, which enables our sales personnel to develop in-depth industry and product knowledge. Several of the industries that we serve are undergoing deregulation and consolidation, which provides us with additional opportunities as businesses search for cost-effective solutions for their sales, service, marketing and technology-related customer support needs. The industries we target are described below.

Financial Services and Insurance

We provide retail banks, mortgage companies and other financial services organizations with a wide range of services, including card-holder acquisition, active account generation, account balance transfer, account retention, insurance telesales, and customer service. Our Financial Marketing Services operation offers banking services, such as marketing and servicing home equity loans, lines of credit, loan-by-phone, checking and deposit account acquisition, mortgage loans and other traditional banking products.

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Telecommunications

We provide customer service and telesales support for major telecommunications companies, including long distance, cellular, cable, and companies providing billing support services for telecommunications carriers.

Pharmaceutical and Healthcare Services

Through our Medical Marketing Services business organization, we support pharmaceutical and medical device manufacturers, health insurance companies, and other healthcare-related suppliers, for a variety of sales and customer care applications. For example, we provide patient assistance for prescription savings programs, technical/product support for medical device manufacturers and member enrollment services for healthcare insurance companies.

Computer Technology and Consumer Electronics Products and Services

We provide customer service and telesales support for clients in the computer technology and consumer electronics industries. These applications include, but are not limited to, customer service, first-level customer technical support and customer care/retention.

Additional financial information on our industries is presented in Note 14 to our consolidated financial statements included in this Annual Report on Form 10-K.

Technology

We invest heavily in system and software technologies designed to improve operations center productivity thereby lowering the effective cost per contact made or received, and to improve sales and customer service effectiveness by providing our sales and service representatives with real-time access to customer and product information. We believe we were one of the first fully automated teleservices companies and among the first to implement predictive dialing technology for outbound telemarketing and market research, to provide collaborative web browsing services and to provide VoIP capabilities.

Through a global implementation of VoIP, we have established a redundant voice and data network infrastructure that can seamlessly route inbound and outbound voice traffic to our contact centers worldwide.

We utilize a scalable set of UNIX and Windows processors to support our outbound and inbound contact center operations. Dedicated UNIX and Windows processors are used for inbound contact centers, while predictive dialing systems, networked to UNIX and Windows processors at our three corporate data centers, are used for outbound contact centers. The predictive dialing systems support call and data management; the UNIX and Windows processors provide centralized list management, data consolidation, report generation and interfaces with client order processing systems.

We use software to prepare outbound and inbound scripts, manage, update and reference client data files, collect statistical transaction and performance data and assist in the preparation of internal and client reports. This software includes our proprietary list management system (LMS) as well as Siebel’s Contact Management system. The use of the Siebel software as well as Oracle’s database management system provides a scalable and robust suite of applications to support our client’s business needs. We also use a proprietary IVR system that runs on industry standard operating systems and interfaces with our telephony system through Intel’s Dialogic interface cards. This IVR system provides an automated method to handle voice calls and interfaces with Nuance, an industry-leading speech recognition system.

Quality Assurance, Personnel and Training

We place heavy emphasis on the delivery of quality service on calls made or taken on behalf of our clients. This is accomplished through extensive employee training and development programs, augmented with highly developed quality assurance personnel and solid business practices. Our quality assurance and training departments are responsible for the development, implementation and enforcement of policies and procedures used in operating the contact centers. The selection and training of telephone service representatives, training and professional development of operations center management personnel, monitoring of calls and verification and editing of all sales are performed through our Quality Assurance and Training organizations. Through our Quality Assurance department, our internal staff as well as the staff of our clients are able to perform real time on-site and remote call monitoring to maintain quality and efficiency. Sales confirmations are recorded, with the customer’s consent, in

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order to verify the accuracy and authenticity of transactions. Additionally, we are able to provide our clients with immediate updates on the progress of an ongoing program. Access to this data allows our operations management and our clients to identify potential campaign shortfalls and to immediately modify or enhance the program. Digital recording technology has been installed in all of our outbound centers. This installation allows the consolidation of all verification activities into geographically centralized locations and effectively creates a “third party” verification center. Verification results are available to our operations management and our client services management by the end of each calling day. Also, each center can access the recordings for review with supervisory staff or the service representative.

As a result of a successful pilot program, digital recording has been implemented for verification purposes for many of our inbound sales and customer service programs. As with outbound data, inbound, program data is consolidated into an existing Central Verification Center.

Our commitment to providing quality service is further illustrated by our certification with ISO 9001:2000 standards, which are administered by the International Organization for Standardization and represent an international consensus on the essential features of a quality system to ensure the effective operation of a business. All domestic and international sales and service centers are ISO 9001:2000 compliant. Our ISO 9001-2000 certification is at the core of our Quality Manager System, and is the key driver to our process driven / continual improvement orientation.

Employees

Management believes that a key driver of our success is the quality of our employees. We tailor our recruiting and training techniques toward the industries we serve. As part of the setup of each client program, service representatives receive a detailed review of each program in which they are to participate along with training regarding the background, structure and philosophy of the client that is sponsoring the program. As is typical in our business, most of our service representatives are part-time or temporary employees. As of December 31, 2005, we employed 16,174 people, of which 12,888 were part-time or temporary employees. None of our employees are currently represented by a labor union. We consider our relations with our employees to be good.

Clients

We target those companies that we believe have the greatest potential to generate recurring revenue to the Company based on their ongoing direct sales and customer service needs. At December 31, 2005, we provided direct sales, market research and customer service to over 150 clients.

Our customer care clients typically enter into multi-year contractual relationships that may contain provisions for early contract terminations while we generally operate under month-to-month contractual relationships with our telesales clients. The pricing component of a contract is often comprised of a base service charge and separate charges for ancillary services. Our services are generally based upon per-minute or hourly rates. On occasion, we perform services for which we are paid incentives based on completed sales.

For each of the years ended December 31, 2005 and 2003, there were no customers which comprised more than 10% of our revenue. For the year ended December 31, 2004, we had one customer, Virgin Mobile USA, LLC, which comprised 11% of our revenue. This customer also accounted for 13% of our total accounts receivable at December 31, 2004. For the years ended December 31, 2005, 2004 and 2003, our top ten customers accounted for 48%, 50% and 55% of our total revenue, respectively.

Competition

The CRM services industry is very competitive and our principal competition in our primary markets comes from large service organizations, including, but not limited to, Convergys Corporation, SITEL Corporation, Sykes Enterprises, TeleTech Holdings, Inc., APAC TeleService, Inc. and West Corporation. We also compete with numerous independent firms, some of which are as large or larger than we are, as well as the in-house operations of many of our clients or potential clients. In addition, many businesses that are significant consumers of these services utilize more than one service firm at a time and may reallocate work among various firms from time to time. Some of this work is contracted on an individual project basis, with the result that we and other firms seeking such business are required to compete with each other frequently as individual projects are initiated. Furthermore, we believe there is a trend among some businesses toward outsourcing the management of their contact centers to large, multi-service competitors, some of which may be substantially larger with greater financial resources than ICT.

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Quarterly Results and Seasonality

We have experienced and expect to continue to experience quarterly variations in operating results, principally as a result of the timing of client programs (particularly programs with substantial amounts of upfront project setup costs), the commencement and expiration of contracts, the timing and amount of new business we generated, our revenue mix, the timing of additional selling, general and administrative expenses to support the growth and development of existing and new business units, competitive industry conditions and litigation costs. Our results in the third quarter of 2005 reflected $4.1 million of insurance proceeds related to the Shingleton litigation. Our results in the third quarter of 2005 also reflected certain discreet income tax items, which had the effect of reducing our income tax provision in the quarter.

Our business tends to be strongest in the fourth quarter due to the high level of client sales and service activity for the holiday season. The fourth quarter of 2004, however, was impacted by the settlement of the Shingleton litigation. Our fourth quarter results in 2004 reflect $7.7 million of expenses related to the settlement of the Shingleton litigation, net of insurance proceeds of $2.7 million. During the first quarter, the business generally levels off from the previous quarter as a result of reduced client sales and service activity. The level of business for our other quarters can fluctuate as a result of other factors, specifically the timing of contract wins and program starts, as well as approximately 70% of our revenue being generated from service programs, which generally have less seasonality than sales programs.

Government Regulation

Both the Federal and state governments regulate telemarketing sales practices in the U.S. The Federal Telephone Consumer Protection Act of 1991 (the TCPA), enforced by the Federal Communications Commission (the FCC), imposes restrictions on unsolicited telephone calls to residential telephone subscribers. Under the TCPA, it is unlawful to initiate telephone solicitation to residential telephone subscribers before 8:00 A.M or after 9:00 P.M. local time at the subscriber’s location, or to use automated telephone dialing systems or artificial or pre-recorded voices to certain subscribers. Additionally, the TCPA requires telemarketing firms to develop a written policy implementing a “do-not-call” registry, and to train its telemarketing personnel to comply with these restrictions. The TCPA creates a right of action for both consumers and state attorneys general. A court may award actual damages or minimum statutory damages of $500 for certain violations, which may be trebled for willful or knowing violations. Currently, we train our service representatives to comply with the regulations of the TCPA and program our call management system to avoid initiating telephone calls during restricted hours or to individuals maintained on an applicable do-not-call list.

The Federal Trade Commission (the FTC) regulates both general sales practices and telemarketing specifically. Under the Federal Trade Commission Act (the FTC Act), the FTC has broad authority to prohibit a variety of advertising or marketing practices that may constitute “unfair or deceptive acts and practices.” Pursuant to its general enforcement powers, the FTC can obtain a variety of types of equitable relief, including injunctions, refunds, disgorgement, the posting of bonds, and bars from continuing to do business, for a violation of the acts and regulations it enforces.

The FTC also administers the Federal Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994 (the TCFAPA). Under the TCFAPA, the FTC adopted the Telemarketing Sales Rule (TSR), which prohibits deceptive, unfair or abusive practices in telemarketing sales. Generally, the TSR prohibits misrepresentations of the cost, quantity, terms, restrictions, performance or characteristics of products or services offered by telephone solicitation or of refund, cancellation or exchange policies. The TSR also regulates the use of prize promotions in telemarketing to prevent deception and require that a telemarketer identify promptly and clearly the seller on whose behalf the telemarketer is calling, the purpose of the call, the nature of the goods or services offered and, if applicable, that no purchase or payment is necessary to win a prize. The TSR also requires that telemarketers maintain records on various aspects of their business. Analogous restrictions apply to industries regulated by the FCC.

The FTC amended the TSR with changes that became effective on March 31, 2003. The changes to the TSR imposed new limits on the use of predictive dialers, the technology that automatically dials a certain number of telephone numbers and routes the connected calls to telephone sales representatives as they become available. Although this technology utilizes complex algorithms in an attempt to ensure that no consumers are contacted without available telephone sales representatives to handle the calls, this situation occasionally occurs, resulting in what is known as an “abandoned” call. The new regulations place limits on the permissible numbers of such abandoned calls, and requires that telemarketers play a recorded message to all consumers who receive such calls. These regulations also create new limitations on the use of credit card account numbers and other consumer

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information, and require telemarketers to transmit caller identification information to consumers. These regulations also require the transmission of a telephone number and when made available by the telemarketer’s carrier, the name of the telemarketer or seller.

Also in 2003, the Do-Not-Call Implementation Act (the DNC Act) was signed into law. In response to the requirements set forth by the DNC Act, the FCC amended its TCPA rules. The amended rules became effective on June 26, 2003. The amendments, which were similar to the changes made to the TSR, authorized the creation of a National Do-Not-Call registry, placed a limit on the number of calls abandoned by the predictive dialer and required the transmission of a telephone number to be shown by caller ID.

In response to these changes in the TSR and the TCPA, we appointed a Compliance Manager who is responsible for managing the Compliance Committee that ensures our compliance with the new regulations. The regulations associated with the National Do-Not-Call registry were enforced by the Federal government beginning October 1, 2003.

Most states have enacted statutes similar to the TCFAPA generally prohibiting unfair or deceptive acts and practices. Additionally, some states have enacted laws and others are considering enacting laws targeted directly at telemarketing practices. For example, telephone sales in certain states are not final until a written contract is delivered to and signed by the buyer, and such a contract often may be canceled within three business days. At least one state also prohibits telemarketers from requiring credit card payment, and several other states require certain telemarketers to obtain licenses, post bonds or submit sales scripts to the state’s attorney general. Under the more general statutes, depending on the willfulness and severity of the violation, penalties can include imprisonment, fines and a range of equitable remedies such as consumer redress or the posting of bonds before continuing in business. Many of the statutes directed specifically at telemarketing practices provide for a private right of action for the recovery of damages or provide for enforcement by state agencies permitting the recovery of significant civil or criminal penalties, costs and attorneys’ fees. We cannot be assured that any such laws, if enacted, will not adversely affect or limit our current or future operations.

In addition to the laws regulating telephone sales activities, there are federal and state laws governing consumer privacy, such as the Gramm-Leach-Bliley Act and the Health Insurance Portability and Accountability Act. In addition, the USA PATRIOT Act imposes some requirements that affect some of our clients in the financial services sector.

The various industries that we serve are also subject to government regulation. For example, our work on client programs involving the sale of insurance products implicates state licensing and regulatory requirements. In addition, our work on behalf of our pharmaceutical clients requires knowledge of Food and Drug Administration regulations regarding the reporting of adverse events.

In addition to Federal regulation, activity at the state and Federal level regarding laws that impact the teleservices industry has intensified over the past several years. States have enacted a variety of laws regulating marketing via telephone. Do-not-call lists, restricted hours or days, registration, request to continue solicitation and no rebuttal laws are common in many states. We have developed a system to facilitate compliance with all of these laws. Our Compliance Committee, comprised of members from our Quality Assurance, Operations, Client Services, Legal and IT departments, is responsible for compliance. Our participation on the Direct Marketing Association and the American Telemarketing Associates Legislative Committees helps to enable our timely notification of proposed legislation.

Internationally, the various countries outside of the United States in which we have operations generally have less detailed regulatory frameworks for teleservices activities. Instead, many of these countries have laws and/or regulations regulating consumer privacy and the collection and use of consumer data. The most prominent of these is the European Union’s Data Privacy Directive.

In Canada, the Canadian Radio-Television and Telecommunications Commission enforces a variety of rules affecting the teleservices industry, including regulations on unsolicited communications via automatic dialing and announcing devices. On January 1, 2004, the Personal Information Protection and Electronic Documents Act (“PIPEDA”), a federal law regulating the collection and use of an individual’s personal information, became effective. PIPEDA requires, among other things, the establishment of a privacy policy and procedure and the appointment of a privacy officer. Our legal and compliance groups are currently monitoring provincial legislative activity in this area, as PIPEDA permits individual provinces to enact their own, more stringent privacy laws.

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Investor Information

You can access financial and other information in the Investors section of our website. The website address is www.ictgroup.com. We make available through our website, free of charge, copies of our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the SEC. In addition, we make available through our website, free of charge, copies of our Code of Ethics for the Chief Executive Officer and Senior Financial Officers and our Code of Conduct. To the extent that there are any waivers of, or amendments to, either code we may report the waiver or amendment in the Investors section of our website. These documents are also available in print form to any shareholder who requests them. Requests should be directed to the Legal Department of ICT Group, Inc., 100 Brandywine Boulevard, Newtown, PA 18940. The information on the website listed above is not and should not be considered part of this Annual Report on Form 10-K and is not incorporated by reference in this document. This website is only intended to be an inactive textual reference. You can also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street N.E., Washington, D.C. 20459. You can contact the Public Reference Room at 1-800-SEC-0330. Because we file our documents electronically with the SEC, you can also access them at www.sec.gov.

We were incorporated in the Commonwealth of Pennsylvania in 1987. Our executive offices are located at 100 Brandywine Boulevard, Newtown, PA 18940. Our telephone number is (267) 685-5000.

ITEM 1A. RISK FACTORS

An investment in our Company involves a substantial risk of loss. You should carefully consider the risks described below together with all of the other information included in this Annual Report on Form 10-K before making an investment decision. The risks and uncertainties described below are not the only ones facing us.

RISKS RELATING TO OUR BUSINESS

We may not be able to manage our growth effectively, which could adversely affect our results of operations.

We have experienced rapid growth over the past few years and currently expect to continue a high rate of growth. Rapid growth places a significant strain on our management, operations and resources. Our future performance and profitability will depend on our ability to:

• build our infrastructure to meet the demands of our clients;

• successfully recruit, train and retain qualified personnel in a cost-effective manner;

• maintain state-of-the-art technology to compete effectively in the CRM industry;

• effectively oversee and manage our CRM contact centers as we expand geographically, including internationally;

• effectively manage the growth and implementation of our customer contact centers;

• successfully introduce newer cost-effective, offshore, near-shore and home-shore CRM solutions;

• select and serve new vertical markets;

• successfully expand our service offerings from our core customer relationship management business to include enhanced technology, marketing and business process outsourcing services;

• successfully integrate any acquired businesses;

• manage our business in light of general economic conditions and conditions which may affect in particular our clients and other companies in the markets we serve;

• manage our operating costs as we expand and grow our business; and

• maximize the income tax benefits from the locations in which we operate under tax holidays.

8

If we are unable to keep pace with technological changes, our business will be harmed.

Our business is highly dependent on our computer and telecommunications equipment and software capabilities. Our failure to maintain the competitiveness of our technological capabilities or to respond effectively to technological changes could have a material adverse effect on our business, results of operations or financial condition. Our continued growth and future profitability will be highly dependent on a number of factors, including our ability to:

• expand our existing solutions offerings;

• achieve cost efficiencies in our existing CRM contact center operations;

• introduce new solutions that leverage and respond to changing technological developments; and

• stay current with technology advances.

There can be no assurance that technologies or services developed by our competitors or vendors will not render our products or services non-competitive or obsolete, that we can successfully develop and market any new services or products, that any such new services or products will be commercially successful or that the integration of automated customer support capabilities will achieve intended cost reductions. In addition, the inability of equipment vendors and service providers to supply equipment and services on a timely basis could harm our operations and financial condition.

Our results of operations may be subject to significant fluctuations.

Our quarterly and annual operating results have fluctuated in the past and may vary in the future due to a wide variety of factors, including:

• the commencement and expiration or termination of contracts;

• our revenue mix;

• the amount and timing of new business;

• the impact of litigation and associated costs;

• the financial strength of our clients and the collectibility of our receivables;

• our ability to successfully open new customer relationship management contact centers or to expand existing centers in a timely fashion;

• the timing of additional selling, general and administrative expenses;

• competitive conditions in our industry;

• our sources of pre-tax income, which will impact our overall effective tax rate; and

• changes in statutory income tax rates and tax laws in the jurisdictions we operate.

Historically, our business has been strongest in the fourth quarter due to the high level of client sales activity during the fall holiday season. In the past, during the first quarter, CRM services activity generally leveled off or slowed from the previous quarter as a result of reduced client sales activity and client transitions to new marketing programs during the first quarter of the calendar year. In addition, we have generally expanded our operations in the first and third quarters, without a commensurate increase in revenues in those quarters, to support anticipated business growth beginning in the second and fourth quarters, respectively. However, more recently, we have experienced quarterly fluctuations in our business as a result of other factors, such as the timing of demand for the particular services we offer in the specific geographical areas we service.

Due to these factors, our quarterly revenues, expenses and results of operations could vary significantly in the future. You should take these factors into account when evaluating past periods and, because of the potential variability in our quarterly results, you should not rely upon results of past periods as an indication of our future performance. In addition, because our operating results may vary significantly from quarter to quarter, results may not meet the expectations of securities analysts and investors, and this could cause the price of our common stock to fluctuate significantly.

9

Our contracts often are short-term or may be subject to early termination by our clients, which could cause our operating results to fluctuate.

We generally operate under month-to-month contractual relationships with our teleservices clients. The potentially brief duration of certain teleservices programs we implement for clients could cause our operating results to fluctuate. In addition, while our customer care management services unit generally enters into longer-term contractual relationships, those contracts often provide for early termination at the client’s discretion. Certain of those contracts require the client to pay a contractually agreed amount in the event of early termination, but others do not. We cannot assure you that we will be able to collect such amount or that such amount, if received, will sufficiently compensate us for our investment in the canceled program or for the revenues we may lose as a result of early termination.

We generate a significant portion of our revenue from a small number of major clients.

For the year ended December 31, 2005, our top ten clients accounted for 48% of our total revenue. The loss of one of these clients or the failure to maintain the current service level volumes for these customers could have a material adverse effect on our business, financial condition and results of operations. Many of our contracts are cancelable by the customer with limited notice, therefore these contracts do not necessarily ensure that we will generate a minimum level of revenue to cover our fixed operating costs.

We depend on particular industries for a majority of our revenues.

We currently generate a majority of our revenues from clients in the financial services, healthcare and telecommunications industries. Our growth and financial results are largely dependent on continued demand for our services from clients in these industries and current trends in these industries to outsource certain CRM services. If any of these industries experience a downturn, our clients in these sectors may do less business with us, or they may elect to perform the services provided by us in-house. If there are any trends in any of these industries to reduce or eliminate the use of outsourced CRM services, our financial results could be negatively affected. Our revenue, by industry is as follows:

	For the years ended December 31,
	2005		2004		2003
Financial Services and insurance	51	%	52	%	53	%
Telecommunications & information technology	29	%	32	%	33	%
Pharmaceutical and health care	13	%	10	%	10	%
Other	7	%	6	%	4	%

We may be unable to cost-effectively hire or retain qualified personnel, which could materially increase our costs.

Our business is labor intensive and is characterized by high personnel turnover, particularly at new contact centers. Most of our employees receive modest hourly wages and work part time. A higher turnover rate among our employees would increase our recruiting and training costs and decrease operating efficiencies and productivity. Some of our operations require specially trained employees and growth in our business will require us to recruit and train qualified personnel at an accelerated rate from time to time. We may not be able to successfully hire, train and retain sufficient qualified personnel to adequately staff for existing business or future growth, particularly when we undertake new client relationships in industries in which we have not previously provided services. In addition, a significant portion of our costs consists of wages paid to hourly workers. An increase in hourly wages, costs of employee benefits or employment taxes could materially adversely affect us.

Our profitability will be adversely affected if we do not maintain sufficient capacity utilization.

Our profitability is influenced significantly by how we utilize our workstation capacity. We attempt to maximize utilization during all periods. However, because much of our business is inbound, we typically experience significantly higher utilization during peak (weekday) periods than during off-peak (night and weekend) periods. In addition, we have experienced, and in the future may experience, at least in the short-term, idle peak period capacity when we open a new customer interaction center or terminate or complete a large client program. From time to time we assess the expected long-term capacity utilization of our centers. Accordingly, we may, if deemed necessary, consolidate or shutdown under-performing centers in order to maintain or improve targeted utilization and margins. There can be no assurance that we will be able to achieve or maintain optimal customer interaction center capacity utilization.

10

Interruptions or failures of our technology infrastructure could harm our business and reputation.

We are highly dependent on the stability of our computer and communications equipment, systems and software. These systems could be interrupted by natural disasters, power losses, operating malfunctions or computer viruses and other disruptions caused by unauthorized or illegal access to our systems. If an interruption occurs, the contracts that we have with our clients may provide for damages and for termination or re-negotiation. Our property damage insurance may not adequately compensate us for any losses we may incur. Although we have put in place a disaster recovery program, any interruption in or failure of our technology equipment systems could have a material adverse effect on our business.

A significant interruption in telephone service could harm our business.

Any significant interruption in telephone service or developments that could limit the ability of telephone companies to provide us with increased capacity in the future could harm our existing operations and prospects for future growth.

Any future acquisitions we decide to undertake will involve risks.

We have grown our business primarily through internal expansion, and we expect to continue our growth through both internal expansion and selective acquisitions of companies that would augment our service offerings, facilitate our entry into new sectors and/or geographic markets and otherwise expand our efforts in the CRM business. We will not be able to acquire other businesses if we cannot identify suitable acquisition opportunities, reach mutually agreeable terms with acquisition candidates or obtain additional financing, if amounts in excess of the availability under our existing credit facility are necessary, to pay for any acquisitions that we undertake. The negotiation of potential acquisitions as well as the integration of acquired businesses could require us to incur significant costs and cause diversion of our management’s time and resources. Future acquisitions by us could result in:

• dilutive issuances of equity securities;

• a decline in our operating results;

• incurrence of debt and contingent liabilities;

• recording of goodwill and other intangibles that could become impaired; and

• other acquisition-related expenses.

Some or all of these items could have a material adverse effect on our business. Any businesses we acquire in the future may not generate sales and profitability sufficient to justify our investment. If we fail to successfully integrate an acquired business, we may not be able to realize the synergies we anticipated in valuing that business. In addition, to the extent that consolidation becomes more prevalent in our industry, the prices for suitable acquisition candidates may increase to unacceptable levels and thus limit our ability to grow through acquisitions.

Our international operations are susceptible to business and political risks that could adversely affect our results of operations.

We have business locations in various countries outside the United States, including Canada, Ireland, the United Kingdom, Australia, Mexico, Barbados and the Philippines. As of December 31, 2005, 50% of our employees are located outside the United States and generate a significant amount of our revenue. Additionally, North American companies have created a demand for offshore customer care outsourcing capacity. As a result, we expect to continue expansion through start-up operations and acquisitions in additional countries. Expansion of our existing international operations and entry into additional countries will require management attention and financial resources. In addition, there are certain risks inherent in conducting business internationally including: the imposition of trade barriers, foreign exchange restrictions, longer payment cycles, greater difficulties in accounts receivable collection, difficulties in complying with a variety of foreign laws, changes in legal or regulatory requirements, difficulties in staffing and managing foreign operations, political instability and potentially adverse tax consequences. To the extent we experience these risks, our business and results of operations could be adversely affected.

We conduct our business in various foreign currencies and are exposed to market risk from changes in foreign currency exchange rates and interest rates, which could impact our results of operations and financial condition. While we do attempt to mitigate some of this risk through hedging arrangements, to the extent these arrangements are ineffective we may not be successful in mitigating this risk. We also are subject to certain exposures arising from the translation and consolidation of the financial results of our foreign subsidiaries. A significant change in the value of the dollar against the currency of one or more countries in which we operate may have a material adverse effect on our results of operations.

11

Future litigation may result in significant costs for defense purposes or for settlement purposes, both of which may or may not be covered by our current insurance programs. Litigation may also take away management focus from the business and could significantly impact our financial results.

We disclose that our business, not unlike other businesses, may face litigation from time to time. In 2005, we settled a large class action lawsuit for alleged wage rate violations for $14.75 million. Although this specific litigation was resolved, we cannot predict whether any other material suits, claims, or investigations may arise in the future for similar claims. Irrespective of the outcome of any potential lawsuits or potential actions, claims, or investigations relating to the same or any other subject matter, we may incur substantial defense costs and possibly settlement costs, which may or may not be covered in their entirety by insurance. Litigation may also take away management focus from the business, which, in addition to the costs that we may incur, could result in harm to our business, financial condition, results of operations and cash flows.

Our business could be significantly disrupted if we lose members of our management team.

We believe that our success depends to a significant degree upon the continued contributions of our executive officers and other key personnel, both individually and as a group. Our future performance will be substantially dependent on our ability to retain them. The loss of the services of any of our executive officers, particularly John J. Brennan, our Chief Executive Officer, could prevent us from executing our business strategy.

We may not be able to effectively win business against our competition.

The CRM solutions industry is highly competitive. We compete with:

• the in-house CRM operations of our clients or potential clients;

• other outsourced CRM providers, some of which have greater resources than we have; and

• providers of other marketing and CRM formats and, in particular, other forms of direct marketing such as interactive shopping and data collection through television, the internet and other media.

Many businesses that are significant consumers of CRM solutions use more than one CRM solutions firm at a time and reallocate work among various firms from time to time. We and other firms seeking to perform outsourced CRM solutions are frequently required to compete with each other as individual programs are initiated. We cannot be certain that we will be able to compete effectively against our current competitors or that additional competitors, some of which may have greater resources than we have, will not enter the industry and compete effectively against us. As competition in the industry increases, we may face increasing pressure on the prices for our services.

If the trend toward outsourcing or the growth in the industries we serve decreases, our growth may suffer.

Our growth depends in part on continued demand for our services prompted by the outsourcing trend, as well as continued growth in the industries we serve. If interest in outsourcing wanes because of economic, political, or other conditions, or if there is a significant downturn in the industries in which we operate, our business and our growth could suffer.

Consumer resistance to our services could harm our industry.

As the CRM solutions industry continues to grow, the effectiveness of CRM solutions as a direct marketing tool may decrease as a result of consumer saturation and increased consumer resistance to customer acquisition activities, particularly direct sales.

Government regulation of our industry and the industries we serve may increase our costs and restrict the operation and growth of our business.

Both the United States Federal and various state governments regulate our business and the CRM solutions industry as a whole. The Federal Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994 broadly authorizes the FTC to issue regulations restricting certain telemarketing practices and prohibiting misrepresentations in telephone sales. The FTC regulations implementing this Act are commonly referred to as the Telemarketing Sales Rule. Our operations outside the United States are also subject to regulation. Please refer to Part 1, Item 1: “Government Regulation” of this Form 10-K for more detailed information. In addition to current laws, rules and regulations that regulate our business, bills are frequently introduced in Congress to regulate the use of credit information. We cannot predict whether additional Federal or state legislation will be enacted that regulates our business. Additional Federal or state legislation could limit our activities or increase our cost of doing business, which could cause our operating results to suffer.

12

Several of the industries we serve, particularly the insurance, financial services, pharmaceutical, healthcare and telecommunications industries, are subject to government regulation. We could be subject to a variety of regulatory enforcement or private actions for our failure or the failure of our clients to comply with these regulations. Our results of operations could be adversely impacted if the effect of government regulation of the industries we serve is to reduce the demand for our services or expose us to potential liability. We and our employees who sell insurance products are required to be licensed by various state insurance commissions for the particular type of insurance product sold and to participate in regular continuing education programs. Our participation in these insurance programs requires us to comply with certain state regulations, changes in which could materially increase our operating costs associated with complying with these regulations.

Terrorism and the possibility of further acts of violence or war may have a material adverse effect on our operations.

Terrorist attacks, such as those that occurred on September 11, 2001, the response by the United States and further acts of violence or war may affect the market on which our common stock trades, the markets in which we operate, our operations and profitability and your investment. Further terrorist attacks against the United States or other countries may occur. The potential near-term and long-term effect of these attacks on our business, the market for our common stock and the global economy is uncertain. The consequences of any terrorist attacks, or any armed conflicts that may result, are unpredictable, and we may not be able to foresee events that could have an adverse effect on our business or the trading price of our common stock.

Security and privacy breaches of the systems we use to protect personal data could adversely affect our business, results of operations and financial condition.

Our databases contain personal data of our clients’ customers, including credit card and healthcare information. Any security or privacy breach of these databases could expose us to liability, increase our expenses relating to the resolution of these breaches and deter our clients from selecting our services. Our data security procedures may not effectively address evolving security risks or address the security and privacy concerns of existing or potential clients. Any failures in our security and privacy measures could adversely affect our business, financial condition and results of operations.

Our business may be affected by the success of our clients.

In substantially all of our client programs, we generate revenue based, in large part, on the amount of time our customer service representatives devote to our clients’ customers. Consequently, the amount of revenue generated from any particular client program is dependent upon consumers’ interest in, and use of, the client’s products and/or services. There can be no assurance that our clients will continue to market products and services or develop new products and services that require them to use our services.

We may not be able to adequately protect our proprietary information or technology.

Third parties may infringe upon or misappropriate our trademarks, trade names, trade secrets or other intellectual property rights, which could adversely affect our business, results of operations and financial condition, and litigation may be necessary to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of the proprietary rights of others. The steps we have taken to deter misappropriation of our proprietary information and technology or client data may be insufficient to protect us, and we may be unable to prevent infringement of our intellectual property rights or misappropriation of our proprietary information. Any infringement or misappropriation could harm any competitive advantage we currently derive or may derive from our proprietary rights. In addition, because we operate in many foreign jurisdictions, we may not be able to protect our intellectual property in the foreign jurisdictions in which we operate or others.

Our technology and services may infringe upon the intellectual property rights of others.

Third parties may assert claims against us alleging that we are violating or infringing upon their intellectual property rights. Any claims and any resulting litigation could subject us to significant liability for damages. An adverse determination in any litigation of this type could require us to design around a third party’s patent, license alternative technology from another party or reduce or modify our product and service offerings. In addition, litigation is time-consuming and expensive to defend and could result in the diversion of our time and resources. Any claims from third parties may also result in limitations on our ability to use the intellectual property subject to these claims.

RISKS RELATING TO OUR COMMON STOCK

A Voting Trust controlled by our Chief Executive Officer and one of our directors controls 35% of our outstanding common stock.

A Voting Trust controlled by John J. Brennan, our Chief Executive Officer, and his brother Donald P. Brennan, one of our directors, controls approximately 35% of our outstanding common stock. John J. Brennan and Eileen Brennan Oakley, Trustee of the 1996 and 1997 Brennan Family Trusts, have entered into a voting agreement under which the shares of our common stock held by these Trusts, currently about 7% of our outstanding common stock, shall be voted by unanimous consent with John J. Brennan on all matters involving the election of directors. While this voting agreement is in effect, voting of the shares in the Voting Trust on all matters involving the election of directors shall be by the unanimous consent of Ms. Oakley and John J. Brennan. John J. Brennan controls an additional 16% of our outstanding common stock through shares he personally owns and through various voting agreements he has entered into with our employees. As a result, John J. Brennan and Eileen Brennan Oakley have substantial influence in the election of our directors and John J. Brennan and Donald P. Brennan have substantial influence in determining the outcome of other matters requiring shareholder approval.

If either John J. Brennan or Donald P. Brennan ceases to be one of our affiliates, their substantial holdings could be sold in the public market without restriction, which could then lower the market price of our common stock.

Our stock price has been and may continue to be highly volatile.

From January 1, 2004 through February 28, 2006, the market price of our common stock fluctuated from a low of $6.38 to a high of $23.74. Because much of our common stock is owned by affiliates, the number of shares that is subject to daily trading on the market is limited. Therefore, the volatility of our stock price is exacerbated by relatively low trading volumes. The market price of our common stock may continue to be volatile and may be significantly affected by:

• actual or anticipated fluctuations in our operating results;

• announcements of new services by us or our competitors;

• developments with respect to conditions and trends in our industry or in the industries we serve;

• governmental regulation;

• general market conditions;

• the loss of a significant client or a significant change in the volume of services we provide to a client;

• levels of liquidity in our stock’s trading volumes, and

• other factors, many of which are beyond our control.

These factors may adversely affect the trading price of our common stock, regardless of our actual operating performance, and could prevent you from selling your common stock at or above the price at which you purchased it. In addition, the stock market has, recently and from time to time, experienced significant price and volume fluctuations that have adversely affected the market prices of securities of companies without regard to their operating performances.

13

Anti-takeover provisions in our articles of incorporation, bylaws and Pennsylvania law and the right of our board of directors to issue preferred stock without shareholder approval could make a third-party acquisition of us difficult.

Provisions of our articles of incorporation and bylaws may have an anti-takeover effect and may delay, defer or prevent a tender offer or takeover attempt not approved by our board of directors, including those made at a premium over the prevailing market price of the common stock held by shareholders.

Our classified board of directors, limitations on calling a special meeting of our shareholders and the authority of our board to issue preferred stock and establish certain rights, preferences, privileges, limitations and other special rights thereof without any further vote or action by our shareholders could have the effect of delaying, impeding or discouraging the acquisition of control of us in a transaction not approved by our board of directors.

Subchapter F of Chapter 25 of the Pennsylvania Business Corporation Law of 1988, or the PBCL, which is applicable to us, may have an anti-takeover effect and may delay, defer or prevent a tender offer or takeover attempt that a shareholder might consider in his or her best interest, including those attempts that might result in a premium over the market price for the shares held by shareholders. In general, Subchapter F of Chapter 25 of the PBCL delays for five years and imposes conditions upon “business combinations” between an “interested shareholder” and us, unless prior approval of our board of directors is given. The term “business combination” is defined broadly to include various merger, consolidation, division, exchange, or sale transactions, including transactions using our assets for purchase price amortization or refinancing purposes. An “interested shareholder,” in general, would be a beneficial owner of shares entitling that person to cast at least 20% of the votes that all shareholders would be entitled to cast in an election of directors.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

As of December 31, 2005, our corporate headquarters was located in Newtown, Pennsylvania in leased facilities consisting of approximately 105,000 square feet of office space rented under a lease that expires in 2017. In addition to the corporate headquarters staff, certain other divisional and operations personnel are located in the facility. We also lease all of the facilities used in our operations. These lease commitments expire generally between January 2006 and April 2014 and typically contain renewal options. Management believes that its existing facilities are suitable and adequate for our current operations, but additional facilities will be required to support growth. Management believes that suitable additional or alternative space will be available as needed on commercially reasonable terms.

The following table lists our primary contact center locations as of December 31, 2005.

Locations

Conway, AR; Morrilton, AR; Nogales, AZ (2); Colorado Springs, CO; Lakeland, FL; Louisville, KY; Wilton, ME; Amherst, NY; Depew, NY; Lancaster, OH; Allentown, PA; Bloomsburg, PA; Dubois, PA; Langhorne, PA; Lockhaven, PA (2); Trevose, PA; Chesapeake, VA; Tidewater, VA; Spokane, WA (2); Carbonear, Newfoundland, Canada; Cornerbrook, Newfoundland, Canada; St. John’s, Newfoundland, Canada; Miramichi, New Brunswick, Canada ; Moncton, New Brunswick, Canada; Riverview, New Brunswick, Canada; Halifax, Nova Scotia, Canada; New Glasgow, Nova Scotia, Canada; Sydney, Nova Scotia, Canada; Lindsay, Ontario, Canada; Peterborough, Ontario, Canada; Woodstock, Ontario, Canada; Athlone, Ireland; Dublin, Ireland; London, U.K.; Sydney, Australia; Bridgetown, Barbados; Mexico City, Mexico; Manila, Philippines (2)

ITEM 3. LEGAL PROCEEDINGS

From time to time, we are involved in litigation incidental to our business. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict.

14

In 1998, William Shingleton filed a class action lawsuit against us in the Circuit Court of Berkeley County, West Virginia (the Court). The lawsuit alleged that we and twelve current and former members of our management had violated the West Virginia Wage Payment and Collection Act (the Wage Act) for failure to pay promised signing and incentive bonuses and wage increases, failure to compensate employees for short breaks or “transition” periods, production hours worked and improper deductions for the cost of purchasing telephone headsets.

On March 1, 2005, we announced a settlement with the plaintiffs to this litigation. Under the terms of the settlement, ICT agreed to pay $14.75 million to the plaintiff class to settle all allegations relating to unpaid wages, bonuses and other claims, as well as payments for liquidated damages allowed by West Virginia law, plus interest. Of the $14.75 million settlement payment, $6.9 million was recovered from our insurance carriers during 2005. Our 2004 results reflect the accrual for the settlement amount offset by $2.7 million of insurance proceeds. Our 2005 results reflect insurance proceeds of $4.2 million, offset by $604,000 of actual legal expenses that we incurred to complete the requirements set forth in the settlement. As of December 31, 2005, there are no contingent liabilities remaining associated with this litigation.

Additionally, we are a co-defendant in 14 putative consumer class action lawsuits filed against Time Warner, Inc. or America Online, in various state and Federal courts during the period from July 2003 to December 2004. We believe the allegations against us are without merit. America Online is paying for our defense and has agreed to indemnify us against any costs or damages that we may incur as a result of these lawsuits. All of these suits allege that America Online, a customer of ICT, violated consumer protection laws by charging members for accounts they purportedly did not agree to create and that America Online and ICT violated consumer protection laws in the handling of subscribers’ calls seeking to cancel accounts and obtain refunds of amounts paid for such accounts. America Online contracted with us to answer customer service calls from America Online subscribers in accordance with instructions provided by America Online. Nine of the lawsuits that were filed in, or removed to, Federal court were centralized in the Central District of California for consolidated or coordinated pre-trial proceedings pursuant to a February 27, 2005 order of the Judicial Panel on Multidistrict Litigation (the “MDL Litigation”). Three of the lawsuits were filed in the Circuit Court for St. Clair County Illinois (the “Illinois Litigation”). The two remaining lawsuits, one of which has been settled and dismissed with prejudice, as described below, were filed in state courts.

On April 5, 2005 America Online and we signed a settlement agreement with the plaintiffs’ counsel in the Illinois Litigation on behalf of a putative national class of all persons and entities who were charged or billed by or through America Online or its agents, assigns, contracted customer service providers, or other designees acting on behalf of or through America Online, for services and/or goods without their consent or authorization. Consistent with America Online’s agreement to indemnify us against any costs or damages that we may incur as a result of these lawsuits, all settlement payments or services under the settlement agreement will be paid or provided by America Online. On April 7, 2005, the Circuit Court for St. Clair County, Illinois, certified the settlement class, which includes the putative classes alleged in all of the cases discussed above, and preliminarily approved the settlement. In October 2005, the Plaintiffs in the MDL Litigation agreed to join the St. Clair County, Illinois settlement, and a revised settlement agreement was signed on October 21, 2005. A final approval order for the settlement, which can be appealed within 30 days of issuance, was entered on February 22, 2006.

In November 2005, a putative class action lawsuit filed in California Superior Court (Alameda County) was settled by agreement of the parties, and the Court subsequently issued a joint motion to dismiss the matter with prejudice. Again, consistent with America Online’s agreement to indemnify us against any costs or damages that we may incur as a result of these lawsuits, all costs and payments associated with the settlement were paid by America Online.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

15

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock trades on the National Market segment of The Nasdaq Stock Market under the symbol “ICTG.” The following table sets forth, for the periods indicated, the high and low sales prices as quoted on The Nasdaq National Market.

Period	High		Low
Fiscal 2004:
First Quarter	$	15.10	$	10.49
Second Quarter		13.97		9.09
Third Quarter		10.00		6.38
Fourth Quarter		10.27		7.18
Fiscal 2005:
First Quarter		11.99		8.40
Second Quarter		11.30		8.65
Third Quarter		12.75		9.10
Fourth Quarter		17.43		11.31

As of March 1, 2006, there were 50 holders of record of the Company’s common stock, which excludes shareholders whose shares are held in nominee or “street” name by brokers. On March 1, 2006, the closing sale price of the common stock as reported by The Nasdaq Stock Market was $23.48.

We have never declared or paid any cash dividends on our capital stock. Management currently intends to retain its earnings to finance future growth and working capital needs and, therefore, does not anticipate paying any cash dividends in the foreseeable future. Additionally, our bank agreement limits the payment of dividends.

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data are derived from the consolidated financial statements of the Company. The data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 and the consolidated financial statements and related notes thereto included in Item 8 of this Form 10-K.

16

	For the Year Ended December 31,
	2005			2004			2003			2002		2001
	(In thousands, except per share amounts)
Statement of Operations Data:
Revenue	$	401,334		$	325,529		$	298,142		$	298,926	$	239,324
Operating expenses:
Cost of services		244,572			194,365			179,679			172,109		133,816
Selling, general and administrative		141,601			123,559			115,273			111,529		91,495
Litigation costs (recoveries) (1)		(3,611	)		10,338			4,693			1,200		450
Restructuring charge (reversal) (2)		—			—			(686	)		8,894		—
		382,562			328,262			298,959			293,732		225,761
Operating income (loss)		18,772			(2,733	)		(817	)		5,194		13,563
Interest expense, net		2,464			1,594			1,183			828		1,079
Income (loss) before income taxes		16,308			(4,327	)		(2,000	)		4,366		12,484
Income tax provision (benefit)		4,133			(1,634	)		(856	)		1,398		4,506
Net income (loss)	$	12,175		$	(2,693	)	$	(1,144	)	$	2,968	$	7,978
Diluted earnings (loss) per share	$	0.94		$	(0.21	)	$	(0.09	)	$	0.23	$	0.63
Shares used in computing diluted earnings (loss) per share		12,964			12,571			12,483			13,021		12,682

(1) See Note 12 to the consolidated financial statements.

(2) See Note 17 to the consolidated financial statements.

	As of December 31,
	2005		2004		2003		2002		2001
	(In thousands)
Balance Sheet Data:
Cash and cash equivalents	$	10,428	$	11,419	$	12,091	$	10,779	$	7,375
Working capital		56,721		48,739		50,000		45,288		38,766
Total assets		172,759		160,576		135,825		130,818		102,586
Long-term debt, less current maturities		35,000		39,000		30,000		19,000		12,000
Shareholders' equity		81,012		68,948		70,551		68,036		63,660

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are a leading global provider of outsourced customer management and business process outsourcing solutions. Our comprehensive, balanced mix of sales, service, marketing and technology solutions includes: customer care/retention, technical support and customer acquisition, cross-selling/upselling as well as market research, database marketing, data capture/collection, e-mail management, collections and other back-office business processing services. We provide our services through operating `centers located throughout the world, including the U.S., Ireland, the U.K., Canada, Australia, Mexico, Barbados and the Philippines. As of December 31, 2005, we had operations in 41 contact centers from which we support domestic and multinational corporations and institutions, primarily in the financial, insurance, healthcare, telecommunications, information technology and consumer electronics industries.

We also offer a comprehensive suite of CRM technologies, which are available on a hosted basis, for use by clients at their own in-house facilities, or on a co-sourced basis, in conjunction with our fully integrated, Web-enabled contact centers. These technologies include: automatic call distribution (ACD) voice processing, interactive voice response (IVR) and advanced speech recognition (ASR), Voice over Internet Protocol (VoIP), contact management, automated e-mail management and processing, sales force and marketing automation, alert notification and Web self-help, for the delivery of consistent, quality customer care across multiple channels.

Our customer care/retention clients typically enter into longer-term, contractual relationships that may contain provisions for early contract terminations. We generally operate under month-to-month contractual relationships with our telesales clients. The pricing component of a contract is often comprised of a base service charge and separate charges for ancillary services. Our services are generally priced based upon per-minute or hourly rates. On occasion, we perform services for which we are paid incentives based on completed sales. The nature of our business is such that we generally compete with other outsourced service providers as well as the retained in-house call center operations of our customers. This can create pricing pressures and impact the rates we can charge in our contracts.

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Revenue is recognized as the services are performed, generally based on hours or minutes of work performed; however, certain types of revenue relating to up-front project setup costs must be deferred and recognized over a period of time, typically the length of the customer contract. Some of our client contracts have performance standards, which can result in adjustments to monthly billings if the standards are not met. Any required adjustments to our monthly billings are reflected in our revenue on an as-incurred basis.

We refer to our revenue as either Sales revenue or Services revenue. Our Sales revenue includes new customer acquisition and cross-selling products and services to existing customers. Sales revenue is primarily outbound but does include inbound selling activities. Services revenue is generally inbound and encompasses all our other revenue, which is classified into two categories, customer service and ancillary services. Customer service includes customer care, help desk support, technical support and patient assistance whereas ancillary services includes market research, database marketing, technology hosting, data processing and data entry, and other non-sales activities such as market survey work.

Results for 2005 reflect the following:

• Increased revenue, which grew 23% compared to 2004 revenue.

• Significant growth in customer care and other inbound call center services. Growth in our Services revenue was 30%.

• Sales revenue growth was 11% as compared to a decline of 9% in the prior year.

• Significantly reduced selling, general and administrative expenses as a percentage of revenue.

• Continued growth in our Philippines operations, which handled approximately 16% of total production.

• Strengthened our competitive position in key vertical markets, primarily financial services and healthcare.

• Expanded our presence in other markets including technology, government and energy.

• Expanded the scope of our hosted technology offerings services with the introduction of outbound IVR alert services.

We improved our operations in 2005 due to our success in growing our client base, particularly in providing customer care management services in our key vertical markets, which often command higher revenue rates. We were also successful in controlling our direct operating costs for labor and telecommunications. The deployment of our centralized technology infrastructure helped us achieve savings in our telecom costs and increase the utilization of our workstations and software licenses.

On March 1, 2005, we announced a settlement to resolve the Shingleton litigation. Under the terms of the settlement, ICT agreed to pay $14.75 million to settle all allegations relating to unpaid wages, bonuses and other claims, as well as payments for liquidated damages required by the Wage Act. The impact of this settlement was accrued in our financial statements as of December 31, 2004, although the payment of the settlement occurred in 2005. Of the $14.75 million settlement, $6.9 million was recovered from our insurance carriers during 2005. Our 2004 results reflect the accrual for the settlement amount offset by $2.7 million of insurance proceeds. Our 2005 results reflect insurance proceeds of $4.2 million, offset by $604,000 actual legal expenses that we incurred in 2005 to complete the requirements set forth in the settlement. As of December 31, 2005, there are no contingent liabilities remaining associated with this litigation.

Our future profitability will be impacted by, among other things, our ability to expand our service offerings to existing customers as well as our ability to obtain new customers and grow new vertical markets. Our profitability is also impacted by our ability to manage costs and mitigate the effects of foreign currency exchange risk. Our business is very labor-intensive and consequently, in an effort to reduce costs and be as competitive as possible in the marketplace, we have been reallocating some of our services to near-shore and offshore contact centers, which typically have lower labor costs.

Some of these benefits, however, are offset by the expanded training and associated costs we may incur because of our service mix. Many of our customer care services require more complex and costly training processes and to the extent we cannot bill these amounts to our clients, our profitability will be impacted. In addition to the more complex training, the employees who work on our customer care programs are generally paid a higher hourly rate because of the more complex level of services they are providing.

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We believe that our success in 2006 will be largely dependent on our ability to continue capturing new business and leveraging the investment we have made in our infrastructure by expanding our business service offerings. We believe that major corporations will continue to leverage the skills of companies like ours and that the services outsourced will continue to expand beyond the contact center services that currently comprise the large majority of our business. We plan to leverage our existing strength in the financial services, insurance and healthcare markets and provide additional business services to our customers in these industries. To capitalize on these opportunities, we will continue to enhance the technologies we use.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. These generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Our significant accounting policies are described in Note 2 to the consolidated financial statements, included in Item 8 of this Form 10-K. The following discussion addresses our critical accounting policies, which are those that are most important to the portrayal of our financial condition and results and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. If actual results were to differ significantly from estimates made, the reported results could be materially affected. However, we are not currently aware of any reasonably likely events or circumstances that would result in materially different results. Senior management has reviewed these critical accounting policies and estimates with our audit committee.

Revenue Recognition

Revenue is typically calculated based on contracted per-minute or hourly rates with customers. We recognize revenue as services are performed, generally based on billable minutes or hours of work incurred. Some of our client contracts have performance standards, which can result in adjustments to monthly billings if the standards are not met. Any required adjustments to our monthly billings are reflected in our revenue on an as-incurred basis.

In order to provide our business services solutions, we may incur certain up-front project set-up costs specific to each customer contract. In certain instances, we can bill the customer for these costs; however, because the delivered item (project set-up services) does not have stand alone value to the customer, revenue is deferred and recognized as services are provided over the contract term or until contract termination, should that occur prior to the end of the contract term. To the extent we have billed these costs and there are no customer issues with collection, we will defer the project set-up costs and amortize such amounts over the program period, over the remaining contract term or until contract termination. The costs incurred are deferred only to the extent of the amounts billed. Amounts collected from customers prior to the performance of services are also recorded as deferred revenue. Deferred revenue totaled $8.1 million and $4.3 million as of December 31, 2005 and 2004, respectively, and is included in accrued expenses and other in the accompanying consolidated balance sheets. The deferred revenue related to up-front project set-up costs was $4.8 million and $1.6 million as of December 31, 2005 and 2004, respectively. The deferred cost associated with this revenue is included in prepaid expenses and other assets in the accompanying consolidated balance sheets. The deferred costs totaled $3.3 million and $1.1 million at December 31, 2005 and 2004, respectively.

Our revenue recognition policy is in accordance with Staff Accounting Bulletin No. 104, “Revenue Recognition” and Emerging Issues Task Force (EITF) Issue 00-21, “Revenue Arrangements With Multiple Deliverables.”

Allowance for Doubtful Accounts

Our accounts receivable balances are net of an estimated allowance for uncollectible accounts. Management continuously monitors collections and payments from customers and maintains an allowance for uncollectible accounts based upon our historical write-off experience and any specific customer collection issues that have been identified. Other items considered in estimating the allowance for uncollectible accounts include the age of the receivables, the financial status of our customers and general economic conditions. Because the allowance for uncollectible accounts is an estimate, it may be necessary to adjust the allowance for doubtful accounts if actual bad

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debt expense exceeds the estimated reserve. We are subject to concentration risks as certain of our customers, as well as certain of the industries we support, generate a high percentage of our total revenue and corresponding receivables. Accounts receivable, net were approximately $82.7 million and $64.8 million as of December 31, 2005 and 2004, respectively, representing approximately 48% and 40% of total assets, respectively. Given the significance of accounts receivable to our consolidated financial statements, the determination of net realizable values is considered to be a critical accounting estimate.

Impairment of Goodwill and Other Intangible Assets

Goodwill and other intangible assets are recorded through business combinations. As of December 31, 2005 and 2004, we had $3.5 million and $3.3 million of goodwill, respectively. We also had $612,000 and $953,000 of other intangible assets, net of amortization, at December 31, 2005 and 2004, respectively. An impairment of these assets could have a significant impact on our results of operations. An impairment exists when events have occurred or circumstances exist that would cause the fair value of these assets to fall below their carrying value. Although goodwill is no longer required to be amortized, we are required to perform an annual impairment review of our goodwill. This impairment review is performed in the fourth quarter of each year. The impairment assessment is performed using projected cash flows. On an interim basis, we also evaluate whether any events have occurred or whether any circumstances exist that could indicate an impairment of our goodwill. Other intangible assets are evaluated similar to other long-lived assets in accordance with of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” as discussed below. For the years ended December 31, 2005, 2004 and 2003 there were no impairment charges related to goodwill and other intangible assets.

Impairment of Long-Lived Assets

We continually evaluate whether events or circumstances have occurred that would indicate that the remaining estimated useful lives of our long-lived assets may warrant revision or that the remaining balance may not be recoverable. When factors indicate that long-lived assets should be evaluated for possible impairment, an estimate of the related undiscounted cash flows over the remaining life of the long-lived assets is used to measure recoverability. Some of the more important factors we consider include our financial performance relative to our expected and historical performance, significant changes in the way we manage our operations, negative events that have occurred, and negative industry and economic trends. If any impairment is indicated, measurement of the impairment will be based on the difference between the carrying value and fair value of the assets, generally determined based on the present value of expected future cash flows associated with the use of the asset. For the years ended December 31, 2005, 2004 and 2003 we recorded impairment charges of $458,000, $0 and $205,000, respectively. In 2005, the impairment of assets was associated with facilities that we exited early. Net property and equipment as of December 31, 2005 and December 31, 2004 totaled $56.9 million and $56.3 million, respectively, representing approximately 33% and 35% of total assets, respectively.

Accounting for Income Taxes

As part of the process of preparing our consolidated financial statements, management is required to estimate income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual current tax expense together with assessing temporary differences resulting from differing treatment of items, such as depreciation of property and equipment, for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within the consolidated balance sheet. We must then assess the likelihood that our deferred tax assets will be realized through future taxable income. We also have deferred tax assets relating to net operating loss (NOL) carryforwards for state tax purposes, foreign NOL and Federal tax credit carryforwards. With respect to our state NOLs, we do not believe it is more likely than not that these deferred tax assets will be realized. Accordingly, a valuation allowance of $1.7 million has been recorded against these deferred tax assets, of which $84,000 was recorded in 2005. At December 31, 2005, we have $7.0 million of NOL carryforwards relating to some of our foreign subsidiaries. Our subsidiary in Australia has $6.8 million of these NOLs, resulting in a gross deferred tax asset of $2.1 million. Although the NOLs in Australia do not expire under Australian tax law and can be carried forward to offset taxable income in future years, management performed an evaluation on the expected utilization of the carryforwards and determined that it was more likely than not that these carryforwards will not be utilized. Therefore during 2005, management increased the valuation allowance for the deferred tax assets that had been recorded for these NOLs by $1.1 million. As of December 31, 2005 the deferred tax assets associated with the Australian NOLs have a full valuation allowance. Our ability to realize any of the above NOLs in the future will depend upon the Company’s ability to generate profits in the various tax jurisdictions they apply.

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Additionally, we have recorded as a deferred tax asset as of December 31, 2005 approximately $1.7 million of federal tax credits, specifically research and development tax credits and work opportunity tax credits. Because we do not believe we will be able to realize all of these credits associated with research and development, we have recorded a valuation allowance of $1.2 million against them, of which $599,000 was recorded in 2005. Although realization is not assured with our deferred tax assets, management believes it is more likely than not that the remaining deferred tax assets will be realized.

The amount of the deferred tax assets considered realizable, however, could be reduced in the near-term if estimates of future taxable income are reduced. We will continue to evaluate and assess the realizability of all deferred tax assets and adjust valuation allowances, if required in the future.

Restructuring Charges

As of December 31, 2005, we had a remaining accrual of $1.3 million for the amount of estimated costs required to terminate the leases and close the facilities included in the December 2002 restructuring. The original charge of $8.9 million consisted of severance, site closure costs and asset impairments. Certain estimates were made in determining the amount of the charge for site closure costs and asset impairments, but no estimate for sublease income was made, given the market conditions at that time and the inability to find suitable tenants. The amount of the charge will be subject to change over time if a suitable tenant is identified or to the extent we are able to negotiate early lease terminations.

During 2005 and 2004, we did not enter into any sublease arrangements nor did we negotiate any termination settlements for the facilities that remain under contract. The majority of cash payments made were related to the ongoing lease obligations.

Accounting for Contingencies

In the ordinary course of business, we have entered into various contractual relationships with strategic corporate partners, customers, suppliers, vendors and other parties. As such, we could be subject to litigation, claims or assessments arising from any or all of these relationships, or from our relationships with our employees. Management accounts for contingencies such as these in accordance with Statement of Financial Accounting Standards (SFAS) No. 5, “Accounting for Contingencies.” SFAS No. 5 requires an estimated loss contingency be recorded when information available prior to issuance of a company’s financial statements indicates that it is probable that an asset has been impaired or a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. SFAS No. 5 and its interpretations further state that when there is a range of loss and no amount within that range is a better estimate than any other, that the minimum amount in the range should be accrued. Accounting for contingencies arising from contractual or legal proceedings requires management to use its best judgment when estimating an accrual related to such contingencies. As additional information becomes known, the accrual for a loss contingency could fluctuate, thereby creating variability in our results of operations from period to period. Likewise, an actual loss arising from a loss contingency which significantly exceeds the amount accrued could have a material adverse impact on our operating results for the period in which such actual loss becomes known.

At December 31, 2004, we had recorded an accrual related to the Shingleton litigation. Our accrual at December 31, 2004 was $14.8 million and reflected amounts that were agreed upon in a settlement that was announced on March 1, 2005 and approved by the Court on June 27, 2005. We remitted the settlement amount in March 2005 to satisfy our obligation under the settlement. These payments were partially funded with $2.7 million of insurance proceeds that we received. The insurance proceeds were recorded as a receivable within prepaid expenses and other on our consolidated balance sheet at December 31, 2004. Our 2005 results reflect the receipt of additional insurance proceeds of $4.2 million. As of December 31, 2005, we have no accruals remaining relating to the Shingleton litigation. See Item 3 of this Annual Report on Form 10-K.

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Results of Operations

The following is a discussion of the major categories set forth in the statement of operations.

(dollars in thousands)	2005		2004		2003		% change 2005 vs. 2004		% change 2004 vs. 2003
Revenue:	$	401,334	$	325,529	$	298,142	23.3	%	9.2	%
Services		278,999		215,173		176,304	29.7	%	22.0	%
Sales		122,335		110,356		121,838	10.9	%	-9.4	%
Average Number of Workstations		9,805		8,683		8,146

The $75.8 million increase in revenue for 2005 was largely driven by growth in our Services revenue, which accounted for over 84% of this increase and reflects the continuing growth in outsourced customer support. The growth in 2005 was driven primarily by expansion of new contracts in the healthcare, technology and government industries. Our Sales revenue also increased for the first time since 2002 and reflects our strong growth in certain of our international markets. Total revenue per average workstation increased by 9% over 2004, primarily due to increased utilization rates and the growth in ancillary revenue.

The $27.4 million increase in revenue for 2004 was primarily due to new client programs for marketing and customer care services. Our Services revenue grew rapidly in 2004 and increased by $38.9 million from 2003, which more than offset the $11.5 million decrease in Sales revenue. Total revenue per average workstation increased by 2%, reflecting a growing mix of Services revenue, which typically has greater workstation utilization as compared to Sales revenue.

Our results in 2005 have benefited from moving production to lower priced and lower cost offshore and near-shore locations. As we continue to perform work for our customers in offshore and near-shore locations, our revenue will be impacted by fluctuations in foreign currency exchange rates. Changes in foreign exchange rates had a positive impact on total revenue of $3.7 million in 2005 compared to 2004 and was primarily due to changes in the Canadian dollar, the Euro and the British pound sterling. In 2004, changes in foreign exchange rates had a positive impact on total revenue of approximately $5.4 million compared to 2003 and was also primarily due to changes in the Canadian dollar, the Euro and the British pound sterling.

(dollars in thousands)	2005			2004			2003			% change 2005 vs. 2004		% change 2004 vs. 2003
Cost of Services:	$	244,572		$	194,365		$	179,679		25.8	%	8.2	%
Labor costs		174,118			137,867			123,991		26.3	%	11.2	%
Telecom costs		19,389			17,875			18,096		8.5	%	-1.2	%
Other direct costs		51,065			38,623			37,592		32.2	%	2.7	%
Total Cost of Services as a Percentage of Revenue		60.9	%		59.7	%		60.3	%

Our cost of services consists primarily of direct labor costs associated with our customer service representatives (CSRs) and telecommunications costs. Other direct costs we incur for our client programs include information technology support, quality assurance cost, other billable labor and support services costs.

In 2005, the increase in cost of services of $50.2 million over 2004 was driven primarily by labor cost increases of $36.3 million. The labor cost increase were primarily volume driven. To a lesser extent, labor costs were impacted by foreign exchange and changes in hourly rates for our contact center staff. Our labor cost per production hour in 2005 was $11.25 as compared to $11.03 in 2004, and reflects an overall increase in wage rates of approximately 1%, as well as the impact of foreign currency. Foreign currency exchange rates had an overall impact of increasing our cost of services by $4.9 million as compared to 2004. Conversely, due to advances made in the technologies we used in providing our services, the greater propensity of customer service clients to cover their own telecommunications costs and the continuing commoditization of telecommunications, our telecom cost per production hour decreased 13% to $1.25 in 2005 from $1.43 in 2004. Other direct costs increased primarily due to increases in our subcontracting costs ($4.3 million), other billable labor ($3.9 million) and quality assurance

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($2.2 million). Rapid changes in call volume that are deemed to be short-term in nature are often handled through subcontracting arrangements. Some of our other inbound customer care services, particularly those in the healthcare industry, require a variety of ancillary services that are off the phone, which tends to drive our other billable labor costs. Our quality assurance costs are typically a function of our call volume and tend to increase as our volume of business increases.

In 2004, the increase in cost of services of $14.7 million over 2003 was driven primarily by labor cost increases of $13.9 million. Our labor cost per production hour in 2004 was $11.03 as compared to $10.91 in 2003, and reflected an overall decrease in wage rates of approximately 3%, offset by the impact of foreign currency. Foreign currency exchange rates had an overall impact of increasing our cost of services by $5.5 million as compared to 2003. Conversely, due to advances made in the technologies we used in providing our services and our ability to obtain better per-minute rates and volume discounts from some of our telephone carriers and typically lower telecom costs in customer care contracts, our telecom cost per production hour decreased 10% to $1.43 in 2004 from $1.59 in 2003.

(dollars in thousands)	2005			2004			2003			% change 2005 vs. 2004		% change 2004 vs. 2003
Selling, General and Administrative Expenses:	$	141,601		$	123,559		$	115,273		14.6	%	7.2	%
Salaries, benefits and other personnel-related costs		56,716			48,774			44,555		16.3	%	9.5	%
Facilities and equipment costs		50,934			45,017			41,407		13.1	%	8.7	%
Depreciation and amortization		20,790			17,822			17,855		16.7	%	-0.2	%
Other SG&A costs		13,161			11,946			11,456		10.2	%	4.3	%
Total SG&A as a Percentage of Revenue		35.3	%		38.0	%		38.7	%

Selling, general and administrative (SG&A) expenses are primarily comprised of salaries and benefits, rental expenses relating to our facilities and some of our equipment, equipment maintenance and depreciation and amortization.

SG&A expenses increased by $18.0 million in 2005 as compared to 2004, primarily as a result of increased facilities costs along with increases in salaries and benefits. Our facilities costs which consist primarily of rental fees, increased by $5.9 million. During 2005, we opened three new contact centers in the United States and one new contact center in the Philippines to meet increasing demands for our outsourced customer care services. Salaries and benefits costs increased primarily due to headcount increases. Approximately 34% of our SG&A expenses were incurred in foreign locations, which are subject to changes in foreign exchange rates. Foreign exchange rates had the effect of increasing SG&A expenses by approximately $1.6 million in 2005 as compared to 2004. As a percentage of revenue, our SG&A expenses declined in 2005 from 2004 primarily as a result of our ability to manage our revenue growth by increasing utilization of existing infrastructure as well as being able to better control some of our expenses associated with our expansion and the opening of new facilities.

SG&A expenses increased by $8.3 million in 2004 as compared to 2003, primarily as a result of increased facilities costs along with increases in salaries and benefits. Our facilities costs, increased by $3.6 million, reflecting our offshore expansion. Part of this expansion included the second contact center we opened in the Philippines in mid-2004. Also contributing to the increase was a full-year of costs relating to the expansion of our first contact center in the Philippines as compared to only a few months of operations in 2003. Salaries and benefits costs increased primarily due to headcount increases worldwide. Approximately 35% of our SG&A expenses were incurred in foreign locations, which are subject to changes in foreign exchange rates. Foreign exchange rates had the effect of increasing SG&A expenses by approximately $3.2 million in 2004 as compared to 2003. As a percentage of revenue, our SG&A expenses declined in 2004 from 2003, primarily as a result of our ability to handle a portion of the increased revenue with our existing infrastructure.

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(dollars in thousands)	2005			2004		2003		% change 2005 vs. 2004		% change 2004 vs. 2003
Litigation Costs (Recoveries):	$	(3,611	)	$	10,338	$	4,693	-134.9	%	120.3	%

In 2005, our litigation costs include recoveries from one of our insurance carriers of $4.1 million. These insurance proceeds were partially offset by incurred legal expenses of $604,000. The insurance proceeds represent the culmination of litigation we were pursuing against one of the insurance carriers involved in the Shingleton litigation. In addition to the proceeds from the insurance carrier, we also settled a related matter with one of our insurance brokers for an $115,000 recovery.

In 2004, litigation costs totaled $10.3 million and included $2.6 million associated with litigation defense and the legal action against our insurance carriers, with respect to the Shingleton litigation. We also increased our contingency accrual for this litigation from $4.4 million to $14.8 million. On March 1, 2005, we announced a settlement with the plaintiffs to this litigation. Under the terms of the settlement, ICT agreed to pay $14.75 million to the plaintiff class to settle all allegations relating to unpaid wages, bonuses and other claims, as well as payments for liquidated damages allowed by West Virginia law of thirty days plus interest which was being sought for all class members regardless of the amount of wages allegedly unpaid. Our $14.8 million accrual at December 31, 2004, reflected the settlement amount and related payroll taxes. Partially offsetting these expenses was $2.7 million of responsive insurance proceeds from one of our insurance carriers.

(dollars in thousands)	2005		2004		2003			% change 2005 vs. 2004	% change 2004 vs. 2003
Restructuring Reversal:	$	—	$	—	$	(686	)	n/a	-100.0	%

Our restructuring accrual as of December 31, 2005 and 2004 was $1.3 million and $1.8 million, respectively and represents ongoing lease payments, which we expect to satisfy through cash flow generated from continuing operations. The only changes to our accrual in 2005 and 2004 related to the payment of ongoing lease obligations and the payment of severance.

During 2003, we negotiated lease termination settlements, entered into a sublease agreement and adjusted original estimates for certain facilities that were part of the December 2002 restructuring. We reversed $797,000 of the restructuring accrual in order to appropriately reflect the settlement amounts, sublease amount and the other changes in estimate. During the implementation of the restructuring plan in 2003, we identified additional fixed assets (primarily equipment and furniture) for which management currently had no plan to utilize in other facilities. These assets were classified as assets to be disposed of and they were written down to fair value, resulting in an impairment charge of $205,000.

Also during 2003, one individual who was receiving monthly severance as part of the restructuring secured new employment elsewhere, which partially voided his agreement with us. Approximately $94,000 of his remaining severance was reversed in the fourth quarter of 2003. This reversal was also recorded in the restructuring charge line in the accompanying consolidated statements of operations.

(dollars in thousands)	2005		2004		2003		% change 2005 vs. 2004		% change 2004 vs. 2003
Interest Expense, Net:	$	2,464	$	1,594	$	1,183	54.6	%	34.7	%

In 2005, the increase in net interest expense over 2004 was the result of increased average daily outstanding balances under the line of credit during 2005 as compared to 2004, as well as higher interest rates. Average borrowings were approximately $47.0 million in 2005 as compared to $39.7 million in 2004. The weighted average interest rate on amounts outstanding under the line of credit was 5.0% in 2005 as compared to 3.7% in 2004.

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In 2004, the increase in net interest expense over 2003 reflects additional net borrowings against our line of credit, higher interest rates and less investment income. Our additional net borrowings reflect our capital expansion, including the technological advances made with respect to the centralization of our contact center technology. The weighted average interest rate on amounts outstanding under the line of credit was 3.7% in 2004 as compared to 3.1% in 2003.

(dollars in thousands)	2005		2004			2003			% change 2005 vs. 2004		% change 2004 vs. 2003
Income Tax Provision (Benefit):	$	4,133	$	(1,634	)	$	(856	)	-352.9	%	90.9	%

Our income tax provision (benefit) increased by $5.8 million in 2005 and reflected the profits earned by the Company. The effective rate for the years ended December 31, 2005, 2004 and 2003 was 25%, 38% and 43%, respectively.

In 2005, the decrease in our effective rate was primarily due to the Company generating $4.4 million of profit in the Philippines, which was not subject to income tax as a result of a tax holiday we obtained. Our income tax provision in 2005 reflects additional valuation allowances of $1.1 million recorded against the remaining deferred tax assets recorded for our net operating loss carryforwards in Australia. Also, during 2005, the IRS denied a claim we had filed for research and development (“R&D”) credits associated with a previous tax year. While we plan to appeal, we have determined that a full valuation allowance should be recorded on any remaining deferred tax assets associated with R&D credits. Therefore an additional $599,000 of valuation allowance was recorded in 2005. These increases in valuation allowances were partially offset by work opportunity tax credits of approximately $605,000.

In 2004, we had recorded a valuation allowance of $940,000 against a portion of the deferred tax assets recorded for our Australian net operating loss carryforwards. Our tax benefit in 2004 also reflects the tax impact of the Shingleton settlement, as well as work opportunity tax credits and R&D credits of $1.1 million.

The effective rate benefit in 2003 was driven by higher losses in the United States caused by the additional litigation charge recorded during 2003 as well as $420,000 of work opportunity tax credits that we earned.

Quarterly Results and Seasonality

We have experienced and expect to continue to experience quarterly variations in operating results, principally as a result of the timing of client programs (particularly programs with substantial amounts of upfront project setup costs), the commencement and expiration of contracts, the timing and amount of new business we generate, our revenue mix, the timing of additional selling, general and administrative expenses to support the growth and development of existing and new business units, competitive industry conditions and litigation costs. Our results in the third quarter of 2005 reflected $4.1 million of insurance proceeds related to the Shingleton litigation. Our results in the third quarter of 2005 also reflected certain discreet income tax items, which had the effect of reducing our income tax provision in the quarter.

Our business tends to be strongest in the fourth quarter due to the high level of client sales and service activity for the holiday season. The fourth quarter of 2004, however, was impacted by the settlement of the Shingleton litigation. Our fourth quarter results in 2004 reflect $7.7 million of expenses related to the settlement of the Shingleton litigation, net of insurance proceeds of $2.7 million. During the first quarter, the business generally levels off from the previous quarter as a result of reduced client sales and service activity. The level of business for our other quarters can fluctuate as a result of other factors, specifically the timing of contract wins and program starts, as well as approximately 70% of our revenue being generated from service programs, which generally have less seasonality than sales programs.

Liquidity and Capital Resources

At December 31, 2005, we had $10.4 million of cash and cash equivalents compared to $11.4 million at December 31, 2004.

We generate cash through various means, primarily through cash from operations and, when required, through borrowings under our Amended and Restated Credit Facility (the “Credit Facility”). The primary areas of our business in which we spend cash include capital expenditures, payments of principal and interest on amounts owed under our Credit Facility, costs of operations, litigation defense and business combinations.

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Cash From Operations

Cash provided by operations in 2005, 2004 and 2003 was $26.1 million, $13.1 million and $15.2 million, respectively.

Cash from operations in 2005 was generated by net income of $12.2 million and various non-cash expenses of $25.4 million. The non-cash expenses included $20.8 million of depreciation and amortization and $4.0 million of deferred income tax expense. The net income and non-cash items were partially offset by the payment of our Shingleton litigation settlement of $14.8 million. Other working capital changes resulted in an additional $3.3 million of operating cash flow. A $19.1 million increase in accounts payable and accrued expenses was driven by higher accruals for payroll and related expenses, higher deferred revenue, and $6.6 million of amounts due to a customer. This increase was partially offset by a $17.8 million increase in accounts receivable and was due to higher revenue and a slightly extended collection cycle. Much of the cash associated with these fourth quarter receivables was collected in January and February of 2006.

The amount classified as due to customer represents amounts previously collected from a customer that were re-billed to other related entities of this customer at the request of the customer, in order to reflect a revised billing arrangement. These amounts were collected by us prior to December 31, 2005 and are due back to the customer when all re-billed amounts have been collected. It is expected that these amounts will be collected in full from the remaining parties and paid back to the customer in the first quarter of 2006.

Cash from operations in 2004 was generated by a net loss of $2.7 million, which was offset by non-cash expenses of $18.4 million, primarily depreciation and amortization, and increased litigation accruals of $10.4 million. The additional litigation accrual is associated with the Shingleton settlement. Changes in working capital, exclusive of the increased litigation accrual, accounted for a $13.0 million decrease in cash flow from operations and was driven primarily by an increase in accounts receivable. Our accounts receivable increased because of the significant growth in revenue in the fourth quarter of 2004. Much of the cash associated with these fourth quarter receivables was collected in January and February 2005.

Cash from operations in 2003 was generated by a net loss of $1.1 million, offset by non-cash expenses of $17.0 million, primarily depreciation and amortization. Net working capital changes reduced cash flow from operations by $612,000. The working capital change was primarily due to overall decreases in our current liabilities of $5.7 million, partially offset by decreases in our current assets of $5.1 million. Our current liabilities decreased primarily due to $4.6 million of payments made associated with our 2002 restructuring, while our current assets decreased primarily due to higher collections of accounts receivable.

Credit Facility

In 2005, 2004 and 2003, we had net borrowings (repayments) of $(4.0) million, $9.0 million and $7.0 million, respectively. The primary use of these borrowings was to fund a portion of our capital expenditures each year. In March 2005, some of our borrowings were used to make payment on the Shingleton settlement. These borrowings were repaid in 2005 with cash flow provided by operations. See Item 3 of this Annual Report on Form 10-K. Additionally, in 2004, borrowings under our Credit Facility were used to pay a portion of the purchase price for the acquisition of DPS Data Group LLC (DPS). We paid $2.7 million, $1.4 million and $961,000 of interest expense against amounts outstanding for each of those years.

On June 24, 2005, we entered into the Credit Facility. The Credit Facility, which amended our existing three-year $100.0 million revolving credit facility, is structured as a $125.0 million secured revolving facility with a $5.0 million sub-limit for swing line loans and a $30.0 million sub-limit for multicurrency borrowings. The Credit Facility includes a $50.0 million accordion feature, which will allow us to increase our borrowing capacity to $175.0 million, subject to obtaining commitments for the incremental capacity from existing or new lenders. The amendment extended the maturity date from December 2, 2006 to June 24, 2010.

Borrowings under the Credit Facility can bear interest at various rates, depending upon the type of loan. We have two borrowing options, either a “Base Rate” option, under which interest rate is calculated using the higher of the federal funds rate plus 0.5% or the Bank of America prime rate, plus a spread ranging from 0% to 0.75%, or a “Eurocurrency Rate” option, under which interest rate is calculated using LIBOR plus a spread ranging from 1.00% to 2.25%. The amount of the spread under each borrowing option depends on our ratio of funded debt to EBITDA (which, for purposes of the Credit Facility, is defined as income before interest expense, interest income, income taxes, and depreciation and amortization and certain other charges).

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We incurred $596,000 of debt issuance costs associated with the Credit Facility. These costs have been deferred and are being amortized over the five-year term of the Credit Facility. The unamortized issuance costs associated with the original credit facility of $306,000 will continue to be amortized over the new five-year term. We are in compliance with all of the covenants under the Credit Facility as of December 31, 2005.

Litigation

On March 1, 2005, we announced a settlement with the plaintiffs in the Shingleton litigation. Under the terms of the settlement, ICT, without admitting liability or wrongdoing, agreed to pay $14.75 million to the plaintiff class to settle all allegations relating to unpaid wages, bonuses and other claims, as well as payments for liquidated damages allowed by West Virginia law of 30 days of wages plus interest, which was being sought for all class members regardless of the amount of wages allegedly unpaid. The settlement agreement was approved by the Court on June 27, 2005.

In 2005, our total legal costs associated with this litigation were $604,000. Until the litigation was settled, we had spent significant resources defending the Company in both the class action and its related litigation. Our associated legal costs in 2004 and 2003 were $2.6 million and $1.6 million.

Our accrual at December 31, 2004 was $14.8 million. In March 2005, we made payments of $14.8 million to satisfy our obligations under the settlement. This payment was funded with cash-on-hand, borrowings under our Credit Facility and proceeds from responsive insurance coverage.

We sought insurance coverage for part of the damages in this litigation under our Directors and Officers policies that were in effect with two insurers. We received a payment of $2.7 million in March 2005 from one of the insurers. During the third quarter of 2005, we negotiated a settlement with the other insurer and collected the $4.1 million settlement amount. In addition to the proceeds from the insurance carrier, we also settled a related matter with one of our insurance brokers for $115,000, which was collected in January 2006. There are no remaining accruals associated with the Shingleton litigation as of December 31, 2005.

Capital Expenditures and Business Combinations

In 2005, we spent $21.1 million on capital expenditures as compared to $25.1 million and $19.0 million in 2004 and 2003, respectively. For each year, these amounts represented the vast majority of our investing activities. A portion of our capital expenditures is reflected in our workstation growth. There were 10,662 workstations in operation at December 31, 2005 compared to 9,264 workstations at December 31, 2004 and 8,323 at December 31, 2003.

In 2005, we added a net total of 1,398 workstations. This included 692 workstations added to our offshore and near-shore locations, located primarily in the Philippines and Mexico. The remaining 706 workstations were added in our domestic contact centers. We spent approximately $14.8 million on workstation expansion. The remainder of our capital expenditures related primarily to information technology hardware and software.

In 2004, we added a net total of 941 workstations at our contact centers in the U.S. and abroad. In 2004, 981 new workstations were added in the Philippines, where we opened our second contact center. We spent approximately $11.5 million on workstation expansion. We also made significant investments in our information technology resources. Approximately $11.4 million was spent on hardware and software and on various upgrades and enhancements to our contact center dialing technologies.

In 2003, we spent $5.1 million less on capital expenditures than we spent in 2002. Our spending was curtailed in 2003 as we completed our restructuring that was begun in 2002. In 2003, a net total of 46 workstations were added across our contact centers. This reflects the elimination of 937 workstations during 2003, primarily through the restructuring that occurred at the end of 2002.

In addition to capital expenditures, we spent $178,000, $3.0 million and $671,000 in 2005, 2004 and 2003, respectively on business combinations. In March 2005, we made the final payment associated with our acquisition of Grupo Teleinter, S.A. de C.V., a contact center in Mexico City, which was acquired in 2002 for $1.6 million. This payment of $178,000 was contingent upon the subsidiary’s operating results and was agreed to at the time of the acquisition. We also made additional contingent payments of $671,000 for this business in 2003. The amounts paid in 2005 and 2003 were accounted for as additional goodwill.

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In April 2004, we acquired the assets of DPS for $3.0 million. This amount included approximately $111,000 of direct costs incurred for the transaction. In connection with the acquisition of DPS, we agreed to pay the shareholders of DPS additional consideration based on the achievement of specific financial goals for 2004. These goals were not achieved and therefore no additional amounts were paid out under this agreement.

Our operations will continue to require significant capital expenditures to support the growth of our business. Historically, equipment purchases have been financed through cash generated from operations, the Credit Facility and our ability to acquire equipment through operating leases. We believe that cash-on-hand, together with cash flow generated from operations, the ability to acquire equipment through operating leases, and funds available under our Credit Facility will be sufficient to finance our current operations and planned capital expenditures at least into 2007.

We have an effective shelf registration statement filed with the Securities and Exchange Commission (the “SEC”) to register 3,000,000 shares of common stock, including 1,000,000 shares by selling shareholders, plus an allowance for over allotments, to be sold in the future.

Commitments and Obligations

As of December 31, 2005, we are also parties to various agreements that create contractual obligations and commercial commitments. These obligations and commitments will have an impact on future liquidity and the availability of capital resources. We expect to satisfy our contractual obligations through cash flows generated from operations. We would also consider accessing capital markets to meet our needs, although we can make no assurances that this type of financing would be available when we might need it. The tables noted below present a summary of these obligations and commitments:

Contractual Obligations:

(in thousands)

	Payments Due By Period
Description	Total		Less than 1 Year		1 to 3 Years		3 to 5 Years		More than 5 Years
Operating leases (1)	$	81,898	$	22,869	$	26,509	$	12,405	$	20,115
Telephone contract commitments		5,047		4,346		701		—		—
Credit Facility (2)		35,000		—		—		35,000		—
Total contractual obligations	$	121,945	$	27,215	$	27,210	$	47,405	$	20,115

(1) Includes facility and equipment operating leases, some of which call for payment of direct operating costs in addition to rent. These obligation amounts include future minimum lease payments and exclude such direct operating costs.

(2) At December 31, 2005, $35.0 million of borrowings were outstanding under the Credit Facility and were classified as long-term. The amount of the unused Credit Facility at December 31, 2005 was $90.0 million. For additional information, see Note 8 to the consolidated financial statements, included in Item 8 of this Form 10-K.

Our table of contractual obligations excludes purchase orders for merchandise and supplies in the normal course of business that are expected to be liquidated within 12 months.

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123R, “Share-Based Payment.” SFAS No. 123R replaces SFAS No. 123, “Accounting for Stock-Based Compensation” supercedes APB Opinion No. 25, “Accounting for Stock Issued to Employees” and amends SFAS No. 95, “Statement of Cash Flows.” SFAS No. 123R eliminates the ability to account for stock-based compensation transactions using the intrinsic value method under APB Opinion No. 25, and will require instead that such transactions be accounted for using a fair value based method. SFAS No. 123R requires compensation costs related to share-based payment transactions to be recognized in the financial statements over the period that an employee provides service in exchange for the award. We will adopt SFAS No. 123R effective January 1, 2006 using the modified prospective method.

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Under the modified prospective method, companies are required to record compensation cost for new and modified awards over the related vesting period of such awards and record compensation cost prospectively for the unvested portion of awards issued and outstanding at the date of adoption over the remaining vesting period of such awards. No change to prior periods presented is permitted under the modified prospective method.

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections”, which replaces APB Opinion No. 20, “Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements.” SFAS No. 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes retrospective application as of the earliest period presented, or the latest practicable date, as the required method for reporting a voluntary change in accounting principle and the reporting of a correction of an error. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption of this statement will not have a material effect on our financial condition or results of operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our operations are exposed to market risks primarily as a result of changes in interest rates and foreign currency exchange rates. We do not use derivative financial instruments for speculative or trading purposes. To meet disclosure requirements, we perform a sensitivity analysis to determine the effects that market risk exposures may have on our debt and other financial instruments. Information provided by the sensitivity analysis does not necessarily represent the actual changes in fair value that would be incurred under normal market conditions because, due to practical limitations, all variables other than the specific market risk factor are held constant.

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our Credit Facility. A change in market interest rates exposes us to the risk of earnings or cash flow loss but would not impact the fair market value of the related underlying instrument. Borrowings under our Credit Facility are subject to variable LIBOR or prime base rate pricing. Accordingly, a 1.0% change (100 basis points) in the LIBOR rate and the prime rate would have resulted in interest expense changing by $436,000 and $402,000 in 2005 and 2004, respectively. The rate on the $35.0 million of outstanding borrowings at December 31, 2005 approximated market rates; thus, the fair value of the debt approximates its reported value. In the past, management has not entered into financial instruments such as interest rate swaps or interest rate lock agreements. However, we may consider these instruments to manage the impact of changes in interest rates based on management’s assessment of future interest rates, volatility of the yield curve and our ability to access the capital markets in a timely manner.

Foreign Currency Risk

We have operations in Canada, Ireland, the United Kingdom, Australia, Barbados, Mexico and the Philippines that are subject to foreign currency fluctuations. As currency rates change, translation of the foreign entities’ statements of operations from local currencies to U.S. dollars affects year-to-year comparability of operating results.

Our most significant foreign currency exposures occur when revenue is generated in one foreign currency and corresponding expenses are generated in another foreign currency. Historically, our most significant exposure has been with our Canadian operations, where revenue is generated in U.S. dollars (USD) and the corresponding expenses are generated in Canadian dollars (CAD). When the value of the CAD increases against the USD, CAD denominated expenses increase and operating margins are negatively impacted. Partially offsetting this exposure is indigenous Canadian business and associated profitability where USD profits will be higher in a period of a strong CAD. Additionally, as we continue to outsource production to the Philippines, we may experience similar foreign currency exposure as revenue is also generated in USD with the corresponding expenses generated in Philippine pesos (PHP).

We continue to hedge a portion of anticipated operating costs and payables associated with the CAD, primarily payroll expenses, rental expenses and other known recurring expenses, on a monthly basis to mitigate the impact of exchange rate fluctuations. During the latter part of 2005, we decided to also hedge the currency exposure in the Philippines for fiscal year 2006, as the exchange rate of the PHP against the USD began to demonstrate increased volatility, which management expects to continue into 2006. Similar to our CAD strategy, we enter into derivative contracts which serve to hedge a portion of anticipated operating costs and payables associated with the PHP, primarily payroll expenses, rental expenses, telephone costs and other known recurring costs.

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The impact of foreign currencies will continue to present economic challenges for us and could negatively impact overall earnings. A 5% change in the value of the USD relative to foreign currencies would have had an impact of approximately $2.5 million and $1.2 million on our annual earnings in 2005 and 2004, respectively.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our consolidated financial statements being filed under this Item 8 can be found beginning on page F-1 of this Annual Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 9A. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report are functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding disclosure.

(b) Management’s Report on Internal Control Over Financial Reporting

Our management’s report on internal control over financial reporting is set forth in Item 8 of this Annual Report on Form 10-K and can be found on page F-2.

(c) Change in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information with respect to this item is incorporated by reference from our definitive proxy statement in connection with our 2006 Annual Meeting of Shareholders to be filed no later than April 14, 2006 (the Proxy Statement).

ITEM 11. EXECUTIVE COMPENSATION

Information with respect to this item is incorporated by reference from the Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information with respect to this item is incorporated by reference from the Proxy Statement.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information with respect to this item is incorporated by reference from the Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information with respect to this item is incorporated by reference from the Proxy Statement.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Financial Statements and Financial Statement Schedules

See Index to Consolidated Financial Statements and Financial Statement Schedule on page F-1.

Exhibits

The following is a list of exhibits filed as part of this Annual Report on Form 10-K. Where so indicated by footnote, exhibits which were previously filed are incorporated herein by reference. For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated parenthetically except for those situations where the exhibit number was the same as set forth below.

3.1	Amended and Restated Articles of Incorporation of the Company (Filed as Exhibit 3.1 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 on June 4, 1996 (Registration No. 333-4150))
3.2	Amended and Restated Bylaws of the Company (Filed as Exhibit 3.2 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 on June 4, 1996 (Registration No. 333-4150))
9.1	Amended and Restated Voting Trust Agreement among John J. Brennan, Donald P. Brennan and the Company, dated October 16, 2000 (Filed as Exhibit 99.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
10.1	ICT Group, Inc. 1987 Stock Option Plan (Filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-1 on April 26, 1996 (Registration No. 333-4150))+
10.2	Amendment 1996-1 to the ICT Group, Inc. 1987 Stock Option Plan (Filed as Exhibit 10.1 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 on June 4, 1996 (Registration No. 333-4150))+
10.3	ICT Group, Inc. Equity Incentive Plan (Filed as Exhibit 10.2 to the Company’s Registration Statement on Form S-1 on April 26, 1996 (Registration No. 333-4150))+
10.4	ICT Group, Inc. 1996 Equity Compensation Plan as amended through May 20, 2003 (Filed as Exhibit 10.4 to the Company’s Annual Report on Form 10-k for the year ended December 31, 2005)+*
10.5	ICT Group, Inc. 1996 Non-Employee Directors Plan as amended through May 18, 2004 (Filed as Exhibit 10.5 to the Company’s Annual Report on Form 10-k for the year ended December 31, 2005)+*
10.6	ICT Group, Inc. Non-Qualified Deferred Compensation Plan (Filed as Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999)+
10.7	Form of Voting Agreement between the Company and certain option holders (Filed as Exhibit 10.13 to the Company’s Registration Statement on Form S-1 on April 26, 1996 (Registration No. 333-4150))
10.8	Amended and Restated Shareholders Agreement among John J. Brennan, Donald P. Brennan, the Company and certain family trusts, dated October 16, 2000 (Filed as Exhibit 99.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
10.9	Employment Agreement between John J. Brennan and the Company, dated May 8, 1996 (Filed as Exhibit 10.5 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 on June 4, 1996 (Registration No. 333-4150))+

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10.10	Employment Agreement between John L. Magee and the Company, dated April 1, 1987 (Filed as Exhibit 10.7 to the Company’s Registration Statement on Form S-1 on April 26, 1996 (Registration No. 333-4150))+
10.11	Employment Agreement between John D. Campbell and the Company, dated October 1, 1987 (Filed as Exhibit 10.8 to the Company’s Registration Statement on Form S-1 on April 26, 1996 (Registration No. 333-4150))+
10.12	Employment Agreement between Vincent A. Paccapaniccia and the Company, dated August 24, 1998 (Filed as Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998)+
10.13	Employment Agreement between Timothy F. Kowalski and the Company, dated July 7, 1997 (Filed as Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999)+
10.14	Amendment to Employment Agreement between Vincent A. Paccapaniccia and the Company, dated January 2, 2002 (Filed as Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001)+
10.15	Employment Agreement between Vincent M. Dadamo and the Company, dated May 29, 1999 (Filed as Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999)+
10.16	Employment Agreement between Pam Goyke and the Company, dated September 11, 2000 (Filed as Exhibit 10.21 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)+
10.17	Employment Agreement between Dean Kilpatrick and the Company, dated May 5, 1995 (Filed as Exhibit 10.22 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)+
10.18	Amendment to Employment Agreement between Vincent M. Dadamo and the Company, dated January 2, 2002 (Filed as Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001)+
10.19	Amended and Restated Credit Agreement, dated as of December 2, 2003, among the Registrant, certain subsidiaries of the Registrant named therein as guarantors, the lenders named therein, and Bank of America, N.A. as Administrative Agent, Swing Line Lender and L/C Issuer (Filed as Exhibit 10.1 to the Company’s Form 8-K filed on December 5, 2003)
	Amended and Restated Security Agreement, dated as of December 2, 2003, among the Registrant, certain subsidiaries of the Registrant named therein as grantors, and Bank of America, N.A. as Administrative Agent (Filed as Exhibit 10.2 to the Company’s Form 8-K filed on December 5, 2003)
	Amended and Restated Pledge Agreement, dated as of December 2, 2003, among the Registrant, certain subsidiaries of the Registrant named therein as pledgors, and Bank of America, N.A. as Administrative Agent (Filed as Exhibit 10.3 to the Company’s Form 8-K filed on December 5, 2003)
10.20	Lease Agreement between Brandywine Operating Partnership, L.P., dated January 23, 2001 (Filed as Exhibit 10.23 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
10.22	Amendment to Employment Agreement between Dean Kilpatrick and the Company, January 2, 2002 (Filed as Exhibit 10.22 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001)+
10.24	Employment Agreement between Robert Mannarino and the Company, dated June 18, 2001 (Filed as Exhibit 10.24 to the Company’s Annual Report on Form 10-K for the year ended December 21, 2001)+
10.25	Employment Agreement between John J. Brennan and the Company, dated August 1, 2002 (Filed as Exhibit 10.25 to the Company’s Quarterly Report on Form 10-Q for the quarter ending September 30, 2002)+
10.26	Employment Agreement between John L. Magee and the Company, dated August 1, 2002 (Filed as Exhibit 10.26 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)+

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10.27	Amendment to Employment Agreement between Vincent A. Paccapaniccia and the Company, dated October 1, 2002 (Filed as Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)+
10.28	Amendment to Employment Agreement between Vincent M. Dadamo and the Company, dated October 1, 2002 (Filed as Exhibit 10.28 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)+
10.29	Amendment to Employment Agreement between Pam Goyke and the Company, dated October 1, 2002 (Filed as Exhibit 10.29 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)+
10.30	Amendment to Employment Agreement between Dean Kilpatrick and the Company, dated October 1, 2002 (Filed as Exhibit 10.30 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)+
10.31	Employment Agreement between John Campbell and the Company, dated March 1, 2003 (Filed as Exhibit 10.31 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)+
10.32	Amendment to Employment Agreement between Timothy F. Kowalski and the Company, dated March 17, 2003 (Filed as Exhibit 10.32 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)+
10.33	Employment Agreement between Jeffrey Moore and the Company, dated November 7, 2003 (Filed as Exhibit 10.33 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003) +
10.34	Employment Agreement between Donald T. McCormick and the Company, dated December 1, 1999 (Filed as Exhibit 10.34 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004) +
10.35	Employment Agreement between James Shannon and the Company, dated September 15, 2002 (Filed as Exhibit 10.35 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004) +
10.36	ICT Group, Inc. Incentive Plan (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 15, 2005)+
10.37	Description of Compensation of Non-Employee Directors (Filed as Exhibit 10.37 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004) +
10.38	Employment Agreement between Janice A. Jones and the Company dated January 2, 2002, as amended on September 1, 2002 (Filed as Exhibit 10.38 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004) +
10.39	Proposed Settlement Agreement for the Shingleton class action litigation, dated February 25, 2005 (Filed as Exhibit 10.39 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2005) *
10.40	Settlement Agreement and Mutual Release with Federal Insurance Company, dated February 25, 2005 (Filed as Exhibit 10.40 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2005) *
10.41	Amended and Restated Voting Trust Agreement among John J. Brennan, Donald P. Brennan and the Company, dated April 1, 2004 (Filed as Exhibit 10.41 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2005) *
10.42	Voting Agreement among John J. Brennan, Eileen Brennan Oakley and the Company, dated April 1, 2004 (Filed as Exhibit 10.42 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2005) *
10.43	Amended and Restated Credit Agreement, dated as of June 24, 2005, among the Registrant, certain subsidiaries of the Registrant named therein as guarantors, the lenders named therein, and Bank of America, N.A. as Administrative Agent, Swing Line Lender and L/C Issuer (Filed as Exhibit 10.43 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2005) *

33

10.44	Amended and Restated Security Agreement, dated as of June 24, 2005, among the Registrant, certain subsidiaries of the Registrant named therein as grantors, and Bank of America, N.A. as Administrative Agent (Filed as Exhibit 10.44 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2005) *
10.45	Amended and Restated Pledge Agreement, dated as of June 24, 2005, among the Registrant, certain subsidiaries of the Registrant named therein as pledgors, and Bank of America, N.A. as Administrative Agent (Filed as Exhibit 10.45 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2005) *
10.46	Employment Agreement between Lloyd M. Wirshba and the Company, dated July 5, 2005 (Filed as Exhibit 10.46 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2005)+ *
10.47	Settlement Agreement and Mutual Release, dated August 10, 2005 by and between ICT Group, Inc. with various Individual Insureds and National Union Fire Insurance Company, referred to as National Union (Filed as Exhibit 10.47 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2005) *
10.48	ICT Group, Inc. Non-Qualified Retirement Plan (The Basic Plan Document, Adoption Agreement and amendments thereto are Filed as Exhibit 10.48 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005)+ *
10.49	ICT Group, Inc. 1996 Equity Compensation Plan Grant Form (Filed as Exhibit 10.49 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005)+ *
21	List of Subsidiaries *
23	Consent of KPMG LLP *
31.1	Chief Executive Officer’s Rule 13a-14(a)/15d-14(a) Certification *
31.2	Chief Financial Officer’s Rule 13a-14(a)/15d-14(a) Certification *
32.1	Chief Executive Officer’s Section 1350 Certification *
32.2	Chief Financial Officer’s Section 1350 Certification *

+ Compensation plans and arrangements for executives and others.

* Filed herewith

Financial Statements and Financial Statement Schedules

See Index to Consolidated Financial Statements and Financial Statement Schedule at page F-1.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ICT GROUP, INC.
	(Registrant)
Dated: March 6, 2006
	By:	/s/ John J. Brennan
		John J. Brennan
		Chairman, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature		Title	Date
By:	/s/ John J. Brennan John J. Brennan	Chairman, President and Chief Executive Officer and Director (principal executive officer)	March 6, 2006
By:	/s/ Vincent A. Paccapaniccia Vincent A. Paccapaniccia	Executive Vice President, Corporate Finance and Chief Financial Officer (principal financial and accounting officer)	March 6, 2006
By:	/s/ Donald P. Brennan Donald P. Brennan	Vice-Chairman	March 6, 2006
By:	/s/ Bernard Somers Bernard Somers	Director	March 6, 2006
By:	/s/ John Stoops John Stoops	Director	March 6, 2006
By:	/s/ Seth Lehr Seth Lehr	Director	March 6, 2006
By:	/s/ Gordon Coburn Gordon Coburn	Director	March 6, 2006

35

EXHIBIT INDEX

Exhibit No.	Description
3.1	Amended and Restated Articles of Incorporation of the Company (Filed as Exhibit 3.1 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 on June 4, 1996 (Registration No. 333-4150))
3.2	Amended and Restated Bylaws of the Company (Filed as Exhibit 3.2 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 on June 4, 1996 (Registration No. 333-4150))
9.1	Amended and Restated Voting Trust Agreement among John J. Brennan, Donald P. Brennan and the Company, dated October 16, 2000 (Filed as Exhibit 99.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
10.1	ICT Group, Inc. 1987 Stock Option Plan (Filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-1 on April 26, 1996 (Registration No. 333-4150))+
10.2	Amendment 1996-1 to the ICT Group, Inc. 1987 Stock Option Plan (Filed as Exhibit 10.1 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 on June 4, 1996 (Registration No. 333-4150))+
10.3	ICT Group, Inc. Equity Incentive Plan (Filed as Exhibit 10.2 to the Company’s Registration Statement on Form S-1 on April 26, 1996 (Registration No. 333-4150))+
10.4	ICT Group, Inc. 1996 Equity Compensation Plan as amended through May 20, 2003 (Filed as Exhibit 10.4 to the Company’s Annual Report on Form 10-k for the year ended December 31, 2005)+*
10.5	ICT Group, Inc. 1996 Non-Employee Directors Plan as amended through May 18, 2004 (Filed as Exhibit 10.5 to the Company’s Annual Report on From 10-k for the year ended December 31, 2005)+*
10.6	ICT Group, Inc. Non-Qualified Deferred Compensation Plan (Filed as Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999)+
10.7	Form of Voting Agreement between the Company and certain option holders (Filed as Exhibit 10.13 to the Company’s Registration Statement on Form S-1 on April 26, 1996 (Registration No. 333-4150))
10.8	Amended and Restated Shareholders Agreement among John J. Brennan, Donald P. Brennan, the Company and certain family trusts, dated October 16, 2000 (Filed as Exhibit 99.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
10.9	Employment Agreement between John J. Brennan and the Company, dated May 8, 1996 (Filed as Exhibit 10.5 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 on June 4, 1996 (Registration No. 333-4150))+
10.10	Employment Agreement between John L. Magee and the Company, dated April 1, 1987 (Filed as Exhibit 1.7 to the Company’s Registration Statement on Form S-1 on April 26, 1996 (Registration No. 333-4150))+
10.11	Employment Agreement between John D. Campbell and the Company, dated October 1, 1987 (Filed as Exhibit 10.8 to the Company’s Registration Statement on Form S-1 on April 26, 1996 (Registration No. 333-4150))+
10.12	Employment Agreement between Vincent A. Paccapaniccia and the Company, dated August 24, 1998 (Filed as Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998)+
10.13	Employment Agreement between Timothy F. Kowalski and the Company, dated July 7, 1997 (Filed as Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999)+
10.14	Amendment to Employment Agreement between Vincent A. Paccapaniccia and the Company, dated January 2, 2002 (Filed as Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001)+

36

10.15	Employment Agreement between Vincent M. Dadamo and the Company, dated May 29, 1999 (Filed as Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999)+
10.16	Employment Agreement between Pam Goyke and the Company, dated September 11, 2000 (Filed as Exhibit 10.21 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)+
10.17	Employment Agreement between Dean Kilpatrick and the Company, dated May 5, 1995 (Filed as Exhibit 10.22 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)+
10.18	Amendment to Employment Agreement between Vincent M. Dadamo and the Company, dated January 2, 2002 (Filed as Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001)+
10.19	Amended and Restated Credit Agreement, dated as of December 2, 2003, among the Registrant, certain subsidiaries of the Registrant named therein as guarantors, the lenders named therein, and Bank of America, N.A. as Administrative Agent, Swing Line Lender and L/C Issuer (Filed as Exhibit 10.1 to the Company’s Form 8-K filed on December 5, 2003)
	Amended and Restated Security Agreement, dated as of December 2, 2003, among the Registrant, certain subsidiaries of the Registrant named therein as grantors, and Bank of America, N.A. as Administrative Agent (Filed as Exhibit 10.2 to the Company’s Form 8-K filed on December 5, 2003)
	Amended and Restated Pledge Agreement, dated as of December 2, 2003, among the Registrant, certain subsidiaries of the Registrant named therein as pledgors, and Bank of America, N.A. as Administrative Agent (Filed as Exhibit 10.3 to the Company’s Form 8-K filed on December 5, 2003)
10.20	Lease Agreement between Brandywine Operating Partnership, L.P., dated January 23, 2001 (Filed as Exhibit 10.23 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
10.22	Amendment to Employment Agreement between Dean Kilpatrick and the Company, January 2, 2002 (Filed as Exhibit 10.22 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001)+
10.24	Employment Agreement between Robert Mannarino and the Company, dated June 18, 2001 (Filed as Exhibit 10.24 to the Company’s Annual Report on Form 10-K for the year ended December 21, 2001)+
10.25	Employment Agreement between John J. Brennan and the Company, dated August 1, 2002 (Filed as Exhibit 10.25 to the Company’s Quarterly Report on Form 10-Q for the quarter ending September 30, 2002)+
10.26	Employment Agreement between John L. Magee and the Company, dated August 1, 2002 (Filed as Exhibit 10.26 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)+
10.27	Amendment to Employment Agreement between Vincent A. Paccapaniccia and the Company, dated October 1, 2002 (Filed as Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)+
10.28	Amendment to Employment Agreement between Vincent M. Dadamo and the Company, dated October 1, 2002 (Filed as Exhibit 10.28 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)+
10.29	Amendment to Employment Agreement between Pam Goyke and the Company, dated October 1, 2002 (Filed as Exhibit 10.29 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)+
10.30	Amendment to Employment Agreement between Dean Kilpatrick and the Company, dated October 1, 2002 (Filed as Exhibit 10.30 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)+
10.31	Employment Agreement between John Campbell and the Company, dated March 1, 2003 (Filed as Exhibit 10.31 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)+

37

10.32	Amendment to Employment Agreement between Timothy F. Kowalski and the Company, dated March 17, 2003 (Filed as Exhibit 10.32 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)+
10.33	Employment Agreement between Jeffrey Moore and the Company, dated November 7, 2003 (Filed as Exhibit 10.33 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003)+
10.34	Employment Agreement between Donald T. McCormick and the Company, dated December 1, 1999 (Filed as Exhibit 10.34 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004)+
10.35	Employment Agreement between James Shannon and the Company, dated September 15, 2002 (Filed as Exhibit 10.35 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004)+
10.36	ICT Group, Inc. Incentive Plan (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 15, 2005)+
10.37	Description of Compensation of Non-Employee Directors (Filed as Exhibit 10.37 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004)+
10.38	Employment Agreement between Janice A. Jones and the Company dated January 2, 2002, as amended on September 1, 2002 (Filed as Exhibit 10.38 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004)+
10.39	Proposed Settlement Agreement for the Shingleton class action litigation, dated February 25, 2005 (Filed as Exhibit 10.39 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2005) *
10.40	Settlement Agreement and Mutual Release with Federal Insurance Company, dated February 25, 2005 (Filed as Exhibit 10.40 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2005) *
10.41	Amended and Restated Voting Trust Agreement among John J. Brennan, Donald P. Brennan and the Company, dated April 1, 2004 (Filed as Exhibit 10.41 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2005) *
10.42	Voting Agreement among John J. Brennan, Eileen Brennan Oakley and the Company, dated April 1, 2004 (Filed as Exhibit 10.42 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2005) *
10.43	Amended and Restated Credit Agreement, dated as of June 24, 2005, among the Registrant, certain subsidiaries of the Registrant named therein as guarantors, the lenders named therein, and Bank of America, N.A. as Administrative Agent, Swing Line Lender and L/C Issuer (Filed as Exhibit 10.43 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2005) *
10.44	Amended and Restated Security Agreement, dated as of June 24, 2005, among the Registrant, certain subsidiaries of the Registrant named therein as grantors, and Bank of America, N.A. as Administrative Agent (Filed as Exhibit 10.44 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2005) *
10.45	Amended and Restated Pledge Agreement, dated as of June 24, 2005, among the Registrant, certain subsidiaries of the Registrant named therein as pledgors, and Bank of America, N.A. as Administrative Agent (Filed as Exhibit 10.45 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2005) *
10.46	Employment Agreement between Lloyd M. Wirshba and the Company, dated July 5, 2005 (Filed as Exhibit 10.46 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2005)+ *
10.47	Settlement Agreement and Mutual Release, dated August 10, 2005 by and between ICT Group, Inc. with various Individual Insureds and National Union Fire Insurance Company, referred to as National Union (Filed as Exhibit 10.47 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2005) *
10.48	ICT Group, Inc. Non-Qualified Retirement Plan (The Basic Plan Document, Adoption Agreement and amendments thereto are Filed as Exhibit 10.48 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005)+ *
10.49	ICT Group, Inc. 1996 Equity Compensation Plan Grant Form (Filed as Exhibit 10.49 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005)+ *
21	List of Subsidiaries *

38

23	Consent of KPMG LLP *
31.1	Chief Executive Officer’s Rule 13a – 14(a)/15d – 14 (a) Certification *
31.2	Chief Financial Officer’s Rule 13a – 14(a)/15d – 14 (a) Certification *
32.1	Chief Executive Officer’s Section 1350 Certification *
32.2	Chief Financial Official’s Section 1350 Certification *

+ Compensation plans and arrangements for executives and others.

* Filed herewith.

39

ICT GROUP, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND

FINANCIAL STATEMENT SCHEDULE

	Page
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING	F-2
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-3
CONSOLIDATED BALANCE SHEETS	F-5
CONSOLIDATED STATEMENTS OF OPERATIONS	F-6
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY	F-7
CONSOLIDATED STATEMENTS OF CASH FLOWS	F-8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	F-9
FINANCIAL STATEMENT SCHEDULE:
SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS	F-27

F-1

Management’s Report on Internal Control over Financial Reporting

Management of ICT Group, Inc. (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management evaluated the Company’s internal control over financial reporting as of December 31, 2005. In making this assessment, management used the framework established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a result of this assessment and based on the criteria in the COSO framework, management has concluded that, as of December 31, 2005, the Company’s internal control over financial reporting was effective.

The Company’s independent auditors, KPMG LLP, have audited management’s assessment of the Company’s internal control over financial reporting. Their opinions on management’s assessment and the effectiveness of the Company’s internal control over financial reporting and on the Company’s consolidated financial statements appear on F-3 and F-4 in this Annual Report on Form 10-K.

/s/ John J. Brennan

John J. Brennan

Chairman, President and Chief Executive Officer

/s/ Vincent A. Paccapaniccia

Vincent A. Paccapaniccia

Executive Vice President, Corporate Finance and

Chief Financial Officer

March 6, 2006

F-2

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

ICT Group, Inc.:

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control over Financial Reporting, that ICT Group, Inc. maintained effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). ICT Group, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that ICT Group, Inc. maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, ICT Group, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of ICT Group, Inc. and subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2005, and the related financial statement schedule, and our report dated March 6, 2006 expressed an unqualified opinion on those consolidated financial statements and the related financial statement schedule.

/s/ KPMG LLP

Philadelphia, Pennsylvania

March 6, 2006

F-3

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

ICT Group, Inc.:

We have audited the accompanying consolidated balance sheets of ICT Group, Inc. and subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2005. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule, “Valuation and Qualifying Accounts.” These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ICT Group, Inc. and subsidiaries as of December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of ICT Group, Inc.’s internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 6, 2006 expressed an unqualified opinion on management’s assessment of, and the effective operation of, internal control over financial reporting.

/s/ KPMG LLP

Philadelphia, Pennsylvania

March 6, 2006

F-4

ICT GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

	December 31,
	2005		2004
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	10,428	$	11,419
Accounts receivable, net of allowance for doubtful accounts of $362 and $ 439		82,656		64,848
Prepaid expenses and other		11,573		14,332
Deferred income taxes		4,238		7,410
Total current assets		108,895		98,009
PROPERTY AND EQUIPMENT, NET		56,924		56,298
OTHER ASSETS		6,940		6,269
	$	172,759	$	160,576
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	19,946	$	16,853
Accrued expenses and other		31,433		16,399
Income taxes payable		795		1,215
Accrued litigation		—		14,803
Total current liabilities		52,174		49,270
LINE OF CREDIT		35,000		39,000
OTHER LIABILITIES		2,345		2,259
DEFERRED INCOME TAXES		2,228		1,099
COMMITMENTS AND CONTINGENCIES (NOTE 12)
SHAREHOLDERS’ EQUITY:
Preferred stock, $0.01 par value 5,000 shares authorized, none issued		—		—
Common stock, $0.01 par value, 40,000 shares authorized, 12,789 and 12,646 shares issued and outstanding		128		127
Additional paid-in capital		51,791		51,756
Retained earnings		27,566		15,391
Accumulated other comprehensive income		1,527		1,674
Total shareholders’ equity		81,012		68,948
	$	172,759	$	160,576

The accompanying notes are an integral part of these consolidated financial statements.

F-5

ICT GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

	For the Year Ended December 31,
	2005			2004			2003
REVENUE	$	401,334		$	325,529		$	298,142
OPERATING EXPENSES:
Cost of services		244,572			194,365			179,679
Selling, general and administrative		141,601			123,559			115,273
Litigation costs (recoveries)		(3,611	)		10,338			4,693
Restructuring reversal		—			—			(686	)
		382,562			328,262			298,959
Operating income (loss)		18,772			(2,733	)		(817	)
INTEREST EXPENSE		(2,637	)		(1,729	)		(1,293	)
INTEREST INCOME		173			135			110
Income (loss) before income taxes		16,308			(4,327	)		(2,000	)
INCOME TAX PROVISION (BENEFIT)		4,133			(1,634	)		(856	)
NET INCOME (LOSS)	$	12,175		$	(2,693	)	$	(1,144	)
EARNINGS (LOSS) PER SHARE:
Basic earnings (loss) per share	$	0.96		$	(0.21	)	$	(0.09	)
Diluted earnings (loss) per share	$	0.94		$	(0.21	)	$	(0.09	)
Shares used in computing basic earnings (loss) per share		12,722			12,571			12,483
Shares used in computing diluted earnings (loss) per share		12,964			12,571			12,483

The accompanying notes are an integral part of these consolidated financial statements.

F-6

ICT GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands)

	Common Stock			Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
	Shares	Amount
BALANCE, JANUARY 1, 2003	12,394	$	124	$	51,277	$	19,228		$	(2,593	)	$	68,036
Exercise of stock options and related income tax benefit	89		1		208		—			—			209
Comprehensive income:
Net loss	—		—		—		(1,144	)		—			(1,144	)
Currency translation adjustment	—		—		—		—			3,442			3,442
Unrealized gain on derivative instruments, net of tax	—		—		—		—			8			8
Total comprehensive income													2,306
BALANCE, DECEMBER 31, 2003	12,483		125		51,485		18,084			857			70,551
Exercise of stock options and related income tax benefit	163		2		271		—			—			273
Comprehensive loss:
Net loss	—		—		—		(2,693	)		—			(2,693	)
Currency translation adjustment	—		—		—		—			538			538
Unrealized gain on derivative instruments, net of tax	—		—		—		—			279			279
Total comprehensive loss													(1,876	)
BALANCE, DECEMBER 31, 2004	12,646		127		51,756		15,391			1,674			68,948
Exercise of stock options and related income tax benefit	143		1		35								36
Comprehensive income:
Net income	—		—		—		12,175			—			12,175
Currency translation adjustment	—		—		—		—			(497	)		(497	)
Unrealized gain on derivative instruments, net of tax	—		—		—		—			350			350
Total comprehensive income													12,028
BALANCE, DECEMBER 31, 2005	12,789	$	128	$	51,791	$	27,566		$	1,527		$	81,012

The accompanying notes are an integral part of these consolidated financial statements.

F-7

ICT GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	For the Year Ended December 31,
	2005			2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	12,175		$	(2,693	)	$	(1,144	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		20,790			17,822			17,855
Tax benefit of stock option exercises		109			169			49
Deferred income tax expense (benefit)		4,029			181			(1,491	)
Gain on sale of equipment		(184	)		—			—
Asset impairment		458			—			280
Amortization of debt issuance costs		194			209			300
(Increase) decrease in:
Accounts receivable		(17,755	)		(15,327	)		8,125
Prepaid expenses and other		2,727			(2,076	)		(3,047	)
Other assets		(418	)		(455	)		8
Increase (decrease) in:
Accounts payable		3,176			3,274			(2,695	)
Accrued expenses and other liabilities		15,962			1,172			(4,572	)
Income taxes payable		(420	)		375			(1,481	)
Accrued litigation		(14,750	)		10,403			3,050
Net cash provided by operating activities		26,093			13,054			15,237
CASH FLOWS FROM INVESTING ACTIVITIES:
Net sales of marketable securities		—			5,500			—
Purchases of property and equipment		(21,132	)		(25,135	)		(19,046	)
Proceeds from sale of equipment		249			—			—
Business acquisitions		(178	)		(3,011	)		(671	)
Net cash used in investing activities		(21,061	)		(22,646	)		(19,717	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under line of credit		45,000			45,000			19,000
Payments on line of credit		(49,000	)		(36,000	)		(12,000	)
Payment of debt issuance costs		(596	)		—			(571	)
Proceeds from exercise of stock options		209			339			160
Net cash (used in) provided by financing activities		(4,387	)		9,339			6,589
EFFECT OF FOREIGN EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENTS		(1,636	)		(419	)		(797	)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(991	)		(672	)		1,312
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		11,419			12,091			10,779
CASH AND CASH EQUIVALENTS, END OF YEAR	$	10,428		$	11,419		$	12,091

The accompanying notes are an integral part of these consolidated financial statements.

F-8

ICT GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2005, 2004 AND 2003

1. BACKGROUND:

ICT Group, Inc. (incorporated in the Commonwealth of Pennsylvania in 1987) and subsidiaries (the Company) is a leading global provider of outsourced business services solutions. We provide a comprehensive mix of sales, service, marketing and business services outsourcing solutions. We manage customer operations centers in the U.S., U.K., Ireland, Canada, Australia, Mexico, Barbados and the Philippines from which we support domestic and multinational corporations and institutions, primarily in the financial, insurance, telecommunications, healthcare, information technology, media and energy services industries. Unless the context indicates otherwise, “ICT,” the “Company,” “we,” “our,” and “us” refer to ICT Group, Inc. and, where appropriate, one or more of its subsidiaries.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

The consolidated financial statements include the accounts of ICT Group, Inc., and its wholly-owned and controlled subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

Pursuant to Statement of Financial Accounting Standards (SFAS) No. 52, “Foreign Currency Translation,” the functional currency of our foreign subsidiaries is their local currency. Therefore, all assets and liabilities of our foreign subsidiaries are translated at the period-end currency exchange rate and revenue and expenses are translated at an average currency exchange rate for the period. The resulting translation adjustment is accumulated in a separate component of shareholders’ equity. Intercompany loans are generally treated as a permanent investment as repayment is not planned or anticipated in the near future. Therefore, gains and losses on the remeasurement of these loans are accumulated in a separate component of shareholders’ equity. Should we revise our intent with respect to these loans and seek their repayment, the remeasurement gains and losses would be included in the determination of net income or loss.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant items subject to such estimates and assumptions include the valuation of property and equipment, the assessment of the recoverability of goodwill and intangible assets, valuation allowances for receivables and deferred income tax assets, restructuring accruals, litigation contingencies and the fair value of derivative instruments. Actual results could differ from those estimates.

Revenue Recognition

Revenue is typically calculated based on contracted per-minute or hourly rates with customers. We recognize revenue as services are performed, generally based on billable minutes or hours of work incurred. Some of our client contracts have performance standards, which can result in adjustments to monthly billings if the standards are not met. Any required adjustments to our monthly billings are reflected in our revenue on an as-incurred basis.

In order to provide our business services solutions, we may incur certain up-front project set-up costs specific to each customer contract. In certain instances, we can bill the customer for these costs; however, because the delivered item (project set-up services) does not have stand alone value to the customer, revenue is deferred and recognized as services are provided over the contract term or until contract termination, should that occur prior to the end of the contract term. To the extent we have billed these costs and there are no customer issues with collection, we will defer the project set-up costs and amortize such amounts over the program period, remaining contract term or until contract termination. The costs incurred are deferred only to the extent of the amounts billed. Amounts collected from customers prior to the performance of services are also recorded as deferred revenue. Deferred revenue totaled $8,146,000 and $4,295,000 as of December 31, 2005 and 2004, respectively, and is included in accrued expenses and other in the accompanying consolidated balance sheets. The deferred revenue related to

F-9

up-front project set-up costs was $4,813,000 and $1,634,000 as of December 31, 2005 and 2004, respectively. The deferred cost associated with this revenue is included in prepaid expenses and other in the accompanying consolidated balance sheets. The deferred costs totaled $3,305,000 and $1,144,000 at December 31, 2005 and 2004, respectively.

Our revenue recognition policy is in accordance with Staff Accounting Bulletin No. 104, “Revenue Recognition “ and Emerging Issues Task Force (EITF) Issue 00-21, “Revenue Arrangements With Multiple Deliverables.”

Grant Income

We earn income from government grants, primarily in Ireland and Canada. We recognize the grant income as we incur the related costs, primarily payroll, for which the grant is intended to compensate. Grant income is recorded as a reduction of the related expense in the consolidated statement of operations. If we have already incurred the costs, then we recognize grant income during the period in which the grant becomes a receivable or is collected. If there are additional conditions attached to the grant, we evaluate the conditions and only record income if there is reasonable assurance that we will comply with the conditions. Many of our grants have conditions relating to the maintenance of specified levels of employees, with which we have the intent and ability to comply. To the extent we are not able to remain in compliance with the terms of certain of the grants, we may have to refund a portion of the grant. To date, no such amounts have been required to be refunded. Grant receivables are recorded in prepaid expenses and other on our consolidated balance sheet.

Cash and Cash Equivalents

Cash and cash equivalents include cash and highly liquid investments purchased with maturities of three months or less. Cash equivalents at December 31, 2005 and 2004 consisted of an overnight repurchase agreement and money market accounts.

Marketable Securities

To the extent we maintain certain investments in marketable securities, we account for them according to SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities.” In 2004, we invested in auction rate securities that were classified as available-for-sale securities. Available-for-sale securities are carried at fair value with unrealized gains and losses recorded in accumulated other comprehensive income (loss), net of the related tax effect, if any. Any declines in the fair value of the securities that are considered “other than temporary” are recognized currently in the statement of operations as an impairment of the security. Subsequent recoveries in the fair value, if any, are not recognized in the statement of operations, but as a component of accumulated other comprehensive income (loss), as indicated above. During the fourth quarter of 2004, we sold our portfolio of auction rate securities totaling $5,500,000 and had no such investments at December 31, 2004. There was no gain or loss on the sale. We have not since entered into similar investments.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts represents management’s best estimate of the amount of probable credit losses in existing accounts receivable. We determine the allowance based on historical write-off experience and any specific customer collection issues that have been identified. We review our allowance for doubtful accounts monthly. Past due balances are reviewed individually for collectibility. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Amounts charged to expense in 2005, 2004 and 2003 were $150,000, $205,000 and $97,000, respectively. We do not have any off-balance sheet credit exposure related to our customers.

Property and Equipment

Property and equipment are recorded at cost. Depreciation and amortization are provided over the estimated useful lives of the applicable assets using the straight-line method. The lives used are as follows:

Communications and computer equipment	3-7 years
Furniture and fixtures	5-7 years
Leasehold improvements	Lesser of lease term or useful life

F-10

Depreciation and amortization expense relating to property and equipment was $20,449,000, $17,519,000 and $17,663,000 for the years ended December 31, 2005, 2004 and 2003, respectively. Repairs and maintenance are charged to expense as incurred. Additions and betterments are capitalized and amortized over their estimated useful lives. Improvements made to our leased facilities are amortized into expense over the remaining lease term.

Under the provisions of American Institute of Certified Public Accountants Statement of Position 98-1, “Accounting for Costs of Computer Software Developed or Obtained for Internal Use,” we capitalize the costs associated with software developed or obtained for internal use when both the preliminary project stage is completed and management has authorized funding for the project, and it is probable that the project will be completed and used to perform the function intended. Capitalized costs include only (i) external direct costs of materials and services consumed in developing or obtaining internal-use software, (ii) direct payroll and payroll-related costs relating to the time spent by employees on each internal-use software project, and (iii) interest costs incurred, when material, while developing internal-use software. Capitalization of such costs ceases no later than the point at which the project is substantially complete and ready for its intended purpose. We capitalized $948,000, $1,654,000 and $1,203,000 of costs during 2005, 2004 and 2003, respectively, which have been included in communications and computer equipment. These costs are amortized on a project-by-project basis over an estimated useful life, typically three years, beginning when the software is placed into operations and is ready for its intended purpose. At December 31, 2005, there was approximately $503,000 of capitalized costs associated with projects that are still in progress, and therefore are not currently being amortized.

Goodwill and Other Intangibles

Goodwill and other intangible assets are recorded in connection with business combinations (see Note 5). An impairment may exist when events have occurred or circumstances exist that would cause the fair value of these assets to fall below their carrying value. Although goodwill is no longer required to be amortized, we are required to perform an annual impairment review of our goodwill. This impairment review is performed in the fourth quarter of each year. The impairment assessment is a discounted cash flow analysis using projected cash flows of the Company. Management has determined that we have one reporting unit for purposes of applying SFAS No. 142, “Goodwill and Other Intangible Assets,” based on our current reporting structure. We performed our impairment test as of December 31, 2005 and determined that goodwill was not impaired. On an interim basis, we also evaluate whether any events have occurred or whether any circumstances exist which could indicate an impairment of our goodwill. For the years ended December 31, 2005, 2004 and 2003, there were no impairment charges taken against goodwill. Other intangible assets are evaluated under the provision of SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets,” as discussed below. There were no impairment charges taken against other intangibles for the years ended December 31, 2005, 2004 and 2003.

Impairment of Long-Lived Assets

Under the provisions of SFAS No. 144, long-lived assets, such as property and equipment and intangible assets, are to be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We continually evaluate whether events or circumstances have occurred that would indicate that the remaining estimated useful life of long-lived assets may warrant revision or that the remaining balance may not be recoverable. When factors indicate that long-lived assets should be evaluated for possible impairment, we use an estimate of the related undiscounted cash flows over the remaining life of the long-lived assets to measure recoverability. If impairment is indicated, measurement of the impairment is based on the difference between the carrying value and fair value of the assets, generally determined based on the present value of expected future cash flows associated with the use of the asset. For the years ended December 31, 2005, 2004 and 2003 we recorded impairment charges of $458,000, $0 and $205,000, respectively.

Income Taxes

Income taxes are accounted for under the asset and liability method in accordance with SFAS No. 109, “Accounting for Income Taxes.” Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.

F-11

Derivative Instruments

Derivative instruments are recorded at fair value on the consolidated balance sheet. We account for these derivative instruments pursuant to SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” as amended by SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities” and SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” Our derivatives are designated as cash flow hedges (see Note 16); therefore, to the extent the Company’s derivatives qualify for accounting as a hedging instrument, changes in fair value are recorded through accumulated other comprehensive income until settlement of the instrument, at which time gains and/or losses are realized.

Fair Value of Financial Instruments

Financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and a line of credit. Management believes that the carrying value of these assets and liabilities are representative of their respective fair values due to the short-term nature of those instruments. The interest rate on our outstanding borrowings under our line of credit at December 31, 2005 approximated market rates; thus, the fair value of the debt approximates its reported value.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash, cash equivalents and accounts receivable. We perform periodic evaluations of the relative credit standing of the financial institutions with which we do business. We maintain cash accounts that at times may exceed federally insured limits; however, we have not experienced any losses from maintaining cash accounts in excess of such limits. Management believes that we are not exposed to any significant risks on our cash accounts. Accounts receivable are subject to the financial condition of our customers. We periodically evaluate the financial condition of our customers and generally do not require collateral. Although we are an international business, much of our customer base is located in North America and not necessarily in the offshore locations where we operate. Our allowance for doubtful accounts reflects current market conditions and management’s assessment regarding the collectibility of our receivables (see Note 14).

Stock-based Compensation

We use the intrinsic value method of accounting for stock-based employee compensation in accordance with Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. Deferred compensation is recorded for option grants to employees for the amount, if any, by which the market price per share exceeds the exercise price per share at the measurement date, which is generally the grant date. Typically, the exercise price of our options equals the market price at the date of grant. For the years ended December 31, 2005, 2004 and 2003, we did not record any stock-based compensation expense. For option grants to non-employees, we apply fair value accounting in accordance with SFAS No. 123, “Accounting for Stock-Based Compensation” and EITF Issue 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.”

Had compensation cost for our stock-based compensation plans been determined under SFAS No. 123, net income (loss) and earnings (loss) per share would have been as follows:

	For the years ended December 31,
In thousands, except per share data	2005		2004			2003
Net income (loss), as reported	$	12,175	$	(2,693	)	$	(1,144	)
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of tax		432		459			560
Pro forma net income (loss)	$	11,743	$	(3,152	)	$	(1,704	)
Diluted earnings (loss) per share, as reported	$	0.94	$	(0.21	)	$	(0.09	)
Pro forma diluted earnings (loss) per share	$	0.90	$	(0.25	)	$	(0.14	)

F-12

The weighted average fair value of the options granted in 2005, 2004 and 2003 was estimated at $7.03, $8.01 and $8.59 per share, respectively, on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

	For the years ended December 31,
	2005		2004		2003
Expected dividend yield	0.0	%	0.0	%	0.0	%
Volatility	67	%	63	%	63	%
Risk free interest rate	4.26	%	4.35	%	4.10	%
Expected life	7.6 years		8 years		8 years

Comprehensive Income

We follow SFAS No. 130, “Reporting Comprehensive Income,” which requires companies to classify items of other comprehensive income (loss) by their nature in a financial statement and display the accumulated balance of other comprehensive income (loss) separately from retained earnings and additional paid-in capital in the equity section of the balance sheet. For the years ended December 31, 2005, 2004 and 2003, accumulated other comprehensive income (loss) consisted of foreign currency translation adjustments and unrealized gains and losses on outstanding derivative instruments.

As of December 31, 2005, 2004 and 2003, the accumulated balances for each classification of other comprehensive income were as follows:

	For the years ended December 31,
(in thousands)	2005		2004		2003
Derivative instruments, net of tax		637		287		8
Foreign currency translation adjustments		890		1,387		849
Accumulated other comprehensive income	$	1,527	$	1,674	$	857

Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated (see Note 12). Legal costs associated with loss contingencies are recorded as they are incurred.

Leasing Arrangements

We follow SFAS No. 13, “Accounting for Leases” and SFAS No. 98, “Accounting for Leases,” which requires companies to assess the classification of the leases they enter into as either a capital lease or an operating lease. Capital leases are considered financing arrangements and are accounted for on the balance sheet. Operating leases are considered to be rental arrangements and are not recorded on the balance sheet. Please refer to Note 12, where we disclose our future commitments under operating leases.

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123R, “Share-Based Payment.” SFAS No. 123R replaces SFAS No. 123, supercedes APB Opinion No. 25 and amends SFAS No. 95, “Statement of Cash Flows.” SFAS No. 123R eliminates the ability to account for stock-based compensation transactions using the intrinsic value method under APB Opinion No. 25, and will require instead that such transactions be accounted for using a fair value based method. SFAS No. 123R requires compensation costs related to share-based payment transactions to be recognized in the financial statements over the period that an employee provides service in exchange for the award. We will adopt SFAS No. 123R effective January 1, 2006 using the modified prospective method.

Under the modified prospective method, companies are required to record compensation cost for new and modified awards over the related vesting period of such awards and record compensation cost prospectively for the unvested portion of awards issued and outstanding at the date of adoption over the remaining vesting period of such awards. No change to prior periods presented is permitted under the modified prospective method.

F-13

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections,” which replaces APB Opinion No. 20, “Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements – An Amendment of APB Opinion No. 28.” SFAS No. 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes retrospective application as of the earliest period presented, or the latest practicable date, as the required method for reporting a voluntary change in accounting principle and the reporting of a correction of an error. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption of this statement will not have a material effect on our financial condition or results of operations.

3. EARNINGS PER SHARE:

We follow SFAS No. 128, “Earnings Per Share.” Basic earnings (loss) per share (Basic EPS) is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding. Diluted earnings (loss) per share (Diluted EPS) is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding, after giving effect to the potential dilution from the exercise of securities, such as stock options, into shares of common stock as if those securities were exercised. A reconciliation of shares used to compute EPS is shown below.

	For the years ended December 31,
(in thousands, except per share amounts)	2005		2004			2003
Net income (loss)	$	12,175	$	(2,693	)	$	(1,144	)
Basic earnings (loss) per share:
Weighted average shares outstanding		12,722		12,571			12,483
Basic earnings (loss) per share	$	0.96	$	(0.21	)	$	(0.09	)
Diluted earnings (loss) per share:
Weighted average shares outstanding		12,722		12,571			12,483
Dilutive shares resulting from common stock equivalents (1)		242		—			—
Shares used in computing diluted earnings (loss) per share		12,964		12,571			12,483
Diluted earnings (loss) per share	$	0.94	$	(0.21	)	$	(0.09	)

(1) Given the Company’s loss for the years ended December 31, 2004 and 2003, Diluted EPS is the same as Basic EPS as all common stock equivalents would be antidilutive. Accordingly, the dilutive effect of 315 and 446 shares resulting from stock equivalents in 2004 and 2003, respectively, is not included. For the year ended December 31, 2005, the dilutive effect of 353 shares resulting from common stock equivalents was not included as the result would be antidilutive.

4. PROPERTY AND EQUIPMENT:

Property and equipment consists of the following:

	December 31,
(in thousands)	2005			2004
Communications and computer equipment	$	129,519		$	113,593
Furniture and fixtures		27,205			25,495
Leasehold improvements		21,672			19,855
		178,396			158,943
Less - Accumulated depreciation and amortization		(121,472	)		(102,645	)
	$	56,924		$	56,298

F-14

5. OTHER ASSETS:

Other assets consists of the following:

	December 31,
(in thousands)	2005		2004
Deposits	$	2,042	$	1,610
Goodwill		3,477		3,299
Other intangible assets, net of accumulated amortization of $836 and $495		612		953
Deferred financing costs, net of accumulated amortization of $1,136 and $942		809		407
	$	6,940	$	6,269

On April 5, 2004, we purchased the assets and assumed certain liabilities of DPS Data Group LLC (DPS). DPS provides various back-office administrative and data entry services for customers in the financial services industry. Management believes the service offerings of DPS complement the business services we currently offer to our customers. This transaction was accounted for as a purchase business combination, and accordingly, the results of operations and cash flows of the business acquired are included in the accompanying consolidated financial statements from the date of acquisition. Pro forma combined results of operations are not presented since the results of operations as reported in the accompanying consolidated financial statements would not be materially different.

The cash paid was $3,011,000, including transaction costs. There was $2,027,000 of goodwill recorded in connection with this acquisition along with identified intangible assets of $820,000. The entire amount of goodwill is expected to be deductible for tax purposes. The purchase price allocation associated with this transaction is shown below:

(in thousands)
Accounts receivable	$	270
Property and equipment		120
Customer relationship		740
Non-compete		80
Goodwill		2,027
Other assets		7
Liabilities assumed		(233	)
Cash paid	$	3,011

In connection with this transaction, there was additional consideration that was contingent upon the achievement of specific financial goals for 2004. The goals were not attained and no amounts were paid out under this agreement.

With respect to the intangibles, the non-compete intangibles are being amortized on a straight-line basis over their stated terms of six years and the customer relationship intangible is being amortized over a seven-year period. Amounts amortized over the seven-year period reflect our utilization of the economic benefits associated with the intangible.

On October 1, 2002 we acquired the assets of Grupo TeleInter, S.A. de C.V. The primary reason for the acquisition was to facilitate our near-shore expansion plans and establish a call center location to cater to the Mexican marketplace. The total consideration was $2,250,000, of which $600,000 was allocated to tangible net assets acquired (primarily receivables and property and equipment), $625,000 was allocated to a customer-related intangible asset, and the remaining $1,025,000 was attributed to goodwill. We made acquisition payments of $1,579,000 in 2002 and $671,000 in 2003. On March 31, 2005, we made an additional payment of $178,000 relating to this acquisition, which was recorded as additional goodwill. This final payment was subject to the original acquisition agreement and was based on the cumulative 2004 and 2003 final operating results.

F-15

Our intangible assets, other than goodwill, and the related accumulated amortization and net book value are as follows.

	December 31,
(in thousands)	2005			2004
Customer-related	$	1,368		$	1,368
Non-compete agreements		80			80
		1,448			1,448
Less: Accumulated amortization		(836	)		(495	)
	$	612		$	953

Amortization expense was $341,000, $303,000 and $192,000 for the years ended December 31, 2005, 2004 and 2003. The estimated amortization expense for intangibles derived from business combinations for fiscal years 2006, 2007, 2008, 2009 and 2010 is $276,000, $124,000, $95,000, $71,000 and $38,000, respectively.

Deferred financing costs represent costs we incurred in renewing our Credit Facility (see Note 8). These costs are being amortized on a straight-line basis as interest expense over the five-year term of the agreement.

6. ACCRUED EXPENSES AND OTHER:

Accrued expenses and other consists of the following:

	December 31,
(in thousands)	2005		2004
Payroll and related benefits	$	12,534	$	9,336
Due to customer		6,632		—
Current portion of restructuring (Note 17)		352		655
Telecommunications expense		1,177		587
Sales and VAT taxes		686		484
Accrued facilities		496		351
Deferred revenue		8,146		4,295
Other		1,410		691
	$	31,433	$	16,399

The amount classified as due to customer represents amounts previously collected from a customer that were re-billed to other related entities of this customer at the request of the customer, in order to reflect a revised billing arrangement. These amounts were collected by us prior to December 31, 2005 and are due back to the customer when all re-billed amounts have been collected. It is expected that these amounts will be collected in full from the remaining parties and paid back to the customer in the first quarter of 2006.

7. OTHER LIABILITIES:

Other liabilities consists of the following:

	December 31,
(in thousands)	2005		2004
Non-current portion of restructuring (Note 17)	$	932	$	1,180
Accrued facilities		1,246		912
Other		167		167
	$	2,345	$	2,259

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8. LINES OF CREDIT AND LONG-TERM DEBT:

On June 24, 2005, we entered into an Amended and Restated Credit Agreement (the “Credit Facility”).

The Credit Facility, which amended our existing three-year $100,000,000 revolving credit facility, is structured as a $125,000,000 secured revolving facility with a $5,000,000 sub-limit for swing line loans and a $30,000,000 sub-limit for multicurrency borrowings. The Credit Facility includes a $50,000,000 accordion feature, which will allow us to increase our borrowing capacity to $175,000,000, subject to obtaining commitments for the incremental capacity from existing or new lenders. The amendment extended the maturity date from December 2, 2006 to June 24, 2010.

Borrowings under the Credit Facility can bear interest at various rates, depending upon the type of loan. We have two borrowing options, either a “Base Rate” option, under which interest rate is calculated using the higher of the federal funds rate plus 0.5% or the Bank of America prime rate, plus a spread ranging from 0% to 0.75%, or a “Eurocurrency Rate” option, under which interest rate is calculated using LIBOR plus a spread ranging from 1% to 2.25%. The amount of the spread under each borrowing option depends on our ratio of funded debt to EBITDA (which, for purposes of the Credit Facility, is defined as income before interest expense, interest income, income taxes, and depreciation and amortization and certain other charges). At December 31, 2005, our Eurocurrency Rate, including the spread, was 5.63% and our Base Rate, including the spread was 7.25%. At December 31, 2005, interest for approximately 86% of our outstanding borrowings is calculated using the Eurocurrency Rate with the interest for the remaining 14% of our outstanding borrowings being calculated using the Base Rate. For the years ended December 31, 2005, 2004 and 2003, our interest expense related to our Credit Facility, exclusive of the amortization of debt issuance costs, was $2,394,000, $1,484,000 and $870,000, respectively.

The Credit Facility contains certain affirmative and negative covenants including limitations on specified levels of consolidated leverage, consolidated fixed charges and minimum net worth requirements, and includes limitations on, among other things, liens, mergers, consolidations, sales of assets, incurrence of debt and capital expenditures. We are also required to pay a quarterly commitment fee ranging from 0.2% to 0.5% of the unused amount. Under the Credit Facility, upon the occurrence of an event of default, such as non-payment or failure to observe specific covenants, the lenders would be entitled to declare all amounts outstanding under the facility immediately due and payable. As of December 31, 2005, we were in compliance with all covenants contained in the Credit Facility.

We incurred $596,000 of debt issuance costs associated with the Credit Facility. These costs have been deferred and are being amortized over the five-year term of the Credit Facility. The unamortized issuance costs of $306,000 associated with the original credit facility will continue to be amortized over the new five-year term.

At December 31, 2005, $35,000,000 of borrowings was outstanding under the Credit Facility and was classified as a long-term liability. At December 31, 2005, there were no outstanding foreign currency loans nor were there any outstanding letters of credit. The amount of the unused Credit Facility at December 31, 2005 was $90,000,000. The Credit Facility can be drawn upon through June 24, 2010, at which time all amounts outstanding must be repaid. Borrowings under the Credit Facility are collateralized with substantially all of our assets, as well as the capital stock of our subsidiaries.

9. INCOME TAXES:

The components of the income (loss) before income taxes are as follows:

	For the years ended December 31,
(in thousands)	2005		2004			2003
Domestic	$	11,011	$	414		$	(1,368	)
Foreign		5,297		(4,741	)		(632	)
	$	16,308	$	(4,327	)	$	(2,000	)

The provision (benefit) for income taxes includes federal, state and foreign taxes payable and deferred taxes related to temporary differences between the financial statements and tax bases of assets and liabilities and operating loss and tax credit carryforwards. The components of the income tax provision (benefit) are as follows:

F-17

	For the years ended December 31,
(in thousands)	2005			2004			2003
Current:
Federal	$	1,736		$	(625	)	$	379
State		66			(7	)		—
Foreign		(1,698	)		(1,183	)		256
		104			(1,815	)		635
Deferred:
Federal		3,390			371			(592	)
State		16			58			(22	)
Foreign		623			(248	)		(877	)
		4,029			181			(1,491	)
	$	4,133		$	(1,634	)	$	(856	)

The appropriate income tax effect of each type of temporary difference is as follows:

(in thousands)	December 31,
	2005			2004
Deferred tax assets:
Nonrecurring compensation expense	$	—		$	614
Accruals and reserves not currently deductible for tax		3,702			6,544
Federal tax credits		1,719			1,541
State net operating loss carryforwards		1,686			1,602
Foreign net operating loss carryforwards		2,101			2,323
Other		—			59
Total deferred tax assets		9,208			12,683
Valuation allowance		(4,970	)		(3,173	)
Total deferred tax assets, net of valuation allowance		4,238			9,510
Deferred tax liabilities:
Depreciation and amortization		2,228			3,199
Total deferred tax liabilities		2,228			3,199
Net deferred tax assets	$	2,010		$	6,311

State Net Operating Losses:

A portion of our deferred tax asset relates to the income tax effect of net operating loss carryforwards for state tax purposes. Management does not believe it is more likely than not that these assets will be realized. Accordingly, the Company has recorded a valuation allowance of $1,686,000 against these assets. This valuation allowance reflects an additional valuation allowance of $84,000 recorded in 2005. The net operating loss carryforwards expires at various dates between 2008 and 2025.

Foreign Net Operating Losses:

At December 31, 2005, we have $6,992,000 of net operating loss (NOL) carryforwards for tax purposes relating to some of our non-U.S. subsidiaries. Our subsidiary in Australia has $6,846,000 of NOLs. Although these NOLs do not expire under Australian tax law and can be carried forward to offset taxable income in future years, management performed an evaluation on the expected utilization of the carryforwards and determined that it was more likely than not that the Australian carryforwards will not be utilized. Therefore during 2005, management recorded a valuation allowance of $1,114,000 against the deferred tax assets that have been recorded for these NOLs. As of December 31, 2005, the deferred tax asset of $2,054,000 associated with the Australian NOLs has a full valuation allowance. As of December 31, 2004, we had a valuation allowance of $940,000 for the deferred tax asset associated with the Australian NOLs. Our ability to realize any of the above NOLs in the future will depend upon the Company’s ability to generate profits in the various tax jurisdictions to which they apply.

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Federal Tax Credits:

At December 31, 2004, we had recorded $1,230,000 of deferred tax assets and income tax receivables for federal tax credits relating to research and development. The credits covered fiscal periods from 2000 through 2004. At the time, management believed that not all of these credits would be realized and had recorded a valuation allowance of $631,000. During 2005, the IRS denied our claim for the credits associated with a previous tax year. While we plan to appeal, we have determined that a full valuation allowance should be recorded on the remaining deferred tax asset. Therefore an additional valuation allowance of $599,000 was recorded in 2005. These federal tax credits expire between 2022 and 2024.

In addition to the research and development credits, we have approximately $489,000 of work opportunity tax credits that we earned in 2003. Management expects to amend a prior year return and utilize these credits to offset taxable income. Accordingly there is no valuation allowance placed against these credits.

There are no valuation allowances for any other deferred tax assets. Although realization is not assured, management believes it is more likely than not that the remaining deferred tax assets will be realized. The amount of the deferred tax asset considered realizable, however, could be reduced in the future, if estimates of future taxable income are reduced.

Foreign Subsidiaries:

At December 31, 2005, there were $8,029,000 of accumulated undistributed earnings of non-U.S. subsidiaries that are considered to be permanently reinvested. A deferred tax liability will be recognized when we are no longer able to demonstrate that we plan to permanently reinvest undistributed earnings. If such earnings were remitted to the parent company, applicable U.S. federal income and foreign withholding taxes may be partially offset by foreign tax credits.

Effective August 25, 2005, we completed a reorganization of our Philippines operations. The primary purpose of the reorganization was to obtain flexibility with respect to investments in our Philippines operations. From 2003 through the time of the reorganization, the profits earned in the Philippines were considered Subpart F income for U.S. tax purposes. In 2005, approximately $4,700,000 of profits in the Philippines was considered Subpart F income.

In 2005, our facilities in the Philippines became registered under the Philippines Economic Zone Authority (‘PEZA”). Therefore, our operations in the Philippines are not subject to Philippines income tax. Our tax-exempt status is currently set to expire in mid-year 2007 for one of our facilities and mid-year 2010 for our other facility. Currently, Philippine law does allow for extensions of the PEZA tax exemptions. Therefore, we intend to apply for those extensions as our current exemptions expire. We do not have any other tax holidays in the jurisdictions in which we operate. The income tax benefit in 2005 attributable to the tax status of our Philippine subsidiary was approximately $2,100,000, or $0.16 per diluted share.

Tax Benefits Associated with Stock Options:

In June 1996, we recorded a nonrecurring compensation charge of $12,700,000 relating to the extension of stock options. In connection with the compensation charge, a deferred tax benefit of $4,700,000 was recorded based on the then excess of the Company’s stock price ($16.00 per share) over the exercise price of the extended options. To the extent the stock price is below $16.00 per share when the options are exercised, the actual tax deduction benefit the Company will receive will be less than the carrying amount of the deferred tax asset. The difference or shortfall between the actual tax deduction benefit and the deferred tax asset recorded is reversed either through the income tax provision, resulting in additional income tax expense, or through a reduction of additional paid-in-capital (“APIC”) on the consolidated balance sheet. For the current year, the Company recorded the shortfall against APIC since it had generated excess tax benefits from prior stock option exercises. As of December 31, 2005, there were no remaining extended options and no deferred tax asset related to the extended options remained. During 2005 and 2004, $272,000 and $235,000 of shortfalls were recorded as a reduction of APIC, respectively.

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Effective Rate Reconciliation:

The reconciliation of the statutory federal income tax rate to our effective income tax rate is as follows:

	For the years ended December 31,
	2005		2004		2003
Federal statutory tax rate	34.0	%	34.0	%	34.0	%
State income taxes, net of federal tax benefit	0.1		(1.0	)	1.0
Difference between U.S. and non-U.S. rates	(21.9	)	4.3		12.1
Subpart F income	9.7		—		—
Tax credits and other	(5.0	)	21.9		2.4
Valuation allowance for Australian NOL	6.8		(21.7	)	—
Permanent differences	1.6		0.3		(6.7	)
	25.3	%	37.8	%	42.8	%

10. PROFIT SHARING PLAN:

We maintain a trusteed profit sharing plan (Section 401(k)) for all qualified employees, as defined. The Company matches 50% of employee contributions, up to a maximum of 6% of the employee’s compensation; however, it may also make additional contributions to the plan based upon profit levels and other factors. No such additional contributions were made in 2005, 2004 or 2003. Employees are fully vested in their contributions, while full vesting in the Company’s contributions occurs upon death, disability, retirement or completion of five years of service. In 2005, 2004 and 2003, the Company’s contributions were $811,000, $728,000 and $692,000, respectively. The plan’s trustees are the management of the Company.

We also maintain a Non-Qualified Deferred Compensation Plan for certain employees. This plan allows certain employees to defer a portion of their compensation on a pre-tax basis. Employees are fully vested in their deferred amounts, but withdrawals are not permitted until the plan is terminated, the employee attains age 65, or the employee terminates, becomes disabled, or dies. Other withdrawals are permitted for unforeseeable emergencies only. In 2005, 2004 and 2003, the Company matched 10% of employee deferrals, up to certain limits with vesting of Company matching contributions occurring ratably over three years. The amount matched totaled $39,000, $111,000 and $71,000 in 2005, 2004 and 2003, respectively.

11. EQUITY PLANS:

Stock Option Plans

Our 1996 Equity Compensation Plan authorizes up to 2,220,000 shares of common stock for issuance in connection with the granting to employees and consultants of incentive and nonqualified stock options, restricted stock, stock appreciation rights and other awards based on our common stock. The options to be granted and the option prices are established by the Board of Directors or a committee composed of two or more of its members. Incentive stock options are granted with exercise prices not less than fair market value. Options are exercisable for periods not to exceed ten years, as determined by the Board of Directors or its committee and generally vest over a three-year period. As of December 31, 2005, 841,800 shares of common stock were available for grant under the plan.

Our 1996 Non-Employee Director Plan authorizes up to 250,000 shares of common stock for issuances of nonqualified stock options to non-employee directors. As of December 31, 2005, 127,500 shares of common stock were available for grant under this plan.

In connection with our 1987 Stock Option Plan, options to purchase 1,530,000 shares of common stock were authorized for issuance. No future grants will be made under this plan. As of December 31, 2005, there are no outstanding options under this plan.

Equity Incentive Plan

In December 1995, we adopted an Equity Incentive Plan that provided for the issuance of up to 270,000 Equity Incentive Units (Units). In December 1995, management awarded 159,300 Units with a purchase price of $1.02 per Unit. Each Unit allowed the holder the right to purchase one share of common stock at a specified price. Units were exercisable for a period not to exceed ten years from the date of grant. As of December 31, 2005, there were no Units outstanding. No more Units will be granted under the Equity Incentive Plan.

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Information with respect to the options granted under our stock option plans and Units is as follows:

	Shares		Exercise Price		Weighted Average Exercise Price
Outstanding, January 1, 2003	1,527,733		$	.04 – 20.90	$	7.91
Granted	67,320			7.20 – 14.52		11.72
Exercised	(88,650	)		.04 – 12.50		1.79
Canceled	(150,565	)		1.02 – 20.90		12.75
Outstanding, December 31, 2003	1,355,838			.04 – 20.90		7.97
Granted	57,560			7.06 – 12.53		11.35
Exercised	(163,000	)		.04 – 12.50		2.08
Canceled	(31,185	)		1.02 – 20.90		12.88
Outstanding, December 31, 2004	1,219,213			.04 – 20.27		8.78
Granted	144,000			8.82 – 15.47		9.99
Exercised	(143,650	)		.04 – 9.56		1.45
Canceled	(55,275	)		1.02 – 20.15		13.55
Outstanding, December 31, 2005	1,164,288			2.94 – 20.27		9.61

The following table summarizes information about stock options and units outstanding at December 31, 2005:

Range of Exercise Price	Options Outstanding				Options Exercisable
	Number Outstanding	Weighted Average Remaining Life	Weighted Average Exercise Price		Number Exercisable	Weighted Average Exercise Price
$2.94 to $ 4.18	123,150	3.2	$	3.40	123,150	$	3.40
$4.19 to $ 8.36	248,325	2.9		5.37	244,975		5.35
$8.37 to $ 12.54	586,880	6.2		10.51	431,730		10.70
$12.55 to $ 16.72	130,000	5.8		14.97	114,750		15.10
$16.73 to $ 20.27	75,933	6.2		17.42	74,683		17.41
$2.94 to $ 20.27	1,164,288	5.1		9.61	989,288		9.48

12. COMMITMENTS AND CONTINGENCIES:

Leases

We lease office facilities and certain equipment under operating leases. Rent expense was $26,370,000, $26,016,000 and $24,374,000 for the years ended December 31, 2005, 2004 and 2003, respectively. For the year ended December 31, 2005, our facilities leases represented 67% of all rent expense, with equipment leases comprising the other 33%. As of December 31, 2005, we do not have any equipment leases for which the term extends beyond 2007. As of December 31, 2005, future minimum rentals for all operating leases are as follows:

(in thousands)	Total		Facilities		Equipment
2006	$	22,869	$	18,233	$	4,636
2007		16,934		13,655		3,279
2008		9,575		9,575		—
2009		7,259		7,259		—
2010		5,146		5,146		—
2011 and thereafter		20,115		20,115		—
	$	81,898	$	73,983	$	7,915

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Telecommunications Contracts

We enter into agreements, ranging from one to three years, with our telephone long-distance carriers, which provide for, among other things, annual minimum purchases based on volume and termination penalties. As of December 31, 2005 we have contractual agreements with six different carriers. Annual minimum purchases associated with these agreements were $4,346,000 and $701,000 for 2006 and 2007, respectively. We currently do not have any contracts with long-distance carriers extending into 2008.

Employment Agreements

We have renewable employment agreements with twelve key executives with terms ranging from one to three years. The agreements provide for, among other things, severance payments ranging from six months to three years.

Litigation

From time to time, we are involved in litigation incidental to our business. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict.

In 1998, William Shingleton filed a class action lawsuit against us in the Circuit Court of Berkeley County, West Virginia (the Court). The lawsuit alleged that we and twelve current and former members of our management had violated the West Virginia Wage Payment and Collection Act (the Wage Act) for failure to pay promised signing and incentive bonuses and wage increases, failure to compensate employees for short breaks or “transition” periods, production hours worked and improper deductions for the cost of purchasing telephone headsets.

On March 1, 2005, we announced a settlement with the plaintiffs to this litigation. Under the terms of the settlement, ICT agreed to pay $14,750,000 to the plaintiff class to settle all allegations relating to unpaid wages, bonuses and other claims, as well as payments for liquidated damages allowed by West Virginia law, plus interest. Of the $14,750,000 settlement payment that we made, $6,885,000 was recovered from our insurance carriers during 2005. Our 2004 results reflect the accrual for the settlement amount offset by $2,670,000 of insurance proceeds. Our 2005 results also reflect insurance proceeds of $4,215,000, offset by $604,000 of legal expenses that we incurred to complete the requirements set forth in the settlement. As of December 31, 2005, there are no contingent liabilities remaining associated with this litigation.

Additionally, we are a co-defendant in 14 putative consumer class action lawsuits filed against Time Warner, Inc. or America Online, in various state and Federal courts during the period from July 2003 to December 2004. We believe the allegations against us are without merit. America Online is paying for our defense and has agreed to indemnify us against any costs or damages that we may incur as a result of these lawsuits. All of these suits allege that America Online, a customer of ICT, violated consumer protection laws by charging members for accounts they purportedly did not agree to create and that America Online and ICT violated consumer protection laws in the handling of subscribers’ calls seeking to cancel accounts and obtain refunds of amounts paid for such accounts. America Online contracted with us to answer customer service calls from America Online subscribers in accordance with instructions provided by America Online. Nine of the lawsuits that were filed in, or removed to, Federal court were centralized in the Central District of California for consolidated or coordinated pre-trial proceedings pursuant to a February 27, 2005 order of the Judicial Panel on Multidistrict Litigation (the “MDL Litigation”). Three of the lawsuits were filed in the Circuit Court for St. Clair County, Illinois (the “Illinois Litigation”). The two remaining lawsuits, one of which has been settled and dismissed with prejudice, as described below, were filed in state courts.

On April 5, 2005 America Online and we signed a settlement agreement with the plaintiffs’ counsel in the Illinois Litigation on behalf of a putative national class of all persons and entities who were charged or billed by or through America Online or its agents, assigns, contracted customer service providers, or other designees acting on behalf of or through America Online, for services and/or goods without their consent or authorization. Consistent with America Online’s agreement to indemnify us against any costs or damages that we may incur as a result of these lawsuits, all settlement payments or services under the settlement agreement will be paid or provided by America Online. On April 7, 2005, the Circuit Court for St. Clair County, Illinois certified the settlement class, which includes the putative classes alleged in all of the cases discussed above, and preliminarily approved the settlement. In October 2005, the plaintiffs in the MDL Litigation agreed to join the St. Clair County, Illinois settlement, and a revised settlement agreement was signed on October 21, 2005. A final approval order for the settlement, which can be appealed within 30 days of issuance, was entered on February 22, 2006.

F-22

In November 2005, a putative class action lawsuit filed in California Superior Court (Alameda County) was settled by agreement of the parties, and the Court subsequently issued a joint motion to dismiss the matter with prejudice. Again, consistent with America Online’s agreement to indemnify us against any costs or damages that we may incur as a result of these lawsuits, all costs and payments associated with the settlement were paid by America Online.

13. SUPPLEMENTAL CASH FLOW INFORMATION:

For the years ended December 31, 2005, 2004 and 2003, we paid interest of $2,723,000, $1,361,000 and $961,000, respectively. For the years ended December 31, 2005, 2004 and 2003, we paid (received) income taxes, net of refunds, of $(1,025,000), $(1,540,000) and $2,389,000, respectively.

14. CUSTOMER CONCENTRATION

The following table summarizes our revenue, by industry. The loss of one or more of our major customers or an economic downturn in the financial services and insurance or telecommunications and information technology industries could have a material adverse effect on our business.

	For the years ended December 31,
	2005		2004		2003
Financial services and insurance	51	%	52	%	53	%
Telecommunications & information technology	29	%	32	%	33	%
Pharmaceutical and health care	13	%	10	%	10	%
Other	7	%	6	%	4	%

For each of the years ended December 31, 2005 and 2003, there were no customers which comprised more than 10% of our revenue. For the year ended December 31, 2004, we had one customer, Virgin Mobile USA, LLC, who comprised 11% of our revenue. This customer also accounted for 6% and 13% of our total accounts receivable at December 31, 2005 and 2004, respectively. For the years ended December 31, 2005, 2004 and 2003, our top ten customers accounted for 48%, 50% and 55% of our total revenue, respectively.

15. OPERATING AND GEOGRAPHIC INFORMATION:

Based on guidance in SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information,” we have one reportable segment. Our services are provided through contact centers located throughout the world and include customer care management services as well as inbound and outbound telesales, database marketing services, marketing research services, interactive voice response services, technology hosting services, and data management and collection services on behalf of customers operating in our target industries. Technological advancements have allowed us to better control production output at our contact centers by routing customer call lists to different centers depending on capacity. A contact center and the technology assets utilized by the contact center may have different geographic locations. Accordingly, many of our contact centers are not limited to performing only one of the above-mentioned services; rather, they can perform a variety of different services for different customers in different geographic markets.

The following table shows information by geographic area. For the purposes of our disclosure, revenue is attributed to countries based on the location of the customer being served and property and equipment is attributed to countries based on physical location of the asset.

	For the years Ended December 31,
(in thousands)	2005		2004		2003
Revenue:
United States	$	312,963	$	254,566	$	229,549
Canada		47,245		35,208		37,436
Other foreign countries		41,126		35,755		31,157
	$	401,334	$	325,529	$	298,142

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(in thousands)	At December 31,
	2005		2004		2003
Property and equipment, net:
United States	$	32,797	$	29,052	$	24,194
Canada		9,753		10,928		11,242
Philippines		8,936		8,663		2,526
Other foreign countries		5,438		7,655		9,650
	$	56,924	$	56,298	$	47,612

16. DERIVATIVE INSTRUMENTS:

We have operations in Canada, Ireland, the United Kingdom, Australia, Barbados, Mexico and the Philippines that are subject to foreign currency fluctuations. As currency rates change, translation of the statement of operations from local currencies to U.S. dollars affects year-to-year comparability of operating results.

Our most significant foreign currency exposures occur when revenue and associated accounts receivable are collected in one currency and expenses incurred to generate that revenue are paid in another currency. Our most significant area of exposure has been with the Canadian operations, where a portion of revenue is generated in U.S. dollars (USD) and the corresponding expenses are generated in Canadian dollars (CAD). When the value of the CAD increases against the USD, CAD denominated expenses increase and operating margins are negatively impacted. Partially offsetting this exposure is indigenous Canadian business and associated profitability where profits will be higher in a period of a strong CAD. To mitigate this exposure, we enter into derivative contracts which serve to hedge a portion of anticipated operating costs and payables associated with the CAD, primarily payroll expenses, rental expenses, telephone costs and other known recurring costs.

We have also begun to experience foreign currency exposure in the Philippines. Our Philippines operation is similar to Canada, whereby the revenue is typically earned in USD, but operating costs are denominated in Philippine pesos (PHP). Recently, the PHP has begun to strengthen against the USD. As we continue to increase outsourcing to the Philippines, we will experience a greater degree of foreign currency exposure. We have begun to mitigate this exposure, whereby we enter into derivative contracts which serve to hedge a portion of anticipated operating costs and payables associated with the PHP, primarily payroll expenses, rental expenses and other known recurring costs.

The foreign currency forward contracts and currency options that are used to hedge these exposures are designated as cash flow hedges. The gain or loss from the effective portion of the hedge is reported as a component of accumulated other comprehensive income in shareholders’ equity until settlement of the contract occurs. Settlement occurs in the same period that the hedged item affects earnings. Any gain or loss from the ineffective portion of the hedge that exceeds the cumulative change in the present value of future cash flows of the hedged item, if any, is recognized in the current period. For accounting purposes, effectiveness refers to the cumulative changes in the fair value of the derivative instrument being highly correlated to the inverse changes in the fair value of the hedged item. Any related gains and losses on derivative instruments are recorded in selling, general and administrative costs in the consolidated statement of operations.

For the years ended December 31, 2005, 2004 and 2003, we realized gains (losses) of $278,000, $390,000 and ($55,000) on the derivative instruments, respectively. As of December 31, 2005, outstanding derivative instruments had a fair value of approximately $981,000 ($637,000, net of tax). As of December 31, 2004, outstanding derivative instruments had a fair value of approximately $429,000 ($287,000, net of tax). The outstanding derivative instruments at December 31, 2005 serve to hedge a portion of anticipated operating costs and payables associated with the CAD and the PHP from January 2006 through December 2006.

17. CORPORATE RESTRUCTURING

In December 2002, we announced a corporate restructuring and recorded a $8,894,000 pre-tax restructuring charge in connection with a plan to reduce our cost structure by closing all or part of ten operations centers prior to the end of their existing lease terms. The restructuring costs included severance of $1,078,000, site closure costs totaling $7,243,000, which were the estimated costs for closing the operations centers, including $6,151,000 in obligations under signed real estate and equipment lease agreements and $1,092,000 in costs related to early lease terminations and the write-off of $573,000 of

F-24

leasehold improvements, security deposits and certain property and equipment. The discount rate used to present value the remaining payments due under the leases was the risk free interest rate, which was the yield on U.S. treasury obligations with a similar life as the remaining lease payments. In developing the estimate, management had assumed that no sublease income would be available to offset future rent payments given the current market conditions in the locations of the identified operations centers at that time, and the inability to locate any tenants. All of the ten facilities were closed by the end of the second quarter of 2003.

A rollforward of the restructuring accrual is summarized as follows:

(in thousands)	Severance			Lease Obligations and Facility Exit Costs
Accrual at December 31, 2002	$	1,078		$	7,243
Cash Payments and adjustments		(1,072	)		(4,407	)
Accrual at December 31, 2003		6			2,836
Cash Payments		(6	)		(1,001	)
Accrual at December 31, 2004	$	—			1,835
Cash Payments					(551	)
Accrual at December 31, 2005				$	1,284

During 2005 and 2004, we did not enter into any sublease arrangements nor did we negotiate any termination settlements for the facilities that remain under contract. The majority of cash payments made were related to the ongoing lease obligations.

During 2003, we negotiated lease termination settlements for certain facilities that were part of the December 2002 restructuring. The settlement amounts were below our original estimate of lease obligations and facility exit costs. Therefore, we reversed $747,000 of the restructuring accrual in order to appropriately reflect the settlement amounts. We also recorded adjustments relating to various facilities, which resulted in additional reversals of $50,000.

During 2003, one individual who was receiving monthly severance as part of the restructuring secured new employment elsewhere, which partially voided his severance agreement with us. The remaining severance associated with this individual was $94,000 and was reversed.

Also during 2003, we identified additional assets which management did not plan to utilize in other facilities. We recorded an impairment charge of $205,000 against these assets.

Any adjustments to the restructuring charge have been recorded in the restructuring reversal line in the accompanying consolidated statement of operations.

We continue to evaluate and update our estimation of the remaining liabilities. At December 31, 2005 and 2004, $932,000 and $1,180,000 of the restructuring accrual is recorded in other liabilities in the consolidated balance sheet, which represents lease obligation payments and estimated facility exit cost payments to be made beyond one year. At December 31, 2005, the expiration dates of the remaining equipment leases and facilities leases range from 2006 to 2009. The balance of the restructuring accrual is included in accrued expenses on our consolidated balance sheet at December 31, 2005 and 2004.

18. FACILITIES

In February 2005, we moved our Australian operations into a new facility. In April 2005, we signed an agreement to sell the furniture and fixtures from the prior facility to the new tenants and recognized a gain on the sale of approximately $184,000. This gain was recorded through selling, general and administrative costs in the consolidated statement of operations.

Effective July 1, 2005, we executed an early termination of a facilities lease. This facilities lease had originally been entered into at the request of a former customer and the lease term ran through September 2006. While we were able to exit the lease without any penalties being assessed by the landlord, we did have assets, including leasehold improvements, associated with this facility. We were able to redeploy a portion of these assets. The remaining carrying value of assets that were not redeployed of $440,000 was written off as impaired assets. We were able to recover $125,000 from this former customer, as part of an early contract termination agreement signed in May 2005, which partially offset this write-off. Both of these amounts were recorded through selling, general and administrative costs in the consolidated statement of operations.

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19. QUARTERLY FINANCIAL DATA (unaudited):

(In thousands except per share data)

	Quarter Ended
	March 31,				June 30,				September 30,				December 31,
(in thousands)	2005		2004		2005		2004		2005		2004		2005		2004
Revenue	$	94,019	$	77,098	$	96,991	$	75,511	$	99,921	$	80,395	$	110,403	$	92,525
Gross margin		37,457		30,687		38,836		30,314		38,766		32,847		41,703		37,316
Operating income (loss)		2,007		629		3,151		848		7,760		863		5,854		(5,073	)
Income (loss) before income taxes		1,520		335		2,492		523		7,104		412		5,192		(5,597	)
Net income (loss)		1,064		224		1,744		350		5,472		276		3,895	$	(3,543	)
Diluted earnings (loss) per share	$	0.08	$	0.02	$	0.14	$	0.03	$	0.42	$	0.02	$	0.30	$	(0.28	)

Quarterly Results and Seasonality

We have experienced and expect to continue to experience quarterly variations in operating results, principally as a result of the timing of client programs (particularly programs with substantial amounts of upfront project setup costs), the commencement and expiration of contracts, the timing and amount of new business we generated, our revenue mix, the timing of additional selling, general and administrative expenses to support the growth and development of existing and new business units, competitive industry conditions and litigation costs. Our results in the third quarter of 2005 reflected $4,100,000 of insurance proceeds related to the Shingleton litigation. Our results in the third quarter of 2005 also reflected certain discreet income tax items, which had the effect of reducing our income tax provision in the quarter.

Our business tends to be strongest in the fourth quarter due to the high level of client sales and service activity for the holiday season. The fourth quarter of 2004, however, was impacted by the settlement of the Shingleton litigation. Our fourth quarter results in 2004 reflect $7,733,000 of expenses related to the settlement of the Shingleton litigation, net of insurance proceeds of $2,670,000. During the first quarter, the business generally levels off from the previous quarter as a result of reduced client sales and service activity. The level of business for our other quarters can fluctuate as a result of other factors, specifically the timing of contract wins and program starts, as well as approximately 70% of our revenue being generated from service programs, which generally have less seasonality than sales programs.

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ICT GROUP, INC. AND SUBSIDIARIES

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

(in thousands)	Balance, Beginning of Year		Charged to Expense/ Provision	Deductions / Reversals (1)		Balance, End of Year
Description
Allowance for doubtful accounts: 2005 2004 2003	$ $ $	439 337 642	150 205 97	(227 (103 (402	) ) )	$ $ $	362 439 337
Income tax valuation allowance: 2005 2004 2003	$ $ $	3,173 1,217 761	1,797 1,956 456	—   —   —		$ $ $	4,970 3,173 1,217

(1) Amounts listed in this column relating to the allowance for doubtful accounts reflect balances that had been fully reserved and were written off during the year.

F-27

EX-10.4

Exhibit 10.4

ICT GROUP, INC.

1996 EQUITY COMPENSATION PLAN

As Amended Through May 20, 2003

The purpose of the ICT Group, Inc. 1996 Equity Compensation Plan (the “Plan”) is to provide (i) designated officers (including officers who are also directors) and other employees of ICT Group, Inc. (the “Company”) and its subsidiaries, and (ii) independent contractors and consultants who perform valuable services for the Company or its subsidiaries, with the opportunity to receive grants of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock or other awards that are valued in whole or part by reference to, or are otherwise based on, the common stock of the Company (hereinafter collectively referred to as “Grants”). The Company believes that the Plan will cause the participants to contribute materially to the growth of the Company, thereby benefiting the Company’s shareholders and will align the economic interests of the participants with those of the shareholders.

1. Administration

The Plan shall be administered and interpreted by a committee (the “Committee”), which shall consist of two or more persons appointed by the Board of Directors of the Company (the “Board”), all of whom shall be “disinterested persons” as defined under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and “outside directors” as defined under section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) and related Treasury regulations.

The Committee shall have the sole authority to (i) determine the individuals to whom grants shall be made under the Plan, (ii) determine the type, size and terms of the grants to be made to each such individual, (iii) determine the time when the grants will be made and the duration of any applicable exercise or restriction period, including the criteria for vesting and the acceleration of vesting and (iv) deal with any other matters arising under the Plan.

The Committee shall have full power and authority to administer and interpret the Plan, to make factual determinations and to adopt or amend such rules, regulations, agreements and instruments for implementing the Plan and for the conduct of its business as it deems necessary or advisable, in its sole discretion. The Committee’s interpretations of the Plan and all determinations made by the Committee pursuant to the powers vested in it hereunder shall be conclusive and binding on all persons having any interests in the Plan or in any awards granted hereunder. All powers of the Committee shall be executed in its sole discretion, in the best interest of the Company and in keeping with the objectives of the Plan and need not be uniform as to similarly situated individuals.

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2. Grants

All Grants shall be subject to the terms and conditions set forth herein and to those other terms and conditions consistent with this Plan as the Committee deems appropriate and as are specified in writing by the Committee to the individual (the “Grant Letter”). The Committee shall approve the form and provisions of each Grant Letter to an individual. Grants under a particular Section of the Plan need not be uniform as among the grantees.

3. Shares Subject to the Plan

(a) Subject to the adjustment specified below, the aggregate number of shares of common stock of the Company (the “Company Stock”) that may be issued under the Plan is 2,220,000 shares. Notwithstanding anything in the Plan to the contrary, the maximum aggregate number of shares of Company Stock that shall be subject to Grants made under the Plan to any one individual during any calendar year shall be 570,000 shares. The shares may be authorized but unissued shares of Company Stock or reacquired shares of Company Stock, including shares purchased by the Company on the open market for purposes of the Plan. If and to the extent options granted under the Plan terminate, expire, or are cancelled, forfeited, exchanged or surrendered without having been exercised or if any shares of restricted stock are forfeited, the shares subject to such Grants shall again be available for purposes of the Plan.

(b) If there is any change in the number or kind of shares of Company Stock outstanding by reason of a stock dividend, a recapitalization, stock split, or combination or exchange of shares, or merger, reorganization or consolidation in which the Company is the surviving corporation, reclassification or change in par value or by reason of any other extraordinary or unusual events affecting the outstanding Company Stock as a class without the Company’s receipt of consideration, or if the value of outstanding shares of Company Stock is substantially reduced due to the Company’s payment of an extraordinary dividend or distribution, the maximum number of shares of Company Stock available for Grants, the maximum number of shares of Company Stock that may be subject to Grants to any one individual under the Plan in any calendar year, the number of shares covered by outstanding Grants, and the price per share or the applicable market value of such Grants shall be proportionately adjusted by the Committee to reflect any increase or decrease in the number or kind of issued shares of Company Stock to preclude the enlargement or dilution of rights and benefits under such Grants; provided, however, that any fractional shares resulting from such adjustment shall be eliminated. For purposes of this Section 3(b), “shares of Company Stock” and “shares” include referenced shares with respect to stock appreciation rights or other stock-based awards. The adjustments determined by the Committee shall be final, binding and conclusive. Notwithstanding the foregoing, no adjustment shall be authorized or made pursuant to this Section to the extent that such authority or adjustment would cause any incentive stock option to fail to comply with section 422 of the Code.

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4. Eligibility for Participation

All employees of the Company and its subsidiaries (within the meaning of section 424(f) of the Code) (“Employees”) including Employees who are officers or members of the Board shall be eligible to participate in the Plan. Any independent contractors or consultants who perform valuable services (other than consulting services in connection with a capital transaction) for the Company or any of its subsidiaries (“Consultants”) shall be eligible to participate in the Plan, but shall not be eligible to receive incentive stock options. The Committee shall select the Employees and Consultants to receive Grants and determine the number of shares of Company Stock subject to a particular Grant in such manner as the Committee determines. (Employees and Consultants who receive Grants under this Plan shall hereinafter be referred to as “Grantees”.)

Nothing contained in this Plan shall be construed to (i) limit the right of the Committee to make Grants under this Plan in connection with the acquisition, by purchase, lease, merger, consolidation or otherwise, of the business or assets of any corporation, firm or association, including options granted to employees thereof who become Employees of the Company, or for other proper corporate purpose, or (ii) limit the right of the Company to grant stock options or make other awards outside of this Plan.

5. Granting of Options

(a) Number of Shares. The Committee, in its sole discretion, shall determine the number of shares of Company Stock that will be subject to each Grant of stock options to any Employee or Consultant.

(b) Type of Option and Purchase Price. The Committee may grant options intended to qualify as “incentive stock options” within the meaning of section 422 of the Code (“Incentive Stock Options”) or options which are not intended to so qualify (“Nonqualified Stock Options”) or any combination of Incentive Stock Options and Nonqualified Stock Options (hereinafter collectively the “Stock Options”), all in accordance with the terms and conditions set forth herein.

The purchase price of Company Stock subject to a Stock Option shall be determined by the Committee and may be equal to, greater than, or less than the Fair Market Value (as defined below) of a share of such Stock on the date such Stock Option is granted; provided, however, that the purchase price of Company Stock subject to an Incentive Stock Option shall be equal to, or greater than, the Fair Market Value of a share of such Stock on the date such Stock Option is granted.

If the Company Stock is traded in a public market, then the Fair Market Value per share shall be, if the principal trading market for the Company Stock is a national securities exchange or the Nasdaq National Market, the last reported sale price thereof on the relevant date or (if there

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were no trades on that date) the latest preceding date upon which a sale was reported, or, if the Company Stock is not principally traded on such exchange or market, the mean between the last reported “bid” and “asked” prices thereof on the relevant date, as reported on NASDAQ or, if not so reported, as reported by the National Daily Quotation Bureau, Inc. or as reported in a customary financial reporting service, as applicable and as the Committee determines. If the Company Stock is not traded in a public market or subject to reported transactions or “bid” or “ask” quotations as set forth above, the Fair Market Value per share shall be as determined by the Committee.

(c) Option Term. The Committee shall determine the term of each Stock Option. The term of any Stock Option shall not exceed ten years from the date of grant.

(d) Exercisability of Options. Stock Options shall become exercisable in accordance with the terms and conditions determined by the Committee, in its sole discretion, and specified in the Grant Letter. The Committee, in its sole discretion, may accelerate the exercisability of any or all outstanding Stock Option, at any time for any reason.

(e) Manner of Exercise. A Grantee may exercise a Stock Option which has become exercisable, in whole or in part, by delivering a notice of exercise to the Committee with accompanying payment of the purchase price in accordance with Subsection (g) below. Such notice may instruct the Company to deliver shares of Company Stock due upon the exercise of the Stock Option to any registered broker or dealer designated by the Committee (“Designated Broker”) in lieu of delivery to the Grantee. Such instructions must designate the account into which the shares are to be deposited. The Grantee may tender a notice of exercise, which has been properly executed by the Grantee and the aforementioned delivery instructions to any Designated Broker.

(f) Termination of Employment, Disability or Death.

(i) In the event that a Grantee ceases to be an Employee or Consultant, as the case may be, of the Company for any reason other than a “disability,” death, or “termination for cause,” any Stock Option which is otherwise exercisable by the Grantee shall terminate unless exercised within 90 days of the date on which the Grantee ceases to be an Employee or Consultant of the Company (or within such other period of time as may be specified in the Grant Letter), but in any event no later than the date of expiration of the option term. Any of the Grantee’s Stock Options which are not otherwise exercisable as of the date on which the Grantee ceases to be an Employee or Consultant of the Company shall terminate as of such date.

(ii) In the event the Grantee ceases to be an Employee or Consultant of the Company on account of a “termination for cause” by the Company, any Stock Option held by the Grantee shall terminate as of the date the Grantee ceases to be an Employee or Consultant of the Company.

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(iii) In the event the Grantee ceases to be an Employee or Consultant of the Company because the Grantee is “disabled”, any Stock Option which is otherwise exercisable by the Grantee shall terminate unless exercised within one year of the date on which the Grantee ceases to be an Employee or Consultant of the Company (or within such other period of time as may be specified in the Grant Letter), but in any event no later than the date of expiration of the option term. Any of the Grantee’s Stock Options which are not otherwise exercisable as of the date on which the Grantee ceases to be an Employee or Consultant shall terminate as of such date.

(iv) In the event of the death of the Grantee while the Grantee is an Employee or Consultant of the Company or within not more than 90 days of the date on which the Grantee ceases to be an Employee or Consultant of the Company on account of a termination of employment specified in Section 5(f)(i) of the Plan (or within such other period of time as may be specified in the Grant Letter), any Stock Option which is otherwise exercisable by the Grantee shall terminate unless exercised within one year of the date on which the Grantee ceases to be an Employee or Consultant of the Company (or within such other period of time as may be specified in the Grant Letter), but in any event no later than the date of expiration of the option term. Any of the Grantee’s Stock Options which are not otherwise exercisable as of the date on which the Grantee ceases to be an Employee or Consultant shall terminate as of such date.

(v) For purposes of this Section 5(f), the term “Company” shall include the Company’s subsidiaries (within the meaning of section 424(f) of the Code) and the following terms shall be defined as follows: (A) “disability” shall mean a Grantee’s becoming disabled within the meaning of section 22(e)(3) of the Code and (B) “termination for cause” shall mean, except to the extent otherwise provided in a Grantee’s Grant Letter, a finding by the Committee, after full consideration of the facts presented on behalf of both the Company and the Grantee, that the Grantee has breached his or her employment or service contract with the Company, or has been engaged in disloyalty to the Company, including, without limitation, fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his or her employment or service, or has disclosed trade secrets or confidential information of the Company. In such event, in addition to the immediate termination of the Stock Option, the Grantee shall automatically forfeit all option shares for any exercised portion of a Stock Option for which the Company has not yet delivered the share certificates upon refund by the Company of the purchase price.

(g) Satisfaction of Purchase Price. The Grantee shall pay the purchase price specified in the Grant Letter in (i) cash, (ii) with the approval of the Committee, by delivering shares of Company Stock owned by the Grantee (including Company Stock acquired in connection with the exercise of a Stock Option, subject to such restrictions as the Committee deems appropriate) and having a Fair Market Value on the date of exercise equal to the purchase price or (iii) through any combination of (i) and (ii). The Grantee shall pay the purchase price and the amount of withholding tax due, if any, at the time of exercise. Shares of Company Stock shall not be issued upon exercise of a Stock Option until the purchase price is fully paid and any required withholding is made.

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(h) Rule 16b-3 Restrictions. Unless a Grantee who is an “insider,” as defined under Section 16 of the Exchange Act, could otherwise transfer Company Stock issued pursuant to a Stock Option without incurring liability under Section 16(b) of the Exchange Act, at least six months must elapse from the date of acquisition of a Stock Option by such a Grantee to the date of disposition of the Company Stock issued upon exercise of such option.

(i) Limits on Incentive Stock Options. Each Incentive Stock Option shall provide that, to the extent that the aggregate Fair Market Value of the Company Stock on the date of the grant with respect to which Incentive Stock Options are exercisable for the first time by a Grantee during any calendar year under the Plan or any other stock option plan of the Company exceeds $100,000, then such option as to the excess shall be treated as a Nonqualified Stock Option. An Incentive Stock Option shall not be granted to any participant who is not an Employee of the Company or any “subsidiary” (within the meaning of section 424(f) of the Code). An Incentive Stock Option shall not be granted to any Employee who, at the time of grant, owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or any “parent” or “subsidiary” of the Company (within the meaning of section 424(f) of the Code), unless the purchase price per share is not less than 110% of the Fair Market Value of Company Stock on the date of grant and the option exercise period is not more than five years from the date of grant.

6. Restricted Stock Grants

The Committee may issue or transfer shares of Company Stock to any Employee or Consultant under a Grant (a “Restricted Stock Grant”), upon such terms as the Committee deems appropriate. The following provisions are applicable to Restricted Stock Grants:

(a) General Requirements. Shares of Company Stock issued pursuant to Restricted Stock Grants may be issued for cash consideration or for no cash consideration, at the sole discretion of the Committee. The Committee shall establish conditions under which restrictions on the transfer of shares of Company Stock shall lapse over a period of time or according to such other criteria as the Committee deems appropriate (including such performance goals as the Committee may establish). The period of years during which the Restricted Stock Grant will remain subject to restrictions will be designated in the Grant Letter as the “Restriction Period.”

(b) Number of Shares. The Committee shall grant to each Grantee a number of shares of Company Stock pursuant to a Restricted Stock Grant in such manner as the Committee determines.

(c) Termination of Employment or Services. If the Grantee’s employment or service with the Company and its subsidiaries terminates during a period designated in the Grant Letter as the Restriction Period, or if other specified conditions are not met, the Restricted Stock Grant

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shall terminate as to all shares covered by the Grant as to which restrictions on transfer have not lapsed and any such shares of Company Stock must be immediately returned to the Company. The Committee may, however, provide for complete or partial exceptions to this requirement as it deems equitable.

(d) Restrictions on Transfer and Legend on Stock Certificate. During the Restriction Period, a Grantee may not sell, assign, transfer, pledge or otherwise dispose of the shares of Company Stock to which such Restriction Period applies except to a Successor Grantee under Section 9. The Committee, at its sole discretion, may determine that the Company not issue certificates for any shares subject to a Restricted Stock Grant or that the Company retain possession of certificates for any shares issued pursuant to a Restricted Stock Grant, until all restrictions on such shares have lapsed. Each certificate for a share issued under a Restricted Stock Grant shall contain a legend giving appropriate notice of the applicable restrictions in the Grant. The Grantee shall be entitled to receive a stock certificate or certificates, or have the legend removed from the stock certificate or certificates covering any of the shares subject to restrictions, as applicable, when all restrictions on such shares have lapsed.

(e) Right to Vote and to Receive Dividends. During the Restriction Period, unless the Committee determines otherwise, the Grantee shall have the right to vote, subject to the terms of Section 17, any shares subject to the Restricted Stock Grant and the right to receive any dividends paid on such shares, subject to such restrictions as the Committee deems appropriate.

(f) Lapse of Restrictions. All restrictions imposed under the Restricted Stock Grant shall lapse upon the expiration of the applicable Restriction Period and the satisfaction of any conditions imposed by the Committee. The Committee may determine, as to any or all Restricted Stock Grants, that all the restrictions shall lapse without regard to any Restriction Period.

7. Stock Appreciation Rights

(a) General Requirements. The Committee may grant stock appreciation rights (“SARs”) to any Employee or Consultant, separately or in tandem with any Stock Option (for all or a portion of the applicable Stock Option). With respect to tandem SARs, such SARs may be granted either at the time the Stock Option is granted or at any time thereafter while the Stock Option remains outstanding; provided, however, that in the case of an Incentive Stock Option, such rights may be granted only at the time of the Grant of such Stock Option. Unless the Committee determines otherwise, the base amount of each SAR shall be equal to the per share purchase price of the related Stock Option, if any, or if there is not related Stock Option, the Fair Market Value of a share of Company Stock as of the date of Grant of such SAR.

(b) Stock Options Terminate. Upon the exercise of a Stock Option, the SARs relating to the Company Stock covered by such Stock Option, if any, shall terminate. Upon the exercise of SARs, the related Stock Option, if any, shall terminate to the extent of an equal number of shares of Company Stock.

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(c) Value of SARs. Upon a Grantee’s exercise of some or all of the Grantee’s SARs, the Grantee shall receive in settlement of such SARs an amount equal to the value of the stock appreciation for the number of SARs exercised, payable in cash, Company Stock or a combination thereof. The stock appreciation for an SAR is the amount by which (i) the Fair Market Value of the underlying Company Stock on the date of exercise of such SAR exceeds (ii) the base amount of the SAR as described in subsection (a).

(d) Form of Payment. At the time of such exercise, the Grantee shall have the right to elect the portion of the amount to be received that shall consist of cash and the portion that shall consist of Common Stock, which for purposes of calculating the number of shares of Company Stock to be received, shall be valued at their Fair Market Value on the date of exercise of such SARs. The Committee shall have the right to disapprove a Grantee’s election to receive cash in full or partial settlement of the SARs exercised and to require that shares of Company Stock be delivered in lieu of cash. If shares of Company Stock are to be received upon exercise of an SAR, cash shall be delivered in lieu of any fractional share.

(e) Certain Restrictions. An SAR is exercisable during the period specified by the Committee in the Grant Letter, provided that a tandem SAR is only exercisable during the period when the Stock Option to which it is related is also exercisable. No SAR may be exercised for cash by an officer or director of the Company subject to Section 16 of the Exchange Act, in whole or in part, except in accordance with Rule 16b-3 under the Exchange Act.

8. Stock-Based Awards.

The Committee is authorized, subject to limitations under applicable law, to grant to any Employee or Consultant awards of Company Stock or cash awards valued in whole or in part by reference to, or otherwise based on, Company Stock. Such awards may be made subject to such conditions and restrictions, if any, as the Committee may determine in its sole discretion, including the achievement of such corporate or individual performance goals as the Committee may establish.

9. Transferability of Grants

Only the Grantee or his or her authorized representative may exercise rights under a Grant. Such persons may not transfer those rights except by will or by the laws of descent and distribution or, with respect to Grants other than Incentive Stock Options, if permitted by Rule 16b-3 under the Exchange Act and if permitted in any specific case by the Committee in its sole discretion, pursuant to a qualified domestic relations order as defined under the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended or the regulations thereunder. When a Grantee dies, the representative or other person entitled to succeed to the

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rights of the Grantee (“Successor Grantee”) may exercise such rights. A Successor Grantee must furnish proof satisfactory to the Company of his or her right to receive the Grant under the Grantee’s will or under the applicable laws of descent and distribution.

10. Change of Control of the Company

As used herein, a “Change of Control” shall be deemed to have occurred if:

(a) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 40% or more of the voting power of the then outstanding securities of the Company;

(b) The stockholders of the Company approve an agreement providing for (i) the merger or consolidation of the Company with another corporation where the stockholders of the Company, immediately prior to the merger or consolidation, would not beneficially own, immediately after the merger or consolidation, shares entitling such stockholders to 30% or more of all votes (without consideration of the rights of any class of stock to elect directors by a separate class vote) to which all stockholders of the surviving corporation would be entitled in the election of directors or where the members of the Board, immediately prior to the merger or consolidation, would not, immediately after the merger or consolidation, constitute a majority of the Board of the surviving corporation or (ii) the sale or other disposition of all or substantially all the assets of the Company, or a liquidation, dissolution or statutory exchange of the Company;

(c) Any person has commenced, or announced an intention to commence, a tender offer or exchange offer for 40% or more of the voting power of the then outstanding securities of the Company; or

(d) During any period of two consecutive calendar years there is a change of 25% or more in the composition of the Board in office at the beginning of the period except for changes approved by at least two-thirds of the directors then in office who were directors at the beginning of the period.

11. Consequences of a Change of Control

(a) Upon a Change of Control (i) the Company shall provide each Grantee with outstanding Grants written notice of such Change of Control, (ii) all outstanding Stock Options and SARs shall automatically accelerate and become fully exercisable, (iii) the restrictions and conditions on all outstanding Restricted Stock and any stock-based awards made pursuant to Section 8 shall immediately lapse.

(b) In addition, upon a Change of Control described in Section 10(b)(i) where the Company is not the surviving corporation (or survives only as a subsidiary of another corporation), all outstanding Stock Options and SARs shall be assumed or replaced with comparable options or rights by the surviving corporation.

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(c) Notwithstanding the foregoing, in the event of a Change of Control, the Committee may take either or both of the following actions: (i) require that Grantees surrender their outstanding Stock Options and SARs in exchange for a payment by the Company, in cash or Company Stock as determined by the Committee, in an amount equal to the amount by which the then Fair Market Value of the shares of Company Stock subject to the Grantee’s outstanding Stock Options or SARs exceeds the option purchase price of the Stock Options or base amount of the SARs, as the case may be or (ii) terminate any or all outstanding Stock Options or SARs at such time as the Committee deems appropriate. Any such surrender shall take place as of the date of the Change of Control or such other date as the Committee may specify, and, in the case of a Stock Option or SAR held by a Grantee who is subject to Section 16(b) of the Exchange Act, any such surrender or payment shall be made on such date as the Committee shall determine consistent with Rule 16b-3 under the Exchange Act. The Committee shall not have the right to take the actions described in this Subsection (c) if such right would make the applicable Change of Control ineligible for pooling of interest accounting treatment under APB No. 16 or make such Change of Control ineligible for desired tax treatment with respect to such Change of Control and, but for this provision, the Change of Control would otherwise qualify for and the Company intends to use such treatment.

12. Amendment and Termination of the Plan

(a) Amendment. The Board may amend or terminate the Plan at any time; provided, however, that any amendment that increases the aggregate number (or individual limit for any single Grantee) of shares of Company Stock that may be issued under the Plan (other than by operation of Section 3(b)), or modifies the requirements as to eligibility for participation in the Plan, shall be subject to approval by the shareholders of the Company and provided, further, that the Board shall not amend the Plan without shareholder approval if such approval is required by Rule 16b-3 of the Exchange Act or Section 162(m) of the Code.

(b) Termination of Plan. The Plan shall terminate on the day immediately preceding the tenth anniversary of its effective date unless terminated earlier by the Board or unless extended by the Board with the approval of the shareholders.

(c) Termination and Amendment of Outstanding Grants. A termination or amendment of the Plan that occurs after a Grant is made shall not materially impair the rights of a Grantee unless the Grantee consents or unless the Committee acts under Section 20(b) hereof. The termination of the Plan shall not impair the power and authority of the Committee with respect to an outstanding Grant. Whether or not the Plan has terminated, an outstanding Grant may be terminated or amended under Section 20(b) hereof or may be amended by agreement of the Company and the Grantee consistent with the Plan.

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(d) Governing Document. The Plan shall be the controlling document. No other statements, representations, explanatory materials or examples, oral or written, may amend the Plan in any manner. The Plan shall be binding upon and enforceable against the Company and its successors and assigns.

13. Funding of the Plan

This Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Grants under this Plan. In no event shall interest be paid or accrued on any Grant, including unpaid installments of Grants.

14. Rights of Participants

Nothing in this Plan shall entitle any Employee, Consultant or other person to any claim or right to be granted a Grant under this Plan. Neither this Plan nor any action taken hereunder shall be construed as giving any individual any rights to be retained by, or in the employ or service of the Company or any other employment rights.

15. No Fractional Shares

No fractional shares of Company Stock shall be issued or delivered pursuant to the Plan or any Grant. The Committee shall determine whether cash, other awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

16. Withholding of Taxes

(a) Grantees may make an election to satisfy the Company income tax withholding obligation with respect to a Stock Option, SAR, Restricted Stock Grant or other award by having shares withheld up to an amount that does not exceed the Grantee’s maximum marginal tax rate for federal (including FICA), state and local tax liabilities. Such election must be in the form and manner prescribed by the Committee and is subject to the prior approval of the Committee. If the Grantee is a director or officer (within the meaning of Rule 16a-1(f) promulgated under the Exchange Act), if required under Rule 16b-3, such election must be irrevocable and must be made six months prior to the date on which the Stock Option is exercised or all the restrictions lapse with respect to such shares.

(b) The Company shall have the right to deduct from all Grants paid in cash, or from other wages paid to an employee of the Company, any federal, state or local taxes required by law to be withheld with respect to such cash awards and, in the case of Grants paid in Company Stock, the Grantee or other person receiving such shares shall be required to pay to the Company the amount of any such taxes which the Company is required to withhold with respect to such Grants or the Company shall have the right to deduct from other wages paid to the employee by the Company the amount of any withholding due with respect to such Grants.

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17. Voting Trust; Conditions and Requirements for Issuance of Shares

Unless the Committee determines otherwise, all Grants hereunder shall be contingent upon the Grantee entering a voting trust agreement with respect to shares issued pursuant to such Grant, if any, in the form and manner prescribed by the Committee, and no shares of Company Stock shall be issued in connection with any Grant hereunder unless the Grantee participates in such voting trust.

No Company Stock shall be issued in connection with any Grant hereunder unless and until all legal requirements applicable to the issuance of such Company Stock have been complied with to the satisfaction of the Committee. The Committee shall have the right to condition any Grant made to any Grantee hereunder on such Grantee’s undertaking in writing to comply with such restrictions on his or her subsequent disposition of such shares of Company Stock as the Committee shall deem necessary or advisable as a result of any applicable law, regulation or official interpretation thereof and certificates representing such shares may be legended to reflect any such restrictions. Certificates representing shares of Company Stock issued under the Plan will be subject to such stop-transfer orders and other restrictions as may be applicable under such laws, regulations and other obligations of the Company, including any requirement that a legend or legends be placed thereon.

18 Headings

Section headings are for reference only. In the event of a conflict between a title and the content of a Section, the content of the Section shall control.

19 Effective Date of the Plan.

The Plan was originally effective on May 8, 1996. The amendment and restatement of the Plan was effective as of May 24, 2000 and subsequently amended as of March, 2003.

20 Miscellaneous

(a) Substitute Grants. The Committee may make a Grant to an employee of another corporation who becomes an Employee by reason of a corporate merger, consolidation, acquisition of stock or property, reorganization or liquidation involving the Company or any of its subsidiaries in substitution for a stock option or restricted stock grant made by such corporation (“Substituted Stock Incentives”). The terms and conditions of the substitute grant may vary from the terms and conditions required by the Plan and from those of the Substituted Stock Incentives. The Committee shall prescribe the provisions of the substitute grants.

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(b) Compliance with Law. The Plan, the exercise of Stock Options and the obligations of the Company to issue or transfer shares of Company Stock under Grants shall be subject to all applicable laws and to approvals by any governmental or regulatory agency as may be required. With respect to persons subject to Section 16 of the Exchange Act, it is the intent of the Company that the Plan and all transactions under the Plan comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act. The Committee may revoke any Grant if it is contrary to law or modify a Grant to bring it into compliance with any valid and mandatory government regulation. The Committee may also adopt rules regarding the withholding of taxes on payments to Grantees. The Committee may, in its sole discretion, agree to limit its authority under this Section.

(c) Ownership of Stock. Except as otherwise provided by the Committee, a Grantee or Successor Grantee shall have no rights as a shareholder with respect to any shares of Company Stock covered by a Grant until the shares are issued to the Grantee or Successor Grantee on the stock transfer records of the Company.

(d) Governing Law. The validity, construction, interpretation and effect of the Plan and Grant Letters issued under the Plan shall exclusively be governed by and determined in accordance with the law of the Commonwealth of Pennsylvania.

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EX-10.5

Exhibit 10.5

ICT GROUP, INC.

1996 NON-EMPLOYEE DIRECTORS PLAN

As Amended Through May 18, 2004

The purpose of the ICT Group, Inc. 1996 Non-Employee Directors Plan (the “Plan”) is to provide non-employee members of the Board of Directors (“Non-Employee Directors”) of ICT Group, Inc. (the “Company”) and its subsidiaries (within the meaning of section 424(f) of the Code) with the opportunity to receive grants of nonqualified stock options (“Options”). The Company believes that the Plan will cause the participants to contribute materially to the growth of the Company, thereby benefiting the Company’s shareholders, and will align the economic interests of the participants with those of the shareholders.

1. Administration.

The Plan shall be administered by the members of the Board who are not eligible to receive options under this Plan (the “Committee”). If at any time there are not sufficient shares available under the Plan to permit an automatic grant as described in this Plan, the Option shall be reduced pro rata (to zero, if necessary) so as not to exceed the number of shares then available under the Plan.

2. Shares Subject to the Plan

(a) Subject to the adjustment specified below, the aggregate number of shares of common stock of the Company (“Company Stock”) that may be issued under the Plan is 250,000 shares. The shares may be authorized but unissued shares of Company Stock or reacquired shares of Company Stock, including shares purchased by the Company on the open market for purposes of the Plan. If and to the extent Options granted under the Plan terminate, expire, or are cancelled, forfeited, exchanged or surrendered without having been exercised, the shares subject to such Options shall again be available for purposes of the Plan.

(b) If there is any change in the number or kind of shares of Company Stock outstanding (i) by reason of a stock dividend, spin off, recapitalization, stock split, or combination or exchange of shares, (ii) by reason of a merger, reorganization or consolidation in which the Company is the surviving corporation, (iii) by reason of a reclassification or change in par value, or (iv) by reason of any other extraordinary or unusual event affecting the outstanding Company Stock as a class without the Company’s receipt of consideration, or if the value of outstanding shares of Company Stock is substantially reduced as a result of a spinoff or the Company’s payment of an extraordinary dividend or distribution, the maximum number of shares of Company Stock available for Options, the number of shares covered by outstanding Options, the kind of shares issued under the Plan, and the price per share or the applicable market value of such Options shall be proportionately adjusted to reflect any increase or decrease in the number or kind of issued shares of Company Stock to preclude the enlargement or dilution of rights and benefits under such Options; provided, however, that any fractional shares resulting from such adjustment shall be eliminated.

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3. Eligibility for Participation.

All Non-Employee Directors shall participate in the Plan. Non-Employee Directors who have received options under this plan are hereinafter referred to as “Optionees.”

4. Formula Option Grants to Non-Employee Directors.

(a) A Non-Employee Director shall be entitled to receive options which are not intended to qualify as incentive stock options within the meaning of section 422 of the Code (“Nonqualified Stock Options” or “Options”) in accordance with this Section 4.

(b) Initial Grant. Each Non-Employee Director who first becomes a member of the Board after the effective date of this Plan (as specified in Section 19) shall receive a grant of a Nonqualified Stock Option to purchase 15,000 shares of Company Stock on the date as of which he or she first becomes a member of the Board. Options granted pursuant to this Subsection (b) shall be exercisable with respect to 50% of the shares on the date of grant and shall become exercisable with respect to the remaining 50% of the shares on the first anniversary of the date of grant, if the Non-Employee Director continues to be a member of the Board through that date.

(c) Annual Grants. On each date that the Company holds its annual meeting of shareholders, commencing with the 2000 annual meeting, each Non-Employee Director who is in office immediately after the annual election of directors (other than a director who is first elected or appointed to the Board at such meeting) shall receive a grant of a Nonqualified Stock Option to purchase 5,000 shares of Company Stock. The date of grant of each such annual grant shall be the date of the annual meeting of the Company’s shareholders. Options granted pursuant to this Subsection (c) shall be fully exercisable as of the first anniversary of the date of grant, if the Non-Employee Director continues to be a member of the Board through that date.

(d) Other Grants. The Board may grant Non-Employee Directors who have previously received grants under the Plan additional Nonqualified Stock Options on a one-time basis in such amounts as the Board deems appropriate in order to make their equity compensation consistent with that of other Non-Employee Directors. Options granted pursuant to this Subsection (d) shall be fully exercisable as of the date of grant.

(e) Exercise Price. The Exercise Price per share of Company Stock subject to an Option granted under this Section 4 shall be equal to the Fair Market Value of a share of Company Stock on the date of grant.

If the Company Stock is traded in a public market, then the Fair Market Value per share shall be determined as follows: (i) if the principal trading market for the Company Stock is a national securities exchange or the National Market segment of the Nasdaq Stock Market, the last reported sale price thereof on the relevant date or (if there were no trades on that date) the latest preceding date upon which a sale was reported, or (ii) if the Company Stock is not

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principally traded on such exchange or market, the mean between the last reported “bid” and “asked” prices of Company Stock on the relevant date, as reported on Nasdaq or, if not so reported, as reported by the National Daily Quotation Bureau, Inc. or as reported in a customary financial reporting service, as applicable.

(f) Option Term and Exercisability. The term of each Option granted pursuant to this Section 4 shall be ten years.

(g) Payment of Exercise Price.

(i) The Exercise Price for an Option granted under this Plan shall be paid in cash. The Optionee shall pay the Exercise Price and the amount of any withholding tax due at the time of exercise. Shares of Company Stock shall not be issued upon exercise of an Option until the Exercise Price is fully paid and any required withholding is made.

(ii) A Optionee may exercise an Option granted under this Plan by delivering a notice of exercise as described below, with accompanying payment of the Exercise Price in accordance with Subsection (i) above. The notice of exercise may instruct the Company to deliver shares of Company Stock due upon the exercise of the Option to the designated registered broker or dealer in lieu of delivery to the Optionee. Such instructions shall designate the account into which the shares are to be deposited.

5. Termination of Employment, Disability or Death.

(a) Except as provided below, an Option may only be exercised while the Optionee is a Non-Employee Director. In the event that a Optionee ceases to be a Non-Employee Director for any reason other than a “disability”, death, or “termination for cause”, any Option which is otherwise exercisable by the Optionee shall terminate unless exercised within 90 days of the date on which the Optionee ceases to be a member of the Board, but in any event no later than the date of expiration of the Option term. Any of the Optionee’s Options that are not otherwise exercisable as of the date on which the Optionee ceases to be a Non-Employee Director shall terminate as of such date.

(b) In the event the Optionee ceases to be a Non-Employee Director on account of a “termination for cause” by the Company, any Option held by the Optionee shall terminate as of the date the Optionee ceases to be a Non-Employee Director.

(c) In the event the Optionee ceases to be a Non-Employee Director because the Optionee is “disabled”, any Option which is otherwise exercisable by the Optionee shall terminate unless exercised within one year after the date on which the Optionee ceases to be a Non-Employee Director, but in any event no later than the date of expiration of the Option term. Any of the Optionee’s Options which are not otherwise exercisable as of the date on which the Optionee ceases to be a Non-Employee Director shall terminate as of such date.

(d) If the Optionee dies while a Non-Employee Director or within 90 days after the date on which the Optionee ceases to be a Non-Employee Director on account of a termination as

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specified in Section 5(a) above, any Option that is otherwise exercisable by the Optionee shall terminate unless exercised within one year after the date on which the Optionee ceases to be a Non-Employee Director, but in any event no later than the date of expiration of the Option term. Any of the Optionee’s Options that are not otherwise exercisable as of the date on which the Optionee ceases to be a Non-Employee Director shall terminate as of such date.

(e) For purposes of this Section 5:

(A) The term “Company” shall mean the Company and its subsidiaries within the meaning of section 424(f) of the Code.

(B) “Disability” shall mean an Optionee’s becoming disabled within the meaning of section 22(e)(3) of the Code.

(C) “Termination for cause” shall mean the date the Optionee’s directorship is terminated, if the directorship is terminated on account of (a) a any act of fraud, intentional misrepresentation, embezzlement or theft, (b) commission of a felony, or (c) disclosure of trade secrets or confidential information of the Company. In the event a Optionee’s employment is terminated for cause, in addition to the immediate termination of all Options, the Optionee shall automatically forfeit all Option shares for any exercised portion of an Option for which the Company has not yet delivered the share certificates, upon refund by the Company of the Exercise Price paid by the Optionee for such shares.

6. Withholding of Taxes.

(a) Required Withholding. All Options under the Plan shall be subject to applicable federal (including FICA), state and local tax withholding requirements. The Company shall have the right to deduct from all Options paid in cash, or from other wages paid to the Optionee, any federal, state or local taxes required by law to be withheld with respect to such Options. The Company may require the Optionee or other person receiving shares upon the exercise of Options to pay to the Company the amount of any such taxes that the Company is required to withhold with respect to such Options, or the Company may deduct from other wages paid by the Company the amount of any withholding taxes due with respect to such Options.

(b) Election to Withhold Shares. A Optionee may elect to satisfy the Company’s income tax withholding obligation with respect to an Option paid in Company Stock by having shares withheld up to an amount that does not exceed the Optionee’s minimum applicable tax rate for federal (including FICA), state and local tax liabilities.

7. Transferability of Options.

Only the Optionee or his or her authorized representative may exercise rights under an Option. Such persons may not transfer those rights except by will or by the laws of descent and distribution. When a Optionee dies, the representative or other person entitled to succeed to the rights of the Optionee (“Successor Optionee”) may exercise such rights. A Successor Optionee must furnish proof satisfactory to the Company of his or her right to receive the Option under the Optionee’s will or under the applicable laws of descent and distribution.

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8. Change of Control of the Company.

As used herein, a “Change of Control” shall be deemed to have occurred if:

(a) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the voting power of the then outstanding securities of the Company;

(b) The shareholders of the Company approve (or, if shareholder approval is not required, the Board approves) an agreement providing for (i) the merger or consolidation of the Company with another corporation where the shareholders of the Company, immediately prior to the merger or consolidation, will not beneficially own, immediately after the merger or consolidation, shares entitling such shareholders to 20% or more of all votes to which all shareholders of the surviving corporation would be entitled in the election of directors (without consideration of the rights of any class of stock to elect directors by a separate class vote), or where the members of the Board, immediately prior to the merger or consolidation, would not, immediately after the merger or consolidation, constitute a majority of the board of directors of the surviving corporation, (ii) the sale or other disposition of all or substantially all of the assets of the Company, or (iii) a liquidation, dissolution or statutory exchange of the Company;

(c) Any person has commenced a tender offer or exchange offer for 20% or more of the voting power of the then outstanding shares of the Company; or

(d) At least a majority of the Board does not consist of individuals who were elected, or nominated for election, by the directors in office at the time of such election or nomination.

9. Consequences of a Change of Control.

(a) Upon a Change of Control (i) the Company shall provide each Optionee with outstanding Options written notice of such Change of Control, (ii) all outstanding Options shall automatically accelerate and become fully exercisable.

(b) In addition, upon a Change of Control described in Section 8(b)(i) where the Company is not the surviving corporation (or survives only as a subsidiary of another corporation), all outstanding Options shall be assumed by, or replaced with comparable options or rights by, the surviving corporation.

10. Amendment and Termination of the Plan.

The Board may amend or terminate the Plan at any time.

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11. Termination of Plan.

The Plan shall terminate on the day immediately preceding the tenth anniversary of its effective date unless terminated earlier by the Board or unless extended by the Board with the approval of the shareholders.

12. Termination and Amendment of Outstanding Options.

A termination or amendment of the Plan that occurs after a Option has been granted shall not materially impair the rights of a Optionee unless the Optionee consents.

13. Governing Document.

The Plan shall be the controlling document. No other statements, representations, explanatory materials or examples, oral or written, may amend the Plan in any manner. The Plan shall be binding upon and enforceable against the Company and its successors and assigns.

14. Funding of the Plan.

This Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Options under this Plan. In no event shall interest be paid or accrued on any Grant, including unpaid installments of Options.

15. Rights of Participants.

Neither this Plan nor any action taken hereunder shall be construed as giving any individual any rights to be retained as a director of the Company or any employment rights.

16. No Fractional Shares

No fractional shares of Company Stock shall be issued or delivered pursuant to the Plan or any Option.

17. Requirements for Issuance of Shares

No Company Stock shall be issued or transferred in connection with any Option hereunder unless and until all legal requirements applicable to the issuance or transfer of such Company Stock have been complied with. Certificates representing shares of Company Stock issued under the Plan will be subject to such stop-transfer orders and other restrictions as may be applicable under such laws, regulations and other obligations of the Company, including any requirement that a legend or legends be placed thereon.

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18. Headings

Section headings are for reference only. In the event of a conflict between a title and the content of a Section, the content of the Section shall control.

19. Effective Date of the Plan.

Subject to the approval of the Company’s shareholders, this Plan shall be effective on May 8, 1996. The amendment and restatement of the Plan shall be effective as of May 18, 2004.

20. Miscellaneous

(a) Compliance with Law. The Plan, the exercise of Options and the obligations of the Company to issue or transfer shares of Company Stock under Options shall be subject to all applicable laws and to approvals by any governmental or regulatory agency as may be required. With respect to persons subject to Section 16 of the Exchange Act, it is the intent of the Company that the Plan and all transactions under the Plan comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act.

(b) Ownership of Stock. An Optionee or Successor Optionee shall have no rights as a shareholder with respect to any shares of Company Stock covered by an Option until the shares are issued or transferred to the Optionee or Successor Optionee on the stock transfer records of the Company.

(c) Governing Law. The validity, construction, interpretation and effect of the Plan and Option grants issued under the Plan shall exclusively be governed by and determined in accordance with the law of the Commonwealth of Pennsylvania.

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EX-10.48

Exhibit 10.48

The CORPORATEplan for Retirement^SM

EXECUTIVE PLAN

BASIC PLAN DOCUMENT

IMPORTANT NOTE

This document has not been approved by the Department of Labor, the Internal Revenue Service or any other governmental entity. An Adopting Employer must determine whether the plan is subject to the Federal securities laws and the securities laws of the various states. An Adopting Employer may not rely on this document to ensure any particular tax consequences or to ensure that the Plan is “unfunded and maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees” under the Employee Retirement Income Security Act with respect to the Employer’s particular situation. Fidelity Management Trust Company, its affiliates and employees cannot provide you with legal advice in connection with the execution of this document. This document should be reviewed by the Employer’s attorney prior to execution.

CORPORATEplan for EXECUTIVE

BASIC PLAN DOCUMENT

ARTICLE 1

ADOPTION AGREEMENT

ARTICLE 2

DEFINITIONS

2.01 - Definitions

ARTICLE 3

PARTICIPATION

3.01 - Date of Participation

3.02 - Resumption of Participation Following Re employment

3.03 - Cessation or Resumption of Participation Following a Change in Status

ARTICLE 4

CONTRIBUTIONS

4.01 - Deferral Contributions

4.02 - Matching Contributions

4.03 - Employer Contributions

4.04 - Time of Making Contributions

ARTICLE 5

PARTICIPANTS’ ACCOUNTS

5.01 - Individual Accounts

ARTICLE 6

INVESTMENT OF CONTRIBUTIONS

6.01 - Manner of Investment

6.02 - Investment Decisions

ARTICLE 7

RIGHT TO BENEFITS

7.01 - Normal or Early Retirement

7.02 - Death

7.03 - Other Termination of Employment

7.04 - Separate Account

7.05 - Forfeitures

7.06 - Adjustment for Investment Experience

7.07 - Unforeseeable Emergency Withdrawals

7.08 - Change in Control

ARTICLE 8

DISTRIBUTION OF BENEFITS PAYABLE AFTER TERMINATION OF SERVICE

8.01 - Distribution of Benefits to Participants and Beneficiaries

8.02 - Determination of Method of Distribution

8.03 - Notice to Trustee

8.04 - Time of Distribution

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ARTICLE 9

AMENDMENT AND TERMINATION

9.01 - Amendment by Employer

9.02 - Retroactive Amendments

9.03 - Termination

9.04 - Distribution Upon Termination of the Plan

ARTICLE 10

MISCELLANEOUS

10.01 - Communication to Participants

10.02 - Limitation of Rights

10.03 - Nonalienability of Benefits

10.04 - Facility of Payment

10.05 - Information between Employer and Trustee

10.06 - Notices

10.07 - Governing Law

ARTICLE 11

PLAN ADMINISTRATION

11.01 - Powers and responsibilities of the Administrator

11.02 - Nondiscriminatory Exercise of Authority

11.03 - Claims and Review Procedures

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PREAMBLE

It is the intention of the Employer to establish herein an unfunded plan maintained solely for the purpose of providing deferred compensation for a select group of management or highly compensated employees as provided in ERISA.

Article 1. Adoption Agreement.

Article 2. Definitions.

2.01. Definitions.

(a) Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:

(1) “Account” means an account established on the books of the Employer for the purpose of recording amounts credited on behalf of a Participant and any income, expenses, gains or losses included thereon.

(2) “Administrator” means the Employer adopting this Plan, or other person designated by the Employer in Section 1.01(b).

(3) “Adoption Agreement” means Article 1, under which the Employer establishes and adopts or amends the Plan and designates the optional provisions selected by the Employer. The provisions of the Adoption Agreement shall be an integral part of the Plan.

(4) “Beneficiary” means the person or persons entitled under Section 7.02 to receive benefits under the Plan upon the death of a Participant.

(5) “Code” means the Internal Revenue Code of 1986, as amended from time to time.

(6) “Compensation” means for purposes of Article 4 (Contributions) wages as defined in Section 3401(a) of the Code and all other payments of compensation to an employee by the Employer (in the course of the Employer’s trade or business) for which the Employer is required to furnish the employee a written statement under Section 604 l(d) and 6051(a)(3) of the Code, excluding any items elected by the Employer in Section 1.04, reimbursements or other expense allowances, fringe benefits (cash and non-cash), moving expenses, deferred compensation and welfare benefits, but including amounts that are not includable in the gross income of the Participant under a salary reduction agreement by reason of the application of Sections 125, 132(f)(4), 402(e)(3), 402(h) or 403(b) of the Code. Compensation shall be determined without regard to any rules under Section 3401(a) of the Code that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Section 3401(a)(2) of the Code).

Compensation shall also include amounts deferred pursuant to an election under Section 4.01.

In the case of any Self-Employed Individual or an Owner-Employee, Compensation means the Self-Employed Individual’s Earned Income.

(7) “Earned Income” means the net earnings of a Self-Employed Individual derived from the trade or business with respect to which the Plan is established and for which the personal services of such individual are a material income-providing factor, excluding any items not included in gross income and the deductions allocated to such items, except that for taxable years beginning after December 31, 1989 net earnings shall be determined with regard to the deduction allowed under Section 164(f) of the Code, to the extent applicable to the Employer. Net earnings shall be reduced by contributions of the Employer to any qualified plan, to the extent a deduction is allowed to the Employer for such contributions under Section 404 of the Code.

(8) “Employee” means any employee of the Employer, Self-Employed Individual or Owner-Employee.

(9) “Employer” means the employer named in Section 1.02(a) and any Related Employers designated in Section 1.02(b).

(10) “Employment Commencement Date” means the date on which the Employee first performs an Hour of Service.

(11) “Entry Date” means the date(s) designated in Section 1.03(b).

(12) “ERISA” means the Employee Retirement Income Security Act of 1974, as from time to time amended.

(13) “Fund Share” means the share, unit, or other evidence of ownership in a Permissible Investment.

(14) “Hour of Service” means, with respect to any Employee,

(A) Each hour for which the Employee is directly or indirectly paid, or entitled to payment, for the performance of duties for the Employer or a Related Employer, each such hour to be credited to the Employee for the computation period in which the duties were performed;

(B) Each hour for which the Employee is directly or indirectly paid, or entitled to payment, by the Employer or Related Employer (including payments made or due from a trust fund or insurer to which the Employer contributes or pays premiums) on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity, disability, layoff, jury duty, military duty, or leave of absence, each such hour to be credited to the Employee for the Eligibility Computation Period in which such period of time occurs, subject to the following rules:

(i) No more than 501 Hours of Service shall be credited under this paragraph (B) on account of any single continuous period during which the Employee performs no duties;

(ii) Hours of Service shall not be credited under this paragraph (B) for a payment which solely reimburses the Employee for medically-related expenses, or which is made or due under a plan maintained solely for the purpose of complying with applicable workmen’s compensation, unemployment compensation or disability insurance laws; and

(iii) If the period during which the Employee performs no duties falls within two or more computation periods and if the payment made on account of such period is not

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calculated on the basis of units of time, the Hours of Service credited with respect to such period shall be allocated between not more than the first two such computation periods on any reasonable basis consistently applied with respect to similarly situated Employees; and

(C) Each hour not counted under paragraph (A) or (B) for which back pay, irrespective of mitigation of damages, has been either awarded or agreed to be paid by the Employer or a Related Employer, each such hour to be credited to the Employee for the computation period to which the award or agreement pertains rather than the computation period in which the award agreement or payment is made.

For purposes of determining Hours of Service, Employees of the Employer and of all Related Employers will be treated as employed by a single employer. For purposes of paragraphs (B) and (C) above, Hours of Service will be calculated in accordance with the provisions of Section 2530.200b-2(b) of the Department of Labor regulations, which are incorporated herein by reference.

Solely for purposes of determining whether a break in service for participation purposes has occurred in a computation period, an individual who is absent from work for maternity or paternity reasons shall receive credit for the hours of service which would otherwise been credited to such individual but for such absence, or in any case in which such hours cannot be determined, 8 hours of service per day of such absence. For purposes of this paragraph, an absence from work for maternity reasons means an absence (1) by reason of the pregnancy of the individual, (2) by reason of a birth of a child of the individual, (3) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (4) for purposes of caring for such child for a period beginning immediately following such birth or placement. The hours of service credited under this paragraph shall be credited (1) in the computation period in which the absence begins if the crediting is necessary to prevent a break in service in that period, or (2) in all other cases, in the following computation period.

(15) “Normal Retirement Age” means the normal retirement age specified in Section 1.07(f) of the Adoption Agreement.

(16) “Owner-Employee” means, if the Employer is a sole proprietorship, the individual who is the sole proprietor, or, if the Employer is a partnership, a partner who owns more than 10 percent of either the capital interest or the profits interest of the partnership.

(17) “Participant” means any Employee who participates in the Plan in accordance with Article 3 hereof.

(18) “Permissible Investment” means the investments specified by the Employer as available for investment of assets of the Trust and agreed to by the Trustee. The Permissible Investments under the Plan shall be listed in the Service Agreement.

(19) “Plan” means the plan established by the Employer as set forth herein as a new plan or as an amendment to an existing plan, by executing the Adoption Agreement, together with any and all amendments hereto.

(20) “Plan Year” means the 12-consecutive-month period designated by the Employer in Section 1.01(c).

(21) “Related Employer” means any employer other than the Employer named in Section 1.02(a), if the Employer and such other employer are members of a controlled group of corporations (as defined in Section 414(b) of the Code) or an affiliated service group (as defined in Section 414(m)), or are trades or businesses (whether or not incorporated) which are under common control (as defined in Section 414(c)), or such other employer is required to be aggregated with the Employer pursuant to regulations issued under Section 414(o).

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(22) “Self-Employed Individual” means an individual who has Earned Income for the taxable year from the Employer or who would have had Earned Income but for the fact that the trade or business had no net profits for the taxable year.

(23) “Service Agreement” means the agreement between the Employer and Trustee regarding the arrangement between the parties for recordkeeping services with respect to the Plan.

(24) “Trust” means the trust created by the Employer.

(25) “Trust Agreement” means the agreement between the Employer and the Trustee, as set forth in a separate agreement, under which assets are held, administered, and managed subject to the claims of the Employer’s creditors in the event of the Employer’s insolvency, until paid to Plan Participants and their Beneficiaries as specified in the Plan.

(26) “Trust Fund” means the property held in the Trust by the Trustee.

(27) “Trustee” means the corporation or individual(s) appointed by the Employer to administer the Trust in accordance with the Trust Agreement.

(28) “Years of Service for Vesting” means, with respect to any Employee, the number of whole years of his periods of service with the Employer or a Related Employer (the elapsed time method to compute vesting service), subject to any exclusions elected by the Employer in Section 1.07(c). An Employee will receive credit for the aggregate of all time period(s) commencing with the Employee’s Employment Commencement Date and ending on the date a break in service begins, unless any such years are excluded by Section 1.07(c). An Employee will also receive credit for any period of severance of less than 12 consecutive months. Fractional periods of a year will be expressed in terms of days.

In the case of a Participant who has 5 consecutive 1-year breaks in service, all years of service after such breaks in service will be disregarded for the purpose of vesting the Employer-derived account balance that accrued before such breaks, but both pre-break and post-break service will count for the purposes of vesting the Employer-derived account balance that accrues after such breaks. Both accounts will share in the earnings and losses of the fund.

In the case of a Participant who does not have 5 consecutive 1-year breaks in service, both the pre-break and post-break service will count in vesting both the pre-break and post-break employer-derived account balance.

A break in service is a period of severance of at least 12 consecutive months. Period of severance is a continuous period of time during which the Employee is not employed by the Employer. Such period begins on the date the Employee retires, quits or is discharged, or if earlier, the 12-month anniversary of the date on which the Employee was otherwise first absent from service.

In the case of an individual who is absent from work for maternity or paternity reasons, the 12-consecutive month period beginning on the first anniversary of the first date of such absence shall not constitute a break in service. For purposes of this paragraph, an absence from work for maternity or paternity reasons means an absence (1) by reason of the pregnancy of the individual, (2) by reason of the birth of a child of the individual, (3) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (4) for purposes of caring for such child for a period beginning immediately following such birth or placement.

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If the Plan maintained by the Employer is the plan of a predecessor employer, an Employee’s Years of Service for Vesting shall include years of service with such predecessor employer. In any case in which the Plan maintained by the Employer is not the plan maintained by a predecessor employer, service for such predecessor shall be treated as service for the Employer to the extent provided in Section 1.08.

(b) Pronouns used in the Plan are in the masculine gender but include the feminine gender unless the context clearly indicates otherwise.

Article 3. Participation.

3.01. Date of Participation. An eligible Employee (as set forth in Section 1.03(a)) who has filed an election pursuant to Section 4.01 will become a Participant in the Plan on the first Entry Date coincident with or following the date on which such election would otherwise become effective, as determined under Section 4.01.

3.02. Resumption of Participation Following Reemployment. If a Participant ceases to be an Employee and thereafter returns to the employ of the Employer he will again become a Participant as of an Entry Date following the date on which he completes an Hour of Service for the Employer following his reemployment, if he is an eligible Employee as defined in Section 1.03(a), and has filed an election pursuant to Section 4.01.

3.03. Cessation or Resumption of Participation Following a Change in Status. If any Participant continues in the employ of the Employer or Related Employer but ceases to be an eligible Employee as defined in Section 1.03(a), the individual shall continue to be a Participant until the entire amount of his benefit is distributed; however, the individual shall not be entitled to make Deferral Contributions or receive an allocation of Matching contributions during the period that he is not an eligible Employee. Such Participant shall continue to receive credit for service completed during the period for purposes of determining his vested interest in his Accounts. In the event that the individual subsequently again becomes an eligible Employee, the individual shall resume full participation in accordance with Section 3.01.

Article 4. Contributions.

4.01. Deferral Contributions. Each Participant may elect to execute a salary reduction agreement with the Employer to reduce his Compensation by a specified percentage, not exceeding the percentage set forth in Section 1.05(a) and equal to a whole number multiple of one (1) percent, per payroll period, subject to any election regarding bonuses, as set out in Subsection 1.05(a)(2). Such agreement shall become effective on the first day of the period as set forth in the Participant’s election. The election will be effective to defer Compensation relating to all services performed in a calendar year subsequent to the filing of such an election, subject to any election regarding bonuses, as set out in Subsection 1.05(a)(2). An election once made will remain in effect until a new election is made, provided, however that such an election choosing a distribution date pursuant to 1.06(b)(l)(B) will become ineffective the first day of the calendar year preceding the calendar year in which the election requires the distribution to be made. A new election will be effective as of the first day of the following calendar year and will apply only to Compensation payable with respect to services rendered after such date. Amounts credited to a Participant’s account prior to the effective date of any new election will not be affected and will be paid in accordance with that prior election. The Employer shall credit an amount to the account maintained on behalf of the Participant corresponding to the amount of said reduction. Under no circumstances may a salary reduction agreement be adopted retroactively. A Participant may revoke a salary reduction agreement for a calendar year during that year, provided, however, that such revocation shall apply only to Compensation not yet earned. In that event, the Participant shall be precluded from electing to defer future Compensation hereunder during the calendar year to which the revocation applies. Notwithstanding the above,

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(a) in the calendar year in which the Plan first becomes effective or in the year in which the Participant first becomes eligible to participate, an election to defer compensation may be made within 30 days after the Participant is first eligible or the Plan is first effective, which election shall be effective with respect to Compensation payable with respect to services rendered after the date of the election; and

(b) in the event the Employer has elected to permit the deferral of bonus payments hereunder, a salary reduction agreement applicable to such bonus deferral must be made in the calendar year immediately preceding the calendar year to which the bonus relates.

4.02. Matching Contributions. If so provided by the Employer in Section 1.05(b), the Employer shall make a “Matching Contribution” to be credited to the account maintained on behalf of each Participant who had “Deferral Contributions” pursuant to Section 4.01 made on his behalf during the year and who meets the requirement, if any, of Section 1.05(b)(3). The amount of the “Matching Contribution” shall be determined in accordance with Section 1.05(b).

4.03. Employer Contributions. If so provided by the Employer in Section 1.05(c)(l), the Employer shall make an “Employer Contribution” to be credited to the account maintained on behalf of each Participant who meets the requirement, if any, of Section 1.05(c)(3) in the amount required by Section 1.05(c)(l). If so provided by the Employer in Section 1.05(c)(2), the Employer may make an “Employer Contribution” to be credited to the account maintained on behalf of any Participant in such an amount as the Employer, in its sole discretion, shall determine. In making “Employer Contributions” pursuant to Section 1.05(c)(2), the Employer shall not be required to treat all Participants in the same manner in determining such contributions and may determine the “Employer Contribution” of any Participant to be zero.

4.04. Time of Making Contributions. The Employer shall remit contributions deemed made hereunder to the Trust as soon as practicable after such contributions are deemed made under the terms of the Plan.

Article 5. Participants’ Accounts.

5.01. Individual Accounts. The Administrator will establish and maintain an Account for each Participant, which will reflect Matching and Deferral Contributions credited to the Account on behalf of the Participant and earnings, expenses, gains and losses credited thereto, and deemed investments made with amounts in the Participant’s Account. The Administrator will establish and maintain such other accounts and records as it decides in its discretion to be reasonably required or appropriate in order to discharge its duties under the Plan. Participants will be furnished statements of their Account values at least once each Plan Year. The Administrator shall provide the Trustee with information on the amount credited to the separate account of each Participant maintained by the Administrator in its records.

Article 6. Investment of Contributions.

6.01. Manner of Investment. All amounts credited to the Accounts of Participants shall be treated as though invested and reinvested only in eligible investments selected by the Employer in the Service Agreement.

6.02. Investment Decisions. Investments in which the Accounts of Participants shall be treated as invested and reinvested shall be directed by the Employer or by each Participant, or both, in accordance with the Employer’s election in Section 1.11(a).

(a) All dividends, interest, gains and distributions of any nature that would be earned in respect of Fund Shares in which the Account is treated as investing shall be credited to the Account as though reinvested in additional shares of that Permissible Investment.

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(b) Expenses that would be attributable to the acquisition of investments shall be charged to the Account of the Participant for which such investment is treated as having been made.

Article 7. Right to Benefits.

7.01. Normal or Early Retirement. If provided by the Employer in Section 1.07(e), each Participant who attains his Normal Retirement Age or Early Retirement Age will have a nonforfeitable interest in his Account in accordance with the vesting schedule(s) elected in Section 1.07. If a Participant retires on or after attainment of Normal or Early Retirement Age, such retirement is referred to as a normal retirement. On or after his normal retirement, the balance of the Participant’s Account, plus any amounts thereafter credited to his Account, subject to the provisions of Section 7.06, will be distributed to him in accordance with Article 8.

If provided by the Employer in Section 1.07, a Participant who separates from service before satisfying the age requirements for early retirement, but has satisfied the service requirement will be entitled to the distribution of his Account, subject to the provisions of Section 7.06, in accordance with Article 8, upon satisfaction of such age requirement.

7.02. Death. If a Participant dies before the distribution of his Account has commenced, or before such distribution has been completed, his Account shall become vested in accordance with the vesting schedule(s) elected in Section 1.07 and his designated Beneficiary or Beneficiaries will be entitled to receive the balance or remaining balance of his Account, plus any amounts thereafter credited to his Account, subject to the provisions of Section 7.06. Distribution to the Beneficiary or Beneficiaries will be made in accordance with Article 8.

A Participant may designate a Beneficiary or Beneficiaries, or change any prior designation of Beneficiary or Beneficiaries, by giving notice to the Administrator on a form designated by the Administrator. If more than one person is designated as the Beneficiary, their respective interests shall be as indicated on the designation form.

A copy of the death certificate or other sufficient documentation must be filed with and approved by the Administrator. If upon the death of the Participant there is, in the opinion of the Administrator, no designated Beneficiary for part or all of the Participant’s Account, such amount will be paid to his surviving spouse or, if none, to his estate (such spouse or estate shall be deemed to be the Beneficiary for purposes of the Plan). If a Beneficiary dies after benefits to such Beneficiary have commenced, but before they have been completed, and, in the opinion of the Administrator, no person has been designated to receive such remaining benefits, then such benefits shall be paid to the deceased Beneficiary’s estate.

7.03. Other Termination of Employment. If provided by the Employer in Section 1.07, if a Participant terminates his employment for any reason other than death or normal retirement, he will be entitled to a termination benefit equal to (i) the vested percentage(s) of the value of the Matching Contributions to his Account, as adjusted for income, expense, gain, or loss, such percentage(s) determined in accordance with the vesting schedule(s) selected by the Employer in Section 1.07, and (ii) the value of the Deferral Contributions to his Account as adjusted for income, expense, gain or loss. The amount payable under this Section 7.03 will be subject to the provisions of Section 7.06 and will be distributed in accordance with Article 8.

7.04. Separate Account. If a distribution from a Participant’s Account has been made to him at a time when he has a nonforfeitable right to less than 100 percent of his Account, the vesting schedule in Section 1.07 will thereafter apply only to amounts in his Account attributable to Matching Contributions allocated after such distribution. The balance of his Account immediately after such distribution will be transferred to a separate account that will be maintained for the purpose of determining his interest therein according to the following provisions.

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At any relevant time prior to a forfeiture of any portion thereof under Section 7.05, a Participant’s nonforfeitable interest in his Account held in a separate account described in the preceding paragraph will be equal to P(AB + (RxD))-(RxD), where P is the nonforfeitable percentage at the relevant time determined under Section 7.05; AB is the account balance of the separate account at the relevant time; D is the amount of the distribution; and R is the ratio of the account balance at the relevant time to the account balance after distribution. Following a forfeiture of any portion of such separate account under Section 7.05 below, any balance in the Participant’s separate account will remain fully vested and nonforfeitable.

7.05. Forfeitures. If a Participant terminates his employment, any portion of his Account (including any amounts credited after his termination of employment) not payable to him under Section 7.03 will be forfeited by him.

7.06. Adjustment for Investment Experience. If any distribution under this Article 7 is not made in a single payment, the amount remaining in the Account after the distribution will be subject to adjustment until distributed to reflect the income and gain or loss on the investments in which such amount is treated as invested and any expenses properly charged under the Plan to such amounts.

7.07. Unforeseeable Emergency Withdrawals. Subject to the provisions of Article 8, a Participant shall not be permitted to withdraw his Account (and earnings thereon) prior to retirement or termination of employment, except that, to the extent permitted under Section 1.09, a Participant may apply to the Administrator to withdraw some or all of his Account if such withdrawal is made on account of a unforeseeable emergency as determined by the Administrator.

7.08. Change in Control. If the Employer has elected to apply Section 1.06(c), then, upon a Change in Control, as defined in Section 1.12, notwithstanding any other provision of the Plan to the contrary, all Participants shall have a nonforfeitable right to receive the entire amount of their account balances under the Plan and all such amounts shall be paid out to Participants as soon as administratively practicable.

Article 8. Distribution of Benefits.

8.01. Form of Distribution of Benefits to Participants and Beneficiaries. The Plan provides for distribution as a lump sum to be paid in cash on the date specified by the Employer in Section 1.06 pursuant to the method provided in Section 8.02. If elected by the Employer in Section 1.10 and specified in the Participant’s deferral election, the distribution will be paid through a systematic withdrawal plan (installments) for a time period not exceeding 10 years beginning on the date specified by the Employer in Section 1.06.

8.02. Events Requiring Distribution of Benefits to Participants and Beneficiaries.

(a) If elected by the Employer in Section 1.06(a), the Participant will receive a distribution upon the earliest of the events specified by the Employer in Section 1.06(a), subject to the provisions of Section 7.08, and at the time indicated in Section 1.06(a)(2). If the Participant dies before any event in Section 1.06(a) occurs, the Participant shall be considered to have terminated employment and the Participant’s benefit will be paid to the Participant’s Beneficiary in the same form and at the same time as it would have been paid to the Participant pursuant to this Article 8.

(b) If elected by the Employer in Section 1.06(b), the Participant will receive a distribution of all amounts not deferred pursuant to Section 1.06(b)(l)(B) (and earnings attributable to those amounts) upon termination of employment. If elected by the Employer in Section 1.06(b)(l)(B), the Participant shall have the election to receive distributions of amounts deferred pursuant to Section 4.01 (and earnings attributable to those amounts) after a date specified by the Participant in his deferral election which is at least 12 months after the first day of the calendar year in which such amounts would be earned. Amounts distributed to the Participant pursuant to Section 1.06(b) shall be distributed at the time indicated in Section 1.06(b)(2). Subject to the provisions of Section 7.08, the Participant shall receive a distribution in the form provided in Section 8.01. If the Participant

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dies before any event in Section 1.06(a) occurs, the Participant shall be considered to have terminated employment and the Participant’s benefit will be paid to the Participant’s Beneficiary in the same form and at the same time as it would have been paid to the Participant pursuant to this Article 8. However, if the Participant dies before the date specified by the Participant in an election pursuant to Section 1.06(b)(l)(B), then the Participant’s benefit shall be paid to the Participant’s Beneficiary in the form provided in Section 8.01 as if the Participant had elected to be paid at termination of employment.

8.03. Determination of Method of Distribution. The Participant will determine the method of distribution of benefits to himself and his Beneficiary, subject to the provisions of Section 8.02. Such determination will be made at the time the Participant makes a deferral election. Unless the Employer has elected Section 1.06(b) to control distributions, the period certain specified in a Participant’s first deferral election specifying distribution under a systematic withdrawal plan shall apply to all subsequent elections of distributions under a systematic withdrawal plan made by the Participant. Once a Participant has made an election for the method of distribution, that election shall be effective for all contributions made on behalf of the Participant attributable to any Plan Year after that election was made and before the Plan Year in which that election was altered in the manner prescribed by the Administrator. If the Participant does not designate in the manner prescribed by the Administrator the method of distribution to him and his Beneficiary, the method of distribution shall be a lump sum at termination of employment.

8.04. Notice to Trustee. The Administrator will notify the Trustee, pursuant to the method stated in the Trust Agreement for providing direction, whenever any Participant or Beneficiary is entitled to receive benefits under the Plan. The Administrator’s notice shall indicate the form, amount and frequency of benefits that such Participant or Beneficiary shall receive.

8.05. Time of Distribution. In no event will distribution to a Participant be made later than the date specified by the Participant in his salary reduction agreement. All distributions will be made as soon as administratively feasible following the distribution date specified in Section 1.06 or Section 7.08, if applicable.

Article 9. Amendment and Termination.

9.01 Amendment by Employer. The Employer reserves the authority to amend the Plan by filing with the Trustee an amended Adoption Agreement, executed by the Employer only, on which said Employer has indicated a change or changes in provisions previously elected by it. Such changes are to be effective on the effective date of such amended Adoption Agreement. Any such change notwithstanding, no Participant’s Account shall be reduced by such change below the amount to which the Participant would have been entitled if he had voluntarily left the employ of the Employer immediately prior to the date of the change. The Employer may from time to time make any amendment to the Plan that may be necessary to satisfy the Code or ERISA. The Employer’s board of directors or other individual specified in the resolution adopting this Plan shall act on behalf of the Employer for purposes of this Section 9.01.

9.02 Retroactive Amendments. An amendment made by the Employer in accordance with Section 9.01 may be made effective on a date prior to the first day of the Plan Year in which it is adopted if such amendment is necessary or appropriate to enable the Plan and Trust to satisfy the applicable requirements of the Code or ERISA or to conform the Plan to any change in federal law or to any regulations or ruling thereunder. Any retroactive amendment by the Employer shall be subject to the provisions of Section 9.01.

9.03. Termination. The Employer has adopted the Plan with the intention and expectation that contributions will be continued indefinitely. However, said Employer has no obligation or liability whatsoever to maintain the Plan for any length of time and may discontinue contributions under the Plan or terminate the Plan at any time by written notice delivered to the Trustee without any liability hereunder for any such discontinuance or termination.

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9.04. Distribution upon Termination of the Plan. Upon termination of the Plan, no further Deferral Contributions or Matching Contributions shall be made under the Plan, but Accounts of Participants maintained under the Plan at the time of termination shall continue to be governed by the terms of the Plan until paid out in accordance with the terms of the Plan.

Article 10. Miscellaneous.

10.01. Communication to Participants. The Plan will be communicated to all Participants by the Employer promptly after the Plan is adopted.

10.02. Limitation of Rights. Neither the establishment of the Plan and the Trust, nor any amendment thereof, nor the creation of any fund or account, nor the payment of any benefits, will be construed as giving to any Participant or other person any legal or equitable right against the Employer, Administrator or Trustee, except as provided herein; and in no event will the terms of employment or service of any Participant be modified or in any way affected hereby.

10.03. Nonalienabilitv of Benefits. The benefits provided hereunder will not be subject to alienation, assignment, garnishment, attachment, execution or levy of any kind, either voluntarily or involuntarily, and any attempt to cause such benefits to be so subjected will not be recognized, except to such extent as may be required by law.

10.04. Facility of Payment. In the event the Administrator determines, on the basis of medical reports or other evidence satisfactory to the Administrator, that the recipient of any benefit payments under the Plan is incapable of handling his affairs by reason of minority, illness, infirmity or other incapacity, the Administrator may disburse such payments, or direct the Trustee to disburse such payments, as applicable, to a person or institution designated by a court which has jurisdiction over such recipient or a person or institution otherwise having the legal authority under State law for the care and control of such recipient. The receipt by such person or institution of any such payments shall be complete acquittance therefore, and any such payment to the extent thereof, shall discharge the liability of the Trust for the payment of benefits hereunder to such recipient.

10.05. Information between Employer and Trustee. The Employer agrees to furnish the Trustee, and the Trustee agrees to furnish the Employer with such information relating to the Plan and Trust as may be required by the other in order to carry out their respective duties hereunder, including without limitation information required under the Code or ERISA and any regulations issued or forms adopted thereunder.

10.06. Notices. Any notice or other communication in connection with this Plan shall be deemed delivered in writing if addressed as provided below and if either actually delivered at said address or, in the case of a letter, three business days shall have elapsed after the same shall have been deposited in the United States mails, first-class postage prepaid and registered or certified:

(a) If to the Employer or Administrator, to it at the address set forth in the Adoption Agreement, to the attention of the person specified to receive notice in the Adoption Agreement;

(b) If to the Trustee, to it at the address set forth in the Trust Agreement;

or, in each case at such other address as the addressee shall have specified by written notice delivered in accordance with the foregoing to the addressor’s then effective notice address.

10.07. Governing Law. The Plan and the accompanying Adoption Agreement will be construed, administered and enforced according to ERISA, and to the extent not preempted thereby, the laws of the Commonwealth of Massachusetts, without regard to its conflicts of law principles.

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Article 11. Plan Administration.

11.01. Powers and responsibilities of the Administrator. The Administrator has the full power and the full responsibility to administer the Plan in all of its details, subject, however, to the applicable requirements of ERISA. The Administrator’s powers and responsibilities include, but are not limited to, the following:

(a) To make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan;

(b) To interpret the Plan, its interpretation thereof in good faith to be final and conclusive on all persons claiming benefits under the Plan;

(c) To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan;

(d) To administer the claims and review procedures specified in Section 11.03;

(e) To compute the amount of benefits which will be payable to any Participant, former Participant or Beneficiary in accordance with the provisions of the Plan;

(f) To determine the person or persons to whom such benefits will be paid;

(g) To authorize the payment of benefits;

(h) To comply with any applicable reporting and disclosure requirements of Part 1 of Subtitle B of Title I of ERISA;

(i) To appoint such agents, counsel, accountants, and consultants as may be required to assist in administering the Plan;

(j) By written instrument, to allocate and delegate its responsibilities, including the formation of an Administrative Committee to administer the Plan;

11.02. Nondiscriminatory Exercise of Authority. Whenever, in the administration of the Plan, any discretionary action by the Administrator is required, the Administrator shall exercise its authority in a nondiscriminatory manner so that all persons similarly situated will receive substantially the same treatment.

11.03. Claims and Review Procedures.

(a) Claims Procedure. If any person believes he is being denied any rights or benefits under the Plan, such person may file a claim in writing with the Administrator. If any such claim is wholly or partially denied, the Administrator will notify such person of its decision in writing. Such notification will contain (i) specific reasons for the denial, (ii) specific reference to pertinent Plan provisions, (iii) a description of any additional material or information necessary for such person to perfect such claim and an explanation of why such material or information is necessary, and (iv) information as to the steps to be taken if the person wishes to submit a request for review, including a statement of the such person’s right to bring a civil action under Section 502(a) of ERISA following as adverse determination upon review. Such notification will be given within 90 days after the claim is received by the Administrator (or within 180 days, if special circumstances require an extension of time for processing the claim, and if written notice of such extension and circumstances is given to such person within the initial 90-day period).

If the claim concerns disability benefits under the Plan, the Plan Administrator must notify the claimant in writing within 45 days after the claim has been filed in order to deny it. If special circumstances require an extension of time to process the claim, the Plan Administrator must notify

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the claimant before the end of the 45-day period that the claim may take up to 30 days longer to process. If special circumstances still prevent the resolution of the claim, the Plan Administrator may then only take up to another 30 days after giving the claimant notice before the end of the original 30-day extension. If the Plan Administrator gives the claimant notice that the claimant needs to provide additional information regarding the claim, the claimant must do so within 45 days of that notice.

(b) Review Procedure. Within 60 days after the date on which a person receives a written notice of a denied claim (or, if applicable, within 60 days after the date on which such denial is considered to have occurred), such person (or his duly authorized representative) may (i) file a written request with the Administrator for a review of his denied claim and of pertinent documents and (ii) submit written issues and comments to the Administrator. This written request may include comments, documents, records, and other information relating to the claim for benefits. The claimant shall be provided, upon the claimant’s request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim for benefits. The review will take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. The Administrator will notify such person of its decision in writing. Such notification will be written in a manner calculated to be understood by such person and will contain specific reasons for the decision as well as specific references to pertinent Plan provisions. The decision on review will be made within 60 days after the request for review is received by the Administrator (or within 120 days, if special circumstances require an extension of time for processing the request, such as an election by the Administrator to hold a hearing, and if written notice of such extension and circumstances is given to such person within the initial 60-day period). The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the determination on review.

If the initial claim was for disability benefits under the Plan and has been denied by the Plan Administrator, the claimant will have 180 days from the date the claimant received notice of the claim’s denial in which to appeal that decision. The review will be handled completely independently of the findings and decision made regarding the initial claim and will be processed by an individual who is not a subordinate of the individual who denied the initial claim. If the claim requires medical judgment, the individual handling the appeal will consult with a medical professional whom was not consulted regarding the initial claim and who is not a subordinate of anyone consulted regarding the initial claim and identify that medical professional to the claimant.

The Plan Administrator shall provide the claimant with written notification of a plan’s benefit determination on review. In the case of an adverse benefit determination, the notification shall set forth, in a manner calculated to be understood by the claimant – the specific reason or reasons for the adverse determinations, reference to the specific plan provisions on which the benefit determination is based, a statement that the claimant is entitled to receive, upon the claimant’s request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim for benefits.

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The CORPORATEplan for Retirement^SM

EXECUTIVE PLAN

Adoption Agreement

IMPORTANT NOTE

This document has not been approved by the Department of Labor, the Internal Revenue Service or any other governmental entity. An Adopting Employer must determine whether the plan is subject to the Federal securities laws and the securities laws of the various states. An Adopting Employer may not rely on this document to ensure any particular tax consequences or to ensure that the Plan is “unfunded and maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees” under the Employee Retirement Income Security Act with respect to the Employer’s particular situation. Fidelity Management Trust Company, its affiliates and employees cannot provide you with legal advice in connection with the execution of this document. This document should be reviewed by the Employer’s attorney prior to execution.

ADOPTION AGREEMENT

ARTICLE 1

1.01	PLAN INFORMATION
	(a)	Name of Plan:
		This is the ICT Group Non-Qualified Retirement Plan (the “Plan”).
	(b)	Name of Plan Administrator, if not the Employer:
			______________________________________________
		Address:	______________________________________________
			______________________________________________
		Phone Number:	______________________________________________
		The Plan Administrator is the agent for service of legal process for the Plan.
	(c)	Plan Year End is December 31.
	(d)	Plan Status (check one):
		(1)    þ    Effective Date of new Plan: 5/1/2005
		(2)    ¨    Amendment Effective Date: _______________
		The original effective date of the Plan: _______________
1.02	EMPLOYER
	(a)	The Employer is:	ICT Group, Inc.
		Address:	100 Brandywine Blvd.
			Newtown, PA 18940
		Contact’s Name:	________________________________
		Telephone Number:	________________________________
		(1) Employer’s Tax Identification Number:    23-2458937
		(2) Business form of Employer (check one):
`			(A)	þ	Corporation (Other than a Subchapter S corporation)
			(B)	¨	Other (e.g., Subchapter S corporation, partnership, sole proprietor)
		(3) Employer’s fiscal year end: 12/31

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	(b)	The term “Employer” includes the following Related Employer(s) (as defined in Section 2.01(a)(24)):
1.03	COVERAGE
	(a)	The following Employees are eligible to participate in the Plan:
		(1)	¨	Only those Employees listed in Attachment A will be eligible to participate in the Plan.
		(2)	þ	Only those Employees in the eligible class described below will be eligible to participate in the Plan:
				Employees meeting the IRS definition of highly compensated and having met the eligibility requirement of sixty (60) days of active service.
		(3)	¨	Only those Employees described in the Board of Directors Resolutions attached hereto and hereby made a part hereof will be eligible to participate in the Plan.
	(b)	The Entry Date(s) shall be (check one):
		(1)	¨	each January 1.
		(2)	¨	each January 1 and each July 1.
		(3)	¨	each January 1 and each April 1, July 1 and October 1.
		(4)	¨	the first day of each month.
		(5)	þ	immediate upon meeting the eligibility requirements specified in Subsection 1.03(a).
1.04	COMPENSATION
	For purposes of determining Contributions under the Plan, Compensation shall be as defined (check (a) or (b) below, as appropriate):
	(a)  þ	in Section 2.01(a)(8), (check (1) or (2) below, if and as appropriate)):
		(1)	þ		but excluding (check the appropriate box(es)):
				(A)	¨	Overtime Pay.
				(B)	¨	Bonuses.
				(C)	¨	Commissions.
				(D)	þ	The value of a qualified or a non-qualified stock option granted to an Employee by the Employer to the extent such value is includable in the Employee’s taxable income.
				(E)	þ	The following:
						Severence Payments
		(2)		¨		except as otherwise provided below:
						_________________________________________
	(b)  ¨	in the                      Plan maintained by the Employer to the extent it is in excess of the limit imposed under Code Section 401(a)(17).

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1.05	CONTRIBUTIONS
	(a)	Employee contributions (Complete all that apply)
		(1)	þ    Deferral Contributions. The Employer shall make a Deferral Contribution in accordance with, and subject to, Section 4.01 on behalf of each Participant who has an executed salary reduction agreement in effect with the Employer for the calendar year (or portion of the calendar year) in question, not to exceed 0.01 % of Compensation, exclusive of any Bonus.
		(2)	¨    Bonus Contributions. The Employer requires Participants to enter into a special salary reduction agreement to make Deferral Contributions of any percentage of Employer paid cash Bonuses, up to 100% of such Bonuses. (The Compensation definition elected by the Employer in Section 1.04 must include Bonuses if Bonus contributions are permitted.)
	(b)	þ	Matching Contributions (Choose (1) or (2) below, and (3) below, as applicable.)
		(1)	þ    The Employer shall make a Matching Contribution on behalf of each Participant in an amount equal to the following percentage of a Participant’s Deferral Contributions during the Plan Year (check one):
				(A)	¨	50%
				(B)	¨	100%
				(C)	þ	10%
				(D)	¨	(Tiered Match)              % of the first              % of the Participant’s Compensation contributed to the Plan.
				(E)	¨	The percentage declared for the year, if any, by a Board of Directors’ resolution.
				(F)	¨	Other:
		(2)	¨    Matching Contribution Offset. For each Participant who has made 401(k) Deferrals at least equal to the maximum under Code Section 402(g) or, if less, the maximum permitted under the Qualified Plan, the Employer shall make a Matching Contribution for the calendar year equal to (A) minus (B) below:
				(A)	The 401(m) Match that the Participant would have received under the Qualified Plan for such calendar year on the sum of the Participant’s Deferral Contributions and the Participant’s 401(k) Deferrals if no limits otherwise imposed by tax law applied to 401(m) Match and deeming the Participant’s Deferral Contributions to be 401(k) Deferrals.
				(B)	The 401(m) Match actually allocated to such Participant under the Qualified Plan for the calendar year.
			For purposes of this Section 1.05(b): “Qualified Plan” means the Plan; “401(k) Deferrals” means contributions under the Qualified Plan’s cash or deferred arrangement as defined in Code Section 401(k); and “401(m) Match” means a matching contribution as defined in Code Section 401(m).

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	(3)	¨		Matching Contribution Limits (check the appropriate box(es)):
			(A)	¨	Deferral Contributions in excess of              % of the Participant’s Compensation for the period in question shall not be considered for Matching Contributions.
				Note:	If the Employer elects a percentage limit in (A) above and requests the Trustee to account separately for matched and unmatched Deferral Contributions, the Matching Contributions allocated to each Participant must be computed, and the percentage limit applied, based upon each period.
			(B)	¨	Matching Contributions for each Participant for each Plan Year shall be limited to $.
	(4)			Eligibility Requirement(s) for Matching Contributions. A Participant who makes Deferral Contributions during the Plan Year under Section 1.05(a) shall be entitled to Matching Contributions for that Plan Year if the Participant satisfies the following requirement(s) (Check the appropriate box(es). Options (B) and (C) may not be elected together):
			(A)	¨	Is employed by the Employer on the last day of the Plan Year.
			(B)	¨	Earns at least 500 Hours of Service during the Plan Year.
			(C)	¨	Earns at least 1,000 Hours of Service during the Plan Year.
			(D)	¨	Other:
			(E)	þ	No requirements.
			Note: If option (A), (B) or (C) above is selected, then Matching Contributions can only be made by the Employer after the Plan Year ends. Any Matching Contribution made before Plan Year end shall not be subject to the eligibility requirements of this Section 1.05(b)(3)).
(c)			Employer Contributions
		(1)	¨		Fixed Employer Contributions. The Employer shall make an Employer Contribution on behalf of each Participant in an amount determined as described below (check at least one):
			(A)	¨	In an amount equal to              % of each Participant’s Compensation each Plan Year.
			(B)	¨	In an amount determined and allocated as described below:
			(C)	¨	In an amount equal to (check at least one):

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			(i.)  ¨	Any profit sharing contribution that the Employer would have made on behalf of the Participant under the following qualified defined contribution plan but for the limitations imposed by Code Section 401(a)(17):
				_________________________
			(ii.)  ¨	Any contribution described in Code Section 401(m) that the Employer would have made on behalf of the Participant under the following qualified defined contribution plan but for the limitations imposed by Code Section 401(a)(17):
				_________________________
		(2)	¨	Discretionary Employer Contributions. The Employer may make Employer Contributions to the accounts of Participants in any amount, as determined by the Employer in its sole discretion from time to time, which amount may be zero.
		(3)		Eligibility Requirement(s) for Employer Contributions. A Participant shall only be entitled to Employer Contributions under Section 1.05(c)(l) for a Plan Year if the Participant satisfies the following requirement(s) (Check the appropriate box(es). Options (B) and (C) may not be elected together):
			(A)  ¨	Is employed by the Employer on the last day of the Plan Year.
			(B)  ¨	Earns at least 500 Hours of Service during the Plan Year.
			(C)  ¨	Earns at least 1,000 Hours of Service during the Plan Year.
			(D)  ¨	Other:
			(E)  ¨	No requirements.
1.06	DISTRIBUTION DATES
	Distribution from a Participant’s Account pursuant to Section 8.02 shall begin upon the following date(s) (check either (a) or (b); check (c), if desired):
	(a)  ¨	Non-Class Year Accounting (complete (1) and (2)).
		(1)	The earliest of termination of employment with the Employer (see Plan Section 7.03) and the following event(s) (check appropriate box(es); if none selected, all distributions will be upon termination of employment):
			(A)  ¨	Attainment of Normal Retirement Age (as defined in Section 1.07(f)).
			(B)  ¨	Attainment of Early Retirement Age (as defined in Section 1.07(g)).
			(C)  ¨	The date on which the Participant becomes disabled (as defined in Section 1.07(h)).

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	(2)	Timing of distribution (check either (A) or (B)).
		(A)    ¨	The distribution of the Participant’s Account will be begin in the month following the event described in (a)(l) above, however, if the event is termination of employment, then such distribution will begin as soon as practicable on or after the 1st day of the seventh calendar month following such separation if the Participant was a Key Employee.
		(B)    ¨	The distribution of the Participant’s Account will begin as soon as administratively feasible in the calendar year following distribution event described in (a)(l) above, provided however, that if the event is termination of employment, in no event will such distribution begin earlier than the 1st day of the seventh calendar month following such separation if the Participant was a Key Employee.
(b)  þ	Class Year Accounting (complete (1) and (2)).
	(1)	Upon (check at least one; (A) must be selected if plan has contributions pursuant to section 1.05(b) or (c)):
		(A)    þ	Termination of employment with the Employer (see Plan Section 7.03); provided however, that if the event is termination of employment, in no event will such distribution begin earlier than the 1st day of the seventh calendar month following such separation if the Participant was a Key Employee.
		(B)    þ	The date elected by the Participant, pursuant to Plan Section 8.02, and subject to the restrictions imposed in Plan Section 8.02 with respect to future Deferral Contributions, in which event such date of distribution must be at least one year after the date such Deferral Contribution would have been paid to the Participant in cash in the absence of the election to make the Deferral Contribution.
	(2) Timing of distribution subject to Subsection (b)(l)(A) above (check either (A)or(B)).
		(A)    þ	The Distribution of the Participant’s Account will begin 05/01 (specify month and day) following the event described in (b)(l) above.
		(B)    ¨	The Distribution of the Participant’s Account will begin              (specify month and day) of the calendar year following the event described in (b)(l) above.
(c)  þ	Upon a Change of Control in accordance with Plan Section 7.08.

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Note: Internal Revenue Code Section 280G could impose certain, adverse tax consequences on both Participants and the Employer as a result of the application of this Section 1.06(c). The Employer should consult with its attorney prior to electing to apply Section 1.06(c).

1.07 VESTING SCHEDULE

(a) The Participant’s vested percentage in Matching Contributions elected in Section 1.05(b) shall be based upon the schedule(s) selected below.

(1)  ¨   N/A - No Matching Contributions

(2)  ¨   100% Vesting immediately

(3)  ¨   3 year cliff (see C below)

(4)  ¨   5 year cliff (see D below)

(5)  ¨   6 year graduated (see E below)

(6)  ¨   7 year graduated (see F below)

(7)  þ   G below

(8)  ¨   Other (Attachment “B”)

	Vesting Schedule
Years of Service for Vesting	C		D		E		F		G
0	0	%	0	%	0	%	0	%	0.00
1	0	%	0	%	0	%	0	%	33.00
2	0	%	0	%	20	%	0	%	66.00
3	100	%	0	%	40	%	20	%	100.00
4	100	%	0	%	60	%	40	%	100.00
5	100	%	100	%	80	%	60	%	100.00
6	100	%	100	%	100	%	80	%	100.00
7	100	%	100	%	100	%	100	%	100	%

(b) The Participant’s vested percentage in Employer Contributions elected in Section 1.05(c) shall be based upon the schedule(s) selected below.

(1)  þ   N/A - No Employer Contributions

(2)  ¨   100% Vesting immediately

(3)  ¨   3 year cliff (see C below)

(4)  ¨   5 year cliff (see D below)

(5)  ¨   6 year graduated (see E below)

(6)  ¨   7 year graduated (see F below)

(7)  ¨   G below

(8)  ¨   Other (Attachment “B”)

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	Vesting Schedule
Years of Service for Vesting	C		D		E		F		G
0	0	%	0	%	0	%	0	%
1	0	%	0	%	0	%	0	%
2	0	%	0	%	20	%	0	%
3	100	%	0	%	40	%	20	%
4	100	%	0	%	60	%	40	%
5	100	%	100	%	80	%	60	%
6	100	%	100	%	100	%	80	%
7	100	%	100	%	100	%	100	%	100	%

(c)  ¨	Years of Service for Vesting shall exclude (check one):
	(1)  ¨	for new plans, service prior to the Effective Date as defined in Section 1.01(d)(1).
	(2)  ¨	for existing plans converting from another plan document, service prior to the original Effective Date as defined in Section 1.01(d)(2).
(d)  ¨	A Participant will forfeit his Matching Contributions and Employer Contributions upon the occurrence of the following event (s): __________________________________
(e)	A Participant will be 100% vested in his Matching Contributions and Employer Contributions upon (check the appropriate box(es), if any; if 1.06(c) is selected, Participants will automatically vest upon Change of Control as defined in Section 1.12):
	(1)  ¨	Normal Retirement Age (as defined in Section 1.07(f)).
	(2)  ¨	Early Retirement Age (as defined in Section 1.07(g)).
	(3)  ¨	Death.
	(4)  ¨	The date on which the Participant becomes disabled, as determined under Section 1.07(h)of the Plan.
(f)	Normal Retirement Age under the Plan is (check one):
	(1)  þ	age 65.
	(2)  ¨	age      (specify from 55 through 64).
	(3)  ¨	the later of age              (cannot exceed 65) or the fifth anniversary of the Participant’s Commencement Date.
	If no box is checked in this Section 1.07(f), then Normal Retirement Age is 65.

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	(g)  ¨	Early Retirement Age is the first day of the month after the Participant attains age _ (specify 55 or greater) and completes              Years of Service for Vesting.
	(h)  ¨	A Participant is considered disabled when that Participant (check one):
		(1)  ¨	is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.
		(2)  ¨	is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Employer.
1.08	PREDECESSOR EMPLOYER SERVICE
	¨	Service for purposes of vesting in Section 1.07(a) and (b) shall include service with the following employer(s):
1.09	UNFORESEEABLE EMERGENCY WITHDRAWALS
	Participant withdrawals for unforeseeable emergency prior to termination of employment (check one):
	(a)  ¨	will be allowed in accordance with Section 7.07, subject to a $              minimum amount. (Must be at least $1,000)
	(b)  þ	will not be allowed.
1.10	DISTRIBUTIONS
	Subject to Articles 7 and 8 distributions under the Plan are always available as a lump sum. Check below to allow distributions in installment payments:
	þ	under a systematic withdrawal plan (installments) not to exceed 10 years which (check one if box for this Section is selected):
	(a)	¨	will not be accelerated, regardless of the Participant’s Account balance.
	(b)	¨	will be accelerated to a lump sum distribution in accordance with Section 8.03.
1.11	INVESTMENT DECISIONS
	(a)	Investment Directions
		Investments in which the Accounts of Participants shall be treated as invested and reinvested shall be directed (check one):
		(1)  ¨	by the Employer among the options listed in (b) below.

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		(2)  þ	by each Participant among the options listed in (b) below.
		(3)  ¨	in accordance with investment directions provided by each Participant for all contribution sources in a Participant’s Account except the following sources shall be invested as directed by the Employer (check (A) and/or (B)):
			(A)  ¨	Nonelective Employer Contributions
			(B)  ¨	Matching Employer Contributions
			The Employer must direct the applicable sources among the same investment options made available for Participant directed sources listed in the Service Agreement.
	(b)	Plan Investment Options
		Participant Accounts will be treated as invested among the Investment Funds listed in the Service Agreement from time to time pursuant to Participant and/or Employer directions, as applicable.
		Note:	The method and frequency for change of investments will be determined under the rules applicable to the selected funds. Information will be provided regarding expenses, if any, for changes in investment options.
1.12	RELIANCE ON PLAN
	An adopting Employer may not rely solely on this Plan to ensure that the Plan is “unfunded and maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” with respect to the Employer’s particular situation. This Agreement must be reviewed by the Employer’s attorney before it is executed.
	This Adoption Agreement may be used only in conjunction with the CORPORATEplan for Retirement Executive Plan Basic Plan Document.

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EXECUTION PAGE

(Fidelity’s Copy)

IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be executed this            day of            , 20    .

Employer

By

Title

Employer

By

Title

11

EXECUTION PAGE

(Employer’s Copy)

IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be executed this            day of            , 20    .

Employer

By

Title

Employer

By

Title

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Attachment A

Pursuant to Section 1.03(a), the following are the Employees who are eligible to participate in the Plan:

Employer

By

Title

Date

Note:  The Employer must revise Attachment A to add Employees as they become eligible or delete Employees who are no longer eligible. Attachment A should be signed and dated every time a change is made.

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Attachment B

(a) ¨ The Participant’s vested percentage in Matching Contributions elected in Section 1.05(b) shall be based upon the following schedule:

(b) ¨ The Participant’s vested percentage in Employer Contributions elected in Section 1.05(c) shall be based upon the following schedule:

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AMENDMENT TO

THE CORPORATE PLAN FOR RETIREMENT

SELECT PLAN

WHEREAS, the ICT Group, Inc. (the “Sponsor”) has established the Corporate Plan for Retirement Select Plan (the “Plan”) which consists of an Adoption Agreement, and a Basic Plan Document

WHEREAS, the Sponsor desires to make changes to the Deferral Contributions under the Plan; and

WHEREAS, Section 9.01 of the Plan authorizes the Sponsor to amend the Plan.

NOW, THEREFORE, the Plan is hereby amended effective as of May 1, 2005:

AMENDMENTS TO THE ADOPTION AGREEMENT

1. Section 1.05(a):

Section 1.05(a) is hereby amended in its entirety effective May 1, 2005 to read as follows:

“(a) Deferral Contributions. The Employer shall make a Deferral Contribution in accordance with Section 4.01 on behalf of each Participant who has an executed salary reduction agreement in effect with the Employer for the Plan Year (or portion of the Plan Year) in question, not to exceed for a Plan Year the applicable maximum percentages and Compensation limits set forth below.

Participant Category	Maximum Percentage and Compensation Limit
Class 1	50% on the first $1,500,000 of Compensation
Class 2	35% on the first $600,000 of Compensation
Class 3	30% on the first $400,000 of Compensation
Class 4	25% on the first $300,000 of Compensation
Class 5	15% on the first $200,000 of Compensation
Class 6	10% on the first $150,000 of Compensation

Employer may withhold the amounts of such tax from the Participant’s Compensation. With respect to each class, the Sponsor may establish for subsequent Compensation deferral percentages and limits higher or lower than those set forth above”

SECOND AMENDMENT TO THE

ICT GROUP, INC. NON-QUALIFIED RETIREMENT PLAN

ADOPTION AGREEMENT

WHEREAS, ICT Group, Inc. (the “Corporation”) has adopted the ICT Group, Inc. Non-Qualified Retirement Plan (the “Plan”), which has been established by the adoption of The CORPORATEplan for Retirement^SM EXECUTIVE PLAN by executing an Adoption Agreement on March 8, 2005; and

WHEREAS, Section 9.01 of The CORPORATEplan for Retirement^SM EXECUTIVE PLAN provides for the amendment of the Plan and the Adoption Agreement by the Employer; and

WHEREAS, the Employer wants to allow for the distribution of Matching Contributions at the same time as the distribution of Deferral Contributions.

NOW THEREFORE, Section 1.06(b)(1) of the Adoption Agreement is hereby amended in its entirety and replaced by the following as of May 1, 2005:

“1.06. Distribution Dates.

(b) ¨     Class Year Accounting (complete (1) and (2)).

(1) Upon (check at least one):

(A) ¨ Termination of employment with the Employer (see Plan Section 7.03); provided, however, that in no event will such distribution begin earlier than the lst day of the seventh calendar month following such separation if the Participant was a Key Employee.

(B) x The date elected by the Participant pursuant to Plan Section 8.02(b); provided, however, that, if applicable, such election shall be subject to (i) the six month delay on distributions to Key Employees under Code section 409A, and/or (ii) the subsequent election rules under Code section 409A.

IN WITNESS WHEREOF the Corporation has caused this amendment to be executed this 25^th day of April , 2005, by its duly authorized officer.

	ICT GROUP, INC.
By:
Title:

Attest:

FIRST AMENDMENT TO THE

ICT GROUP, INC. NON-QUALIFIED RETIREMENT PLAN

WHEREAS, ICT Group, Inc. (the “Corporation”) has adopted ICT Group, Inc. Non-Qualified Retirement Plan (the “Plan”), which has been established by the adoption of The CORPORATEplan for Retirement^SM EXECUTIVE PLAN by executing an Adoption Agreement on March 8, 2005; and

WHEREAS, Section 9.01 of The CORPORATEplan for Retirement^SM EXECUTIVE PLAN provides for the amendment of the Plan by the Employer; and

WHEREAS, the Employer wants to allow for the distribution of Matching Contributions at the same time as the distribution of Deferral Contributions.

NOW THEREFORE, Section 8.02(b) of the Plan is hereby amended in its entirety and replaced by the following as of May 1, 2005:

“8.02. Events Requiring Distribution of Benefits to Participants and Beneficiaries.

(b) The Participant shall have right to elect the date on which the Participant shall receive distribution of amounts deferred pursuant to Sections 4.01 and 4.02 (and earnings attributable to those amounts), provided such date is at least 12 months after the first day of the calendar year in which such amounts would be earned. If applicable, such election shall be subject to (i) the six month delay on distributions to Key Employees under Code section 409A, and/or (ii) the subsequent election rules under Code section 409A.

IN WITNESS WHEREOF the Corporation has caused this amendment to be executed this 25th day of April , 2005, by its duly authorized officer.

	ICT GROUP, INC.
By:
Title:

Attest:

EX-10.49

Exhibit 10.49

ICT GROUP, INC.

1996 EQUITY COMPENSATION PLAN

1996 Equity Compensation Plan	Name of Grantee:
Nonqualified Stock Option Grant Letter	Date of Grant:
	Number of Options:
	Option Price:	$
	Voting Agreement Date:

ICT Group, Inc. (the “Company”) has adopted the ICT Group, Inc. 1996 Equity Compensation Plan (the “Plan”), which provides for grants of nonqualified options to purchase shares of the Company’s Common Stock, par value $.01 (the “Common Stock”). This Grant Letter evidences the grant of a Nonqualified Stock Option to the above named Grantee (the “Grantee”), in accordance with the terms of the Plan. Capitalized terms used and not otherwise defined in this Grant Letter are used herein as defined in the Plan.

1. Option Grant

Subject to the terms and conditions hereinafter set forth, the Company has granted to the Grantee effective as of the Date of Grant first stated above (the “Date of Grant,”) the right and option (the “Option”) to purchase shares of Common Stock in an amount equal to the number of Options set forth above (the “Shares”). The Option is not intended to constitute an “incentive stock option” within the meaning of section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

2. Option Price

The purchase price of each Share covered by the Option shall be the Option Price set forth above (the “Option Price”).

3. Option Expiration

The Option, to the extent that it has not theretofore been exercised, shall automatically expire on the earliest to occur of the following events:

(a) the close of business on the tenth anniversary of the Date of Grant;

(b) in the event of the Grantee’s death while the Grantee is an Employee or Consultant (or within not more than 90 days from the date on which Grantee ceases to be an Employee or Consultant on account of termination of employment for any reason other than a disability, death or termination for cause), the Option to the extent then exercisable, may be exercised thereafter, by the legal representative of the estate or by the

legatee of the Grantee under the will of the Grantee, for a period of one year from the date the Grantee ceases to be an Employee or Consultant or, if earlier, the date specified in Section 3(a);

(c) in the event the Grantee ceases to be an Employee or Consultant of the Company on account of “disability” (as defined in Section 5(f)(v) of the Plan), the Option may thereafter be exercised by the Grantee, to the extent it was exercisable at the date the Grantee ceased to be an Employee or Consultant of the Company, for a period of one year from the date of such termination of employment or cessation of services, or if earlier, the date specified in Section 3(a);

(d) in the event the Grantee ceases to be an Employee or Consultant of the Company on account of a “termination for cause” (as defined in Section 5(f)(v) of the Plan), the Option shall terminate on the date of such termination of employment or cessation of services; or

(e) in the event the Grantee ceases to be an Employee or Consultant of the Company for any reason other than his death, “disability” or “termination for cause” the Option shall terminate unless exercised within 90 days of the date on which the Grantee ceases to be an Employee or Consultant, or, if earlier, the date specified in Section 3(a).

4. Exercisability of Option

Until the expiration of the Option under Section 3 and subject to the other terms and conditions hereunder, the Option shall be exercisable as follows:

(a) the Option may be exercised as of the following dates:

Date Total Shares Then Exercisable

(b) the right to purchase Shares under the Option as provided in subsection (a) hereof may be exercised in a cumulative fashion; any right to purchase Shares becoming exercisable on a given date shall remain exercisable until the Option expires in accordance with the terms of Section 3;

(c) the Committee, in its sole discretion, may accelerate the exercisability of all or a portion of the Option, at any time for any reason; and

(d) the Option automatically shall become exercisable in full upon a “Change of Control” as defined in Section 11 of the Plan.

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5. Time and Method of Exercise

Subject to the terms of Section 4, the Option may be exercised, in whole or in part, at any time or from time to time, prior to the time it expires in accordance with the terms of Section 3, delivering to the Company a Notice of Exercise in the form attached hereto or by other written notice to the Committee in such form as the Committee shall prescribe. Such notice shall be effective upon receipt by the Committee and shall be accompanied by:

(a) a check, or the equivalent thereof acceptable to the Company, for the full Option Price of the number of Shares being purchased;

(b) if and only if permitted by the Committee, one or more certificates (including certificates acquired in connection with the exercise of the Stock Option) representing a number of Shares which are, in the aggregate, equal in Fair Market Value on the date of exercise to the full Option Price for the Shares being purchased, such certificates being duly endorsed (or accompanied by stock powers signed in blank) so as to transfer to the Company all right, title and interest in and to the Shares represented by such certificates; or

(c) if and only if permitted by the Committee administering the Plan, a combination of the forms of payment specified in Section 5(a) and 5(b) above which, in the aggregate, is equal to the full Option Price for the number of Shares being purchased.

6. Nonassignability of Option Rights

The Option shall not be assigned or transferred by the Grantee, except (i) in the event of the death of the Grantee, by will or by the laws of descent or distribution or, (ii) if permitted by Rule 16b-3 under the Exchange Act and if permitted in any specific case by the Committee in its sole discretion, pursuant to a qualified domestic relations order as defined under the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended or the regulations thereunder. During the life of the Grantee, the Option shall be exercisable only by the Grantee (or his or her authorized representative). Upon a transfer by will or by the laws of the descent or distribution, the person to whom the Option is transferred shall have the right to exercise the Option in accordance with the Plan and this Grant Letter. Any attempt to assign, transfer, pledge or dispose of the Option contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the Option, shall be null and void and without effect.

7. Adjustments

If there is any change in the number or kind of shares of Common Stock outstanding by reason of a stock dividend, a recapitalization, stock split, or combination or exchange of shares, or merger, reorganization or consolidation in which the Company is the surviving corporation, reclassification or change in par value or by reason of any other extraordinary or unusual events affecting the outstanding Common Stock as a class without the Company’s receipt of consideration, or if the value of outstanding shares of Common Stock is substantially reduced due to the Company’s payment of an

3

extraordinary dividend or distribution, the number of shares covered by the Option, and the Option Price shall be proportionately adjusted by the Committee to reflect any increase or decrease in the number or kind of issued shares of Common Stock to preclude the enlargement or dilution of rights and benefits under such Grants; provided, however, that any fractional shares resulting from such adjustment shall be eliminated.

8. Withholding

If applicable, the Grantee or other person receiving Shares upon an exercise of the Option, in whole or in part, shall be required to pay to the Company the amount of any federal, state or local taxes or other charges that the Company is required to withhold with respect to such exercise, including an election to satisfy tax withholding by authorizing the Company to withhold shares pursuant to Section 16 of the Plan. The Company shall have the right to take whatever action it deems necessary to protect the interests of the Company in respect of such liabilities, including, without limitation, withholding a portion of the Shares otherwise deliverable upon exercise of the Option. The Company’s obligation to issue or transfer Shares upon exercise of the Option shall be conditioned upon the Grantee’s compliance with the requirements of this Section to the satisfaction of the Committee.

9. Administration

The Option has been granted pursuant to the terms, conditions and other provisions of the Plan, as in effect on the Date of Grant, and as the Plan may be amended from time to time in accordance with Section 12 of the Plan. All questions of interpretation and application of the Plan and of any grant under the Plan (including this Grant) shall be determined by the Committee in its discretion, and such determination shall be final and binding upon all persons. The validity, construction and effect of this Option shall be determined in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to the principles of conflicts of law thereof.

10. No Shareholder Rights

Neither the Grantee nor any person entitled to exercise the Grantee’s rights in the event of the Grantee’s death shall have any of the rights and privileges of a shareholder with respect to the Shares subject to the Option, except to the extent that certificates for such Shares shall have been issued or transferred on the stock transfer records of the Company upon the exercise of the Option as provided herein.

11. Termination or Amendment

The Option may be terminated or amended, in whole or in part, at any time (a) by the Board, if the Board determines that such termination or amendment is necessary or advisable to bring such Option into compliance with any federal or state securities law or other applicable law or regulation, or (b) by written agreement of the Company and the Grantee consistent with the terms of the Plan.

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12. Notice

Any notice to the Committee provided for in this Grant Letter shall be addressed to it at ICT Group, Inc. 100 Brandywine Blvd, Newtown, PA 18940, Attention: Chief Financial Officer, and any notice to the Grantee shall be addressed to such Grantee at the current address shown on the payroll of the Company, or to such other address the Grantee may designate to the Company in writing. Any notice provided for hereunder shall be delivered by hand, sent by telecopy or telex or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage and registry being prepaid, in a post office or branch post office regularly maintained by the United States Postal Service.

13. Grantee’s Securities Law Representations

If the Committee shall deem it appropriate by reason of any securities law, it may require that the Grantee upon exercise, in whole or in part of the Option, represent to the Company and agree in writing to comply with any such restrictions on the Grantee’s subsequent disposition of such Shares as the Committee shall deem necessary or advisable as a result of any applicable law, regulation or official interpretation thereof. The Committee may require that the Share certificates be inscribed with a legend restricting transfer in accordance with applicable securities law requirements.

14. Voting Agreement

The Option granted hereunder is contingent upon the Grantee’s execution of a Voting Agreement and irrevocable proxy substantially in the form attached to this Grant Letter.

ICT GROUP, INC.
By:
	Vincent A. Paccapaniccia
	Executive VP, Finance & Administration
	& Chief Financial Officer

5

EX-21

EXHIBIT 21

LIST OF SUBSIDIARIES

Name of Subsidiary	State/Country of Incorporation/Organization
ICT Canada Marketing, Inc. Eurotel Marketing Limited Harvest Resources, Inc. Yardley Enterprises, Inc. ICT International ICT Australia Pty. Ltd. ICT Barbados, Inc. ICT Marketing Services of Mexico, S. de R.L. de C.V. ICT Marketing Services of Asia Pacific Pte Ltd ICT Marketing Services, Inc.	Canada Ireland Delaware Delaware Delaware Australia Barbados Mexico Singapore Philippines

EX-23

EXHIBIT 23

Consent of Independent Registered Public Accounting Firm

The Board of Directors

ICT Group, Inc.:

We consent to the incorporation by reference in the registration statement on Form S-3 (No. 333-87912) and registration statements on Form S-8 (Nos. 333-32623, 333-56187, 333-55702, 333-97357 and 333-111531) of ICT Group, Inc. of our reports dated March 6, 2006, with respect to the consolidated balance sheets of ICT Group, Inc. and subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2005, and the related financial statement schedule, management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2005 and the effectiveness of internal control over financial reporting as of December 31, 2005, which reports appear in the December 31, 2005 annual report on Form 10-K of ICT Group, Inc.

KPMG LLP

Philadelphia, Pennsylvania

March 6, 2006

EX-31.1

EXHIBIT 31.1

Rule 13a-14(a)/15d-14(a) Certification

I, John J. Brennan, certify that:

I have reviewed this Annual Report on Form 10-K of ICT Group, Inc.;

1. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

2. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

3. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

4. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 6, 2006	/s/ John J. Brennan
	John J. Brennan Chairman, President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Rule 13a-14(a)/15d-14(a) Certification

I, Vincent A. Paccapaniccia, certify that:

I have reviewed this Annual Report on Form 10-K of ICT Group, Inc.;

1. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

2. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

3. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

4. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 6, 2006	/s/ Vincent A. Paccapaniccia
	Vincent A. Paccapaniccia Executive Vice President, Corporate Finance and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

In connection with the Annual Report of ICT Group, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John J. Brennan, Chairman, President and Chief Executive Officer of the Company, hereby certify, to the best of my knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 6, 2006	/s/ John J. Brennan
	John J. Brennan
	Chairman, President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

In connection with the Annual Report of ICT Group, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Vincent A. Paccapaniccia, Executive Vice President, Corporate Finance and Chief Financial Officer of the Company, hereby certify, to the best of my knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 6, 2006	/s/ Vincent A. Paccapaniccia
	Vincent A. Paccapaniccia
	Executive Vice President, Corporate
	Finance and Chief Financial Officer