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, 2008

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition period from                      to                     

Commission File No. 1-9410

COMPUTER TASK GROUP, INCORPORATED

(Exact name of Registrant as specified in its charter)

State of New York	16-0912632
(State of incorporation)	(I.R.S. Employer Identification No.)
800 Delaware Avenue, Buffalo, New York	14209
(Address of principal executive offices)	(Zip Code)
(716) 882-8000
Registrant’s telephone number, including area code:

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

Title of each class	Name of each exchange on which registered
Common Stock, $.01 par value	The NASDAQ Stock Market LLC
Rights to Purchase Series A Participating Preferred Stock	The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

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.  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨ Accelerated filer  x Non-accelerated filer  ¨ Small reporting company  ¨

Indicate by check mark 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 Registrant’s voting and non-voting common equity, computed by reference to the price at which the common equity was last sold on the last business day of the Registrant’s most recently completed second quarter was $92.6 million. Solely for the purposes of this calculation, all persons who are or may be executive officers or directors of the Registrant have been deemed to be affiliates.

The total number of shares of Common Stock of the Registrant outstanding at February 19, 2009 was 18,285,520.

DOCUMENTS INCORPORATED BY REFERENCE

Certain sections of the Company’s definitive proxy statement to be filed with the Securities and Exchange Commission (SEC) within 120 days of the end of the Company’s fiscal year ended December 31, 2008, are incorporated by reference into Part III hereof. Except for those portions specifically incorporated by reference herein, such document shall not be deemed to be filed with the SEC as part of this annual report on Form 10-K.

PART I

Forward-Looking Statements

This annual report on Form 10-K contains forward-looking statements by management and the Company that are subject to a number of risks and uncertainties. These forward-looking statements are based on information as of the date of this report. The Company assumes no obligation to update these statements based on information from and after the date of this report. Generally, forward-looking statements include words or phrases such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “projects,” “could,” “may,” “might,” “should,” “will” and words and phrases of similar impact. The forward-looking statements include, but are not limited to, statements regarding future operations, industry trends or conditions and the business environment, and statements regarding future levels of, or trends in, revenue, operating expenses, capital expenditures, and financing. The forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Numerous factors could cause actual results to differ materially from those in the forward-looking statements, including the following: (i) industry and economic conditions, including fluctuations in demand for IT services, (ii) the availability to us of qualified professional staff, (iii) domestic and foreign industry competition, (iv) rate and wage inflation or deflation, (v) risks associated with operating in foreign jurisdictions, (vi) the impact of current and future laws and government regulation, as well as repeal or modification of same, affecting the IT solutions and staffing industry, taxes and the Company’s operations in particular, (vii) renegotiations, nullification, or breaches of contracts with customers, vendors, subcontractors or other parties, (viii) consolidation among the Company’s competitors or customers, (ix) the partial or complete loss of the revenue the Company generates from IBM, and (x) the risks described in Item 1A of this annual report on Form 10-K and from time to time in the Company’s reports filed with the Securities and Exchange Commission (SEC).

Item 1. Business

Overview

Computer Task Group, Incorporated (the Company, CTG, or the Registrant) was incorporated in Buffalo, New York on March 11, 1966, and its corporate headquarters are located at 800 Delaware Avenue, Buffalo, New York 14209 (716-882-8000). CTG is an information technology (IT) solutions and staffing company with operations in North America and Europe. CTG employs approximately 3,100 people worldwide. During 2008, the Company had six operating subsidiaries: Computer Task Group of Canada, Inc., providing services in Canada; and Computer Task Group Belgium N.V., Computer Task Group IT Solutions, S.A., Computer Task Group Luxembourg PSF, Computer Task Group (U.K.) Ltd., and CTG Deutschland GmbH, each primarily providing services in Europe. Services provided in North America are performed by CTG.

Services

The Company operates in one industry segment, providing Information Technology (IT) services to its clients. These services include IT Solutions and IT Staffing. CTG provides these primary services to all of the markets that it serves. The services provided typically encompass the IT business solution life cycle, including phases for planning, developing, implementing, managing, and ultimately maintaining the IT solution. A typical customer is an organization with large, complex information and data processing requirements. The Company’s IT Solutions and IT Staffing services are as follows:

• IT Solutions: CTG’s services in this area include helping clients assess their business needs and identifying the right IT solutions to meet these needs, the delivery of services that include the selection and implementation of packaged software and the design, development, testing, and integration of new systems, and the development and implementation of customized software and solutions designed to fit the needs of a specific client or vertical market.

In 2007 and 2008, CTG invested in new IT solutions development, primarily targeted to the healthcare market, and largely to support cost reductions and productivity improvements. In 2008, several healthcare solutions under development moved to the pilot stage of testing. The Company continues to

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modify and further develop these solutions. These solutions include medical care and disease management, group underwriting risk assessment, and medical fraud, waste, and abuse detection and reduction. The Company has developed proprietary software to support these offerings which expands the potential market for sale and support of these solutions. CTG expects to begin commercial marketing of these solutions in 2009. These solutions support both the healthcare provider and payer markets.

Additionally, the Company began participation in the start-up and development of regional health information organizations (RHIOs). RHIOs are consortiums of providers, payers, and government agencies at the local level that are charged with implementing secure communitywide electronic medical records. CTG also has significant experience in implementing electronic medical records (EMR) systems in integrated delivery networks and other provider organizations. CTG’s experience in supporting EMR systems and RHIO formation favorably positions the Company as demand for these services increases.

Independent software testing is a common practice in western Europe and represents a significant portion of the solutions business of CTG’s European operations. In response to growing demand for independent software testing in the United States, driven in part by outsourced software development, CTG adapted the proprietary testing methodology and solution developed by its European business for the American market. This comprehensive testing offering supports IT environments across multiple industries.

Also included in IT Solutions is Application Management Outsourcing (AMO). CTG’s services in this area typically include support of single or multiple applications and help desk functions. Depending on client needs, AMO engagements are performed at client sites or CTG sites. In 2008, the healthcare market accounted for most of CTG’s AMO business with a significant portion of this business involving transitional outsourcing support. In a transitional outsourcing engagement, the client hires CTG to manage an application for an extended time period typically ranging from one to three years while its internal IT staff focuses on implementation of a new application replacing the one being phased out.

• IT Staffing: CTG recruits, retains, and manages IT talent for its clients, primarily large technology service providers and companies with multiple locations and significant need for high-volume external IT resources. The Company also supports larger companies and organizations that need to augment their own IT staff on a flexible basis. Our clients may require the services of our IT talent on a temporary or long-term basis. Our IT professionals generally work with the client’s internal IT staff at client sites. Our recruiting organization works with customers to define their staffing requirements and develop competitive pricing to meet those requirements.

The primary focus of the Company’s staffing business is a managed services model that provides large clients with higher value support through cost-effective supply models customized to client needs, resource management support, vendor management programs, and a highly automated recruiting process and system with global reach.

A trend affecting the staffing industry in recent years is that large users of external technology support are reducing their number of approved suppliers to fewer firms with a preference for those firms able to fulfill high volume requirements at competitive rates and to locate resources with specialized skills on a national level. CTG’s staffing business model fits this profile and it has consistently remained a preferred provider with large technology services providers and users that have reduced their lists of approved IT staffing suppliers.

IT solutions and staffing revenue as a percentage of total revenue for the years ended December 31, 2008, 2007 and 2006 is as follows:

	2008		2007		2006
IT solutions	34	%	34	%	30	%
IT staffing	66	%	66	%	70	%
Total	100	%	100	%	100	%

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In recent years, a major strategic focus of the Company has been to increase the total amount of revenue from its IT solutions business and the percentage of solutions revenue to total revenue as operating margins generated by its solutions business are significantly higher than those of its staffing business. The higher margin solutions business increased by $9.4 million or 8.4% from 2007 to 2008. The increase in IT solutions revenue over the last three years has been a major contributor to the improvement in the Company’s operating margin which increased by 170 basis points to 3.7% in 2008 compared with 2007, the highest level since 1999.

The Company promotes a majority of its services through three vertical market focus areas: Technology Service Providers, Healthcare (which includes services provided to healthcare providers, health insurers, and life sciences companies), and Financial Services. The remainder of CTG’s revenue is derived from general markets.

CTG’s revenue by vertical market for the years ended December 31, 2008, 2007 and 2006 is as follows:

	2008		2007		2006
Technology service providers	34	%	34	%	39	%
Healthcare	26	%	26	%	25	%
Financial services	8	%	11	%	10	%
General markets	32	%	29	%	26	%
Total	100	%	100	%	100	%

The Company’s growth efforts are primarily focused on the healthcare market based on its leading position in serving the provider market, its expertise and experience serving all segments of this market (providers, payers and life sciences companies), higher demand for solutions offerings and support from healthcare companies, and the greater relative strength of this sector compared with other sectors of the U.S. economy. While healthcare providers contributed the largest portion to the Company’s healthcare revenue in 2008, health insurers were the fastest growing client segment in CTG’s healthcare business. The Company’s healthcare revenue increased by $8.2 million or 9.7% from 2007 to 2008.

Over the last three years, the contribution of the financial services market to CTG’s total revenue declined primarily based on greater use of offshore support and lower overall demand in this sector. In recent years, most of CTG’s revenue in the financial services market was generated by its European operations. In 2008, less than 2% of CTG’s consolidated revenue was generated from the financial services market in the United States.

International Business Machines Corporation (IBM) is CTG’s largest customer. CTG provides services to various IBM divisions in many locations. During the second quarter of 2008, the Company and IBM agreed to extend the current National Technical Services (“NTS Agreement”) contract until July 1, 2011. As part of the NTS agreement, the Company also provides its services as a predominant supplier to IBM’s Integrated Technology Services and Systems and Technology Group business units. Services provided under these agreements accounted for approximately 96% of all of the services provided to IBM by the Company in 2008. In 2008, 2007, and 2006, IBM accounted for $108.3 million or 30.6%, $96.0 million or 29.5%, and $110.5 million or 33.8% of the Company’s consolidated revenue, respectively. No other customer accounted for more than 10% of the Company’s revenue in 2008, 2007 or 2006.

In 2008, CTG provided IT services to approximately 480 clients in North America and Europe. In North America, the Company operates in the United States and Canada with 99% of 2008 revenue from North America generated in the United States. In Europe, the Company operates in Belgium, Luxembourg, Germany, and the United Kingdom. Of total 2008 consolidated revenue of $353.2 million, approximately 78% was generated in North America and 22% in Europe.

Pricing and Backlog

The Company recognizes revenue when persuasive evidence of an arrangement exists, when the services have been rendered, when the price is determinable, and when collectibility of the amounts due is reasonably

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assured. For time-and-material contracts, revenue is recognized as hours are incurred and costs are expended. For contracts with periodic billing schedules, primarily monthly, revenue is recognized as services are rendered to the customer. Revenue for fixed price contracts is recognized as per the proportional method of accounting using an input-based approach whereby salary and indirect labor costs incurred are measured and compared with the total estimate of costs at completion for a project. Revenue is recognized based upon the percentage of completion calculation of total incurred costs to total estimated costs. The Company infrequently works on fixed-price projects that include significant amounts of material or other non-labor related costs which could distort the percent complete within a percentage-of-completion calculation. The Company’s estimate of the total labor costs it expects to incur over the term of the contract is based on the nature of the project and our past experience on similar projects, and includes management judgments and estimates which affect the amount of revenue recognized on fixed-price contracts in any accounting period.

The Company’s revenue from contracts accounted for under time-and-material, progress billing, and percentage-of-completion methods for the years ended December 31, 2008, 2007 and 2006 is as follows:

	2008		2007		2006
Time-and-material	90	%	88	%	90	%
Progress billing	7	%	8	%	6	%
Percentage-of-completion	3	%	4	%	4	%
Total	100	%	100	%	100	%

As of December 31, 2008 and 2007, the backlog for fixed-price and all managed-support contracts was approximately $25.0 million and $38.0 million, respectively. Approximately 79% or $19.7 million of the December 31, 2008 backlog is expected to be earned in 2009. Of the $38.0 million of backlog at December 31, 2007, approximately 68%, or $26.0 million was earned in 2008. Revenue is subject to seasonal variations, with a minor slowdown in months of high vacation and legal holidays (July, August, and December). Backlog does not tend to be seasonal; however, it does fluctuate based upon the timing of entry into long-term contracts.

Competition

The IT services market is highly competitive. The market is also highly fragmented with many providers with no single competitor maintaining a clear market leadership. Competition varies by location, the type of service provided, and the customer to whom services are provided. The Company’s competition comes from four major channels: large national or international vendors, including major accounting and consulting firms; hardware vendors and suppliers of packaged software systems; small local firms or individuals specializing in specific programming services or applications; and a customer’s internal data processing staff. CTG competes against all four of these channels for its share of the market. The Company believes that to compete successfully it is necessary to have a local geographic presence, offer appropriate IT solutions, provide skilled professional resources, and price its services competitively.

CTG has implemented a Global Management System, with the goal to achieve continuous, measured improvements in services and deliverables. As part of this program, CTG has developed specific methodologies for providing high value services that result in unique solutions and specified deliverables for its clients. The Company believes these methodologies will enhance its ability to compete. CTG initially achieved worldwide ISO 9001:1994 certification in June 2000. CTG received its worldwide ISO 9001:2000 certification in January 2003. The Company believes it is the only IT services company of its size to achieve worldwide certification.

Intellectual Property

The Company has registered its symbol and logo with the U.S. Patent and Trademark Office and has taken steps to preserve its rights in other countries where it operates. CTG has entered into agreements with various

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software and hardware vendors from time to time in the normal course of business, and has capitalized certain costs under software development projects, none of which are significant to the business.

Employees

Our business depends on our ability to attract and retain qualified professional staff to provide services to our customers. The Company has a structured recruiting organization that works with our clients to meet their requirements by recruiting and providing high quality, motivated staff. We employ approximately 3,100 employees worldwide, with approximately 2,500 in the United States and Canada and 600 in Europe. Of these, approximately 2,700 are IT professionals and 400 are individuals who work in sales, recruiting, delivery, administrative and support positions. We believe that our relationship with our employees is good. No employees are covered by a collective bargaining agreement or are represented by a labor union. CTG is an equal opportunity employer.

Financial Information Relating to Foreign and Domestic Operations

The following table sets forth certain financial information relating to the performance of the Company in the United States, Belgium, other European countries, and other countries for the years ended December 31, 2008, 2007, and 2006. This information should be read in conjunction with the audited consolidated financial statements and notes thereto included in Item 8, “Financial Statements and Supplementary Data” included in this report.

	2008			2007			2006
(amounts in thousands)
Revenue from External Customers:
United States	$	272,242		$	250,097		$	265,386
Belgium		53,773			46,499			38,821
Other European countries		24,437			25,598			20,126
Other countries		2,761			3,091			2,920
Total revenue	$	353,213		$	325,285		$	327,253
Operating Income (Loss):
United States	$	27,066		$	20,062		$	18,957
Europe		2,033			1,896			2,801
Other countries		(79	)		(187	)		(194	)
Corporate and other		(15,938	)		(15,247	)		(14,710	)
Total operating income	$	13,082		$	6,524		$	6,854
Total Assets:
United States	$	68,978		$	70,590		$	76,689
Europe		24,780			26,662			18,849
Other countries		642			649			838
Corporate and other(1)		21,440			14,560			15,341
Total assets	$	115,840		$	112,461		$	111,717

⁽¹⁾ Corporate and other assets consist principally of cash and cash equivalents, investments, deferred income taxes, and other assets.

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Executive Officers of the Company

As of December 31, 2008, the following individuals were executive officers of the Company:

Name	Age	Office	Period During Which Served as Executive Officer	Other Positions and Offices with Registrant
James R. Boldt	57	Chairman, President and Chief Executive Officer	June 21, 2001 for President, July 16, 2001 for Chief Executive Officer, May 2002 for Chairman, all to date	Director
		Executive Vice President	February 2001 to June 2001
		Vice President, Strategic Staffing	December 2000 to September 2001
		Acting Chief Executive Officer	June 2000 to November 2000
		Vice President and Chief Financial Officer	February 12, 1996 to October 1, 2001
Michael J. Colson	46	Senior Vice President	January 3, 2005 to date	None
Arthur W. Crumlish	54	Senior Vice President	September 24, 2001 to date	None
Filip J. L. Gyde	48	Senior Vice President	October 1, 2000 to date	None
Brendan M. Harrington	42	Senior Vice President, Chief Financial Officer	September 13, 2006 to date	None
		Interim Chief Financial Officer	October 17, 2005 to September 12, 2006	None
Thomas J. Niehaus	47	Senior Vice President	July 22, 1999 to date	None
Peter P. Radetich	55	Senior Vice President, General Counsel	April 28, 1999 to date	Secretary

Mr. Boldt was appointed President and joined CTG’s Board of Directors on June 21, 2001, and was appointed Chief Executive Officer on July 16, 2001. Mr. Boldt became the Company’s Chairman in May 2002. Mr. Boldt joined the Company as a Vice President and its Chief Financial Officer and Treasurer in February 1996.

Mr. Colson joined the Company as Senior Vice President of Solutions Development in January 2005. Prior to that, Mr. Colson was Chief Executive Officer of Manning and Napier Information Services, a software and venture capital firm from September 1998 until the time he joined CTG.

Mr. Crumlish was promoted to Senior Vice President in September 2001, and is currently responsible for the Company’s Strategic Staffing Services organization. Prior to that, Mr. Crumlish was Controller of the Company’s Strategic Staffing Services organization. Mr. Crumlish joined the Company in 1990.

Mr. Gyde was promoted to Senior Vice President in October 2000, at which time he assumed responsibility for all of the Company’s European operations. Prior to that, Mr. Gyde was Managing Director of the Company’s Belgium operation. Mr. Gyde has been with the Company since May 1987.

Mr. Harrington was promoted to Senior Vice President and Chief Financial Officer on September 13, 2006. Previously he was Interim Chief Financial Officer and Treasurer from October 17, 2005 to September 12,

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2006. Mr. Harrington joined the Company in February 1994 and served in a number of managerial financial positions in the Company’s corporate and European operations, including as the Director of Accounting since 2003, before being appointed Corporate Controller in May 2005.

Mr. Niehaus joined the Company in February 1999, and was promoted to Senior Vice President of CTG HealthCare Solutions in July 1999. Previously, Mr. Niehaus was Executive Vice President of Elumen Solutions, Inc. from September 1997 to February 1999. Prior to that, Mr. Niehaus was Vice President of Exemplar Systems.

Mr. Radetich joined the Company in June 1988 as Associate General Counsel, and was promoted to General Counsel and Secretary in April 1999.

Available Company Information

The Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (Exchange Act), and reports pertaining to the Company filed under Section 16 of the Exchange Act are available without charge on the Company’s website at www.ctg.com as soon as reasonably practicable after the Company electronically files the information with, or furnishes it to, the SEC. The Company’s code of ethics, committee charters and governance policies are also available without charge on the Company’s website at www.ctg.com/investors/corporategov.htm.

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Item 1A. Risk Factors

We operate in a dynamic and rapidly changing environment that involves numerous risks and uncertainties. The following section describes some, but not all, of the risks and uncertainties that could have a material adverse effect on our business, financial condition, results of operations and the market price of our common stock, and could cause our actual results to differ materially from those expressed or implied in our forward-looking statements.

Decreases in demand for information technology (IT) solutions and staffing services in the future would cause an adverse effect on our revenue and operating results.

The Company’s revenue and operating results are significantly affected by changes in demand for its services. During 2008, the U.S. economy, where the Company performed greater than 77% of its total business based upon revenue, has significantly deteriorated primarily due to subprime mortgage issues, financial market conditions, inflation, and other economic concerns. In the second half of 2008, these economic pressures have also extended to the European markets where the Company operates. These negative pressures on the economy have led to a worldwide contraction of the credit markets, more severe recessionary conditions, and a decline in demand for the Company’s services which will negatively affect the Company’s revenue and operating results in 2009 compared with 2008. Further declines in spending for IT services in 2009 or future years may additionally adversely affect our operating results in the future as they have in the past.

Our business depends on a large number of highly qualified professionals and if we are not able to recruit and retain a sufficient number of these professionals, we would not be able to provide high quality services to our current and future customers, which would have an adverse effect on our revenue and operating results.

We actively compete with many other IT service providers for qualified professional staff. The availability or lack thereof of qualified professional staff may affect our ability to provide services and meet the needs of our customers in the future. An inability to fulfill customer requirements at agreed upon rates due to a lack of available qualified staff may adversely impact our revenue and operating results in the future.

Increased competition and the bargaining power of our large customers may cause our billing rates to decline, which would have an adverse effect on our revenue and, if we are unable to control our personnel costs accordingly, our margins and operating results.

We have experienced several reductions in the rates at which we bill for services to some of our larger customers during previous highly competitive business markets. Additionally, we actively compete against many other companies for business with new and existing clients. Bill rate reductions or competitive pressures may lead to a decline in revenue or the rates we bill our customers for services, which may adversely affect our margins and operating results in the future.

The currency, legislative, tax, regulatory and economic risks associated with international operations could have an adverse effect on our operating results if we are unable to mitigate or hedge these risks.

We have operations in the United States and Canada in North America, and in Belgium, the United Kingdom, Luxembourg and Germany in Europe. Although our foreign operations conduct their business in their local currencies, these operations are subject to currency fluctuations. Each of our operations is subject to its own legislation, employment and tax law changes, and economic climates. These factors relating to our foreign operations are different than those of the United States. Although we actively manage these foreign operations with local management teams, our overall operating results may be negatively affected by economic conditions, changes in foreign currency exchange rates or tax, regulatory or other economic changes beyond our control.

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We derive a significant portion of our revenue from a single customer and a significant reduction in the amount of IT services requested by this customer would have an adverse effect on our revenue and operating results.

IBM is CTG’s largest customer. CTG provides services to various IBM divisions in many locations. In 2008, 2007, and 2006, IBM accounted for $108.3 million or 30.6%, $96.0 million or 29.5%, and $110.5 million or 33.8% of the Company’s consolidated revenue, respectively. No other customer accounted for more than 10% of the Company’s revenue in 2008, 2007 or 2006. The Company’s accounts receivable from IBM at December 31, 2008 and 2007 amounted to $8.5 million and $9.9 million, respectively.

The IT services industry is highly competitive and fragmented, which means that our customers have a number of choices for providers of IT services and we may not be able to compete effectively.

The market for our services is highly competitive. The market is fragmented, and no company holds a dominant position. Consequently, our competition for client requirements and experienced personnel varies significantly by geographic area and by the type of service provided. Some of our competitors are larger and have greater technical, financial, and marketing resources and greater name recognition than we have in the markets we collectively serve. In addition, clients may elect to increase their internal IT systems resources to satisfy their custom software development and integration needs. Finally, our industry is being impacted by the growing use of lower-cost offshore delivery capabilities (primarily India). There can be no assurance that we will be able to continue to compete successfully with existing or future competitors or that future competition will not have a material adverse effect on our results of operations and financial condition.

Changes in government regulations and laws affecting the IT services industry, including accounting principles and interpretations and the taxation of domestic and foreign operations, could adversely affect our results of operations.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and new SEC regulations, are creating uncertainty for companies such as ours. These new or changed laws, regulations and standards are subject to varying interpretations which, in many instances, is due to their lack of specificity. As a result, the application of these new standards and regulations in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We are committed to maintaining high standards of corporate governance and public disclosure. As a result, our efforts to comply with evolving laws, tax regulations and other standards have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. In particular, our efforts to comply with Section 404 of the Sarbanes-Oxley Act of 2002 and the related regulations regarding our required assessment of our internal controls over financial reporting and our independent auditors’ audit of internal control have required the commitment of significant internal, financial and managerial resources.

The Financial Accounting Standards Board (FASB), the SEC, and the Public Company Accounting Oversight Board (PCAOB) or other accounting rulemaking authorities may issue new accounting rules or standards that are different than those that we presently apply to our financial results. Such new accounting rules or standards could require significant changes from the way we currently report our financial condition, results of operations or cash flows.

U.S. generally accepted accounting principles have been the subject of frequent changes in interpretations. As a result of the enactment of the Sarbanes-Oxley Act of 2002 and the review of accounting policies by the SEC as well as by national and international accounting standards bodies, the frequency of future accounting policy changes may accelerate. Such future changes in financial accounting standards may have a significant effect on our reported results of operations, including results of transactions entered into before the effective date of the changes.

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We are subject to income and other taxes in the United States (federal and state) and numerous foreign jurisdictions. Our provisions for income and other taxes and our tax liabilities in the future could be adversely affected by numerous factors including, but not limited to, income before taxes being lower than anticipated in countries with lower statutory tax rates and higher than anticipated in countries with higher statutory tax rates, changes in the valuation of deferred tax assets and liabilities, and changes in various federal and state tax laws, regulations, accounting principles or interpretations thereof, which could adversely impact our financial condition, results of operations and cash flows in future periods.

Our customer contracts generally have a short term or are terminable on short notice and a significant number of failures to renew, early terminations or renegotiations of our existing customer contracts could adversely affect our results of operations.

Our clients typically retain us on a non-exclusive, engagement-by-engagement basis, rather than under exclusive long-term contracts. We performed approximately 90% of our services on a time and materials basis during 2008. As such, our customers generally have the right to terminate a contract with us upon written notice without the payment of any financial penalty. Client projects may involve multiple engagements or stages, and there is a risk that a client may choose not to retain us for additional stages of a project or that a client will cancel or delay additional planned engagements. These terminations, cancellations or delays could result from factors that are beyond our control and are unrelated to our work product or the progress of the project, but could be related to business or financial conditions of the client, changes in client strategies or the economy in general. When contracts are terminated, we lose the associated revenue and we may not be able to eliminate the associated costs in a timely manner. Consequently, our operating results in subsequent periods may be lower than expected. Our clients can cancel or reduce the scope of their engagements with us on short notice. If they do so, we may be unable to reassign our professionals to new engagements without delay. The cancellation or reduction in scope of an engagement could, therefore, reduce the utilization rate of our professionals, which would have a negative impact on our business, financial condition, and results of operations. As a result of these and other factors, our past financial performance should not be relied on as a guarantee of similar or better future performance. Due to these factors, we believe that our results of operations may fluctuate from period to period in the future.

The introduction of new IT products or services may render our existing IT solutions or IT staffing offerings to be obsolete, which, if we are unable to keep pace with these corresponding changes, could have an adverse effect on our business.

Our success depends, in part, on our ability to implement and deliver IT solutions or IT staffing services that anticipate and keep pace with rapid and continuing changes in technology, industry standards and client preferences. We may not be successful in anticipating or responding to these developments on a timely basis, and our offerings may not be successful in the marketplace. Also, services, solutions and technologies developed by our competitors may make our solutions or staffing offerings uncompetitive or obsolete. Any one of these circumstances could have a material adverse effect on our ability to obtain and successfully complete client engagements.

Existing and potential customers may outsource or consider outsourcing their IT requirements to foreign countries in which we may not currently have operations, which could have an adverse effect on our ability to obtain new customers or retain existing customers.

In the past few years, more companies are using or are considering using low cost offshore outsourcing centers to perform technology-related work and complete projects. Currently, we have partnered with clients to perform services in Russia to mitigate and reduce this risk to our Company. However, the risk of additional increases in the future in the outsourcing of IT solutions overseas could have a material, negative impact on our future operations.

11

A significant portion of our total assets consists of goodwill, which is subject to a periodic impairment analysis and a significant impairment determination in any future period could have an adverse effect on our results of operations even without a significant loss of revenue or increase in cash expenses attributable to such period.

We have goodwill totaling approximately $35.7 million at December 31, 2008 resulting from our acquisition of Elumen Solutions, Inc. (Elumen) in early 1999. Elumen provided IT services to healthcare and related companies, and was merged with the Company’s existing staff which also served the healthcare industry. At least annually, we evaluate this goodwill for impairment based on the fair value of the business operations to which this goodwill relates. This estimated fair value could change if we are unable to achieve operating results at the levels that have been forecasted, the market valuation of such companies decreases based on transactions involving similar companies which could occur given the recent economic downturn in the countries in which the Company operates, or there is a permanent, negative change in the market demand for the services offered by this business unit. These changes could result in an impairment of the existing goodwill balance that could require a material non-cash charge which would have an adverse impact on our results of operations.

Changing Economic Conditions and the Effect on Accounting Estimates

The Company has also made a number of estimates and assumptions relating to the reporting of its assets and liabilities and the disclosure of contingent assets and liabilities to prepare its consolidated financial statements pursuant to the rules and regulations of the SEC and other accounting rulemaking authorities. Such estimates primarily relate to the valuation of goodwill, the valuation of stock options for recording equity-based compensation expense, allowances for doubtful accounts receivable, investment valuation, legal matters, other contingencies and estimates of progress toward completion and direct profit or loss on contracts, as applicable. As future events and their affects can not be determined with precision, actual results could differ from these estimates. Changes in the economic climates in which the Company operates may affect these estimates and will be reflected in the Company’s financial statements in the event they occur.

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Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The Company owns and occupies a headquarters building at 800 Delaware Avenue, and an office building at 700 Delaware Avenue, both located in Buffalo, New York, operated by CTG of Buffalo, and which is part of the Company’s North American operations. The corporate headquarters consists of approximately 40,000 square feet and is occupied by corporate administrative operations. The office building consists of approximately 39,000 square feet and is also occupied by corporate administrative operations. At December 31, 2008, these properties were not mortgaged as part of the Company’s existing revolving credit agreement.

The remainder of the Company’s locations are leased facilities. Most of these facilities serve as sales and support offices and their size varies, generally in the range from 250 to 13,200 square feet, with the number of people employed at each office. The Company’s lease terms generally vary from periods of less than a year to five years and typically have flexible renewal options. The Company believes that its present owned and leased facilities are adequate to support its current and anticipated future needs.

Item 3. Legal Proceedings

The Company and its subsidiaries are involved from time to time in various legal proceedings arising in the ordinary course of business. Although the outcome of lawsuits or other proceedings involving the Company and its subsidiaries cannot be predicted with certainty and the amount of any liability that could arise with respect to such lawsuits or other proceedings cannot be predicted accurately, management does not expect these matters, if any, to have a material adverse effect on the financial position, results of operations, or cash flows of the Company.

Item 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders in the fourth quarter of 2008.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Stock Market Information

The Company’s common stock is traded on The NASDAQ Stock Market LLC under the symbol CTGX. The following table sets forth the high and low sales prices for the Company’s common stock for each quarter of the previous two years.

Stock Price	High		Low
Year ended December 31, 2008
Fourth Quarter	$	7.06	$	2.46
Third Quarter	$	7.33	$	4.20
Second Quarter	$	5.50	$	4.03
First Quarter	$	5.76	$	3.75
Year ended December 31, 2007
Fourth Quarter	$	6.05	$	4.02
Third Quarter	$	5.12	$	4.14
Second Quarter	$	4.98	$	4.15
First Quarter	$	4.80	$	4.10

On February 19, 2009, there were 2,335 record holders of the Company’s common shares. The Company has not paid a dividend since 2000. The Company is required to meet certain financial covenants under its current revolving credit agreement in order to pay dividends. The Company was in compliance with these financial covenants at December 31, 2008. The determination of the timing, amount and payment of dividends on the Company’s common stock in the future is at the discretion of the Board of Directors and will depend upon, among other things, the Company’s profitability, liquidity, financial condition, capital requirements and compliance with the aforementioned financial covenants.

For information concerning common stock issued in connection with the Company’s equity compensation plans, see Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

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Issuer Purchases of Equity Securities

The Company has one share repurchase program. During February 2007, 2008, and 2009, the Company’s Board of Director’s authorized a total of 1.0 million shares for future stock repurchases under this program. The share repurchase program does not have an expiration date, nor was it terminated during the fourth quarter of 2008.

Purchases by the Company of its common stock during the fourth quarter ended December 31, 2008 are as follows:

Period	Total Number of Shares Purchased	Average Price Paid per Share*		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that may yet be Purchased Under the Plans or Programs
September 27 – October 31	292,056	$	6.02	292,056	440,985
November 1 – November 30	72,703	$	3.91	72,703	368,282
December 1 – December 31	79,552	$	3.40	79,552	288,730
Total	444,311	$	5.21	444,311	288,730

* Includes commissions paid

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Company Performance Graph

The following graph displays a five-year comparison of cumulative total shareholder returns for the Company’s common stock, the S&P 500 Index, and the Dow Jones U.S. Computer Services Index, assuming a base index of $100 at the end of 2003. The cumulative total return for each annual period within the five years presented is measured by dividing (1) the sum of (A) the cumulative amount of dividends for the period, assuming dividend reinvestment, and (B) the difference between the Company’s share price at the end and the beginning of the period by (2) the share price at the beginning of the period. The calculations were made excluding trading commissions and taxes.

	Base Period Dec 03	INDEXED RETURNS Years Ending
		Dec 04	Dec 05	Dec 06	Dec 07	Dec 08
Computer Task Group, Inc.	100.00	143.96	101.54	122.11	142.16	82.78
S&P 500 Index	100.00	110.88	116.33	134.70	142.10	89.53
Dow Jones U.S. Computer Services Index	100.00	109.02	96.34	114.67	124.33	93.65

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Item 6. Selected Financial Data

Consolidated Summary—Five-Year Selected Financial Information

The selected operating data and financial position information set forth below for each of the years in the five-year period ended December 31, 2008 has been derived from the Company’s audited consolidated financial statements. This information should be read in conjunction with the audited consolidated financial statements and notes thereto included in Item 8, “Financial Statements and Supplementary Data” included in this report.

	2008			2007			2006			2005		2004
(amounts in millions, except per-share data)		(1, 2	)		(1, 2	)		(1	)
Operating Data
Revenue	$	353.2		$	325.3		$	327.3		$	294.5	$	237.1
Operating income	$	13.1		$	6.5		$	6.9		$	4.9	$	3.1
Income from continuing operations	$	7.8		$	4.2		$	3.5		$	2.4	$	3.0
Net income (loss)	$	7.8		$	4.2		$	3.5		$	2.4	$	(1.4	)(3)
Basic net income per share from continuing operations	$	0.51		$	0.26		$	0.21		$	0.14	$	0.18
Basic net income (loss) per share	$	0.51		$	0.26		$	0.21		$	0.14	$	(0.09	)(3)
Diluted net income per share from continuing operations	$	0.49		$	0.25		$	0.21		$	0.14	$	0.17
Diluted net income (loss) per share	$	0.49		$	0.25		$	0.21		$	0.14	$	(0.08	)(3)
Cash dividend per share	$	—		$	—		$	—		$	—	$	—
Financial Position
Working capital	$	24.8		$	23.2		$	21.7		$	40.3	$	17.2
Total assets	$	115.8		$	112.5		$	111.7		$	128.3	$	103.8
Long-term debt	$	—		$	—		$	—		$	23.2	$	—
Shareholders’ equity	$	67.6		$	65.1		$	61.6		$	57.5	$	57.0

(1) On January 1, 2006, the Company adopted the provisions of FAS 123R, “Share-Based Payment” (FAS 123R) and related interpretations. The Company recognized equity-based compensation expense of $1.0 million in 2008, and $0.9 million in 2007 and 2006, in its consolidated statements of operations as selling, general and administrative expenses. The tax benefit recorded for this equity-based compensation expense was $0.4 million in 2008, and $0.3 million in 2007 and 2006, resulting in a net after tax cost to the Company of $0.6 million in each of 2008, 2007 and 2006. For additional information regarding equity-based compensation expense, see note 9 to the consolidated financial statements in Item 8, “Financial Statements and Supplementary Data” included in this report.

(2) During 2007, the Company received two unsolicited merger proposals from RCM Technologies, Inc. After consideration of the proposals, the Company’s Board of Directors unanimously determined that the proposals were inadequate and did not reflect the value inherent in CTG’s business and the Company’s potential growth opportunities. In 2008 and 2007, included in operating income, the Company recorded $0.2 million and $0.7 million, respectively, related to advisory fees incurred in conjunction with its consideration of the two unsolicited merger proposals.

(3) Includes a loss from discontinued operations of approximately $4.4 million, or $0.27 per basic share and $0.25 per diluted share from the disposition of CTG Nederland, B.V. effective January 1, 2004.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation

Forward-Looking Statements

This management’s discussion and analysis of financial condition and results of operations contains forward-looking statements by management and the Company that are subject to a number of risks and uncertainties. These forward-looking statements are based on information as of the date of this report. The Company assumes no obligation to update these statements based on information from and after the date of this report. Generally, forward-looking statements include words or phrases such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “projects,” “could,” “may,” “might,” “should,” “will” and words and phrases of similar impact. The forward-looking statements include, but are not limited to, statements regarding future operations, industry trends or conditions and the business environment, and statements regarding future levels of, or trends in, revenue, operating expenses, capital expenditures, and financing. The forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Numerous factors could cause actual results to differ materially from those in the forward-looking statements, including the following: (i) industry and economic conditions, including fluctuations in demand for IT services and recessionary pressures, (ii) the availability to us of qualified professional staff, (iii) domestic and foreign industry competition, (iv) rate and wage inflation or deflation, (v) risks associated with operating in foreign jurisdictions, (vi) the impact of current and future laws and government regulation, as well as repeal or modification of same, affecting the IT solutions and staffing industry, taxes and the Company’s operations in particular, (vii) renegotiations, nullification, or breaches of contracts with customers, vendors, subcontractors or other parties, (viii) consolidation among the Company’s competitors or customers, (ix) the partial or complete loss of the revenue the Company generates from IBM, and (x) the risks described in Item 1A of this annual report on Form 10-K and from time to time in the Company’s reports filed with the SEC.

Industry Trends

The market demand for the Company’s services is heavily dependent on IT spending by major corporations, organizations and government entities in the markets and regions that we serve. The pace of technology change and changes in business requirements and practices of our clients all have a significant impact on the demand for the services that we provide. Competition for new engagements and pricing pressure has been strong. During the 2008 fourth quarter, we have noticed a decrease in demand for our services, primarily in the staffing business. We anticipate this weakness in demand in the market to continue for most of if not all of 2009.

We have responded to these challenging business conditions by focusing on two main services, which are providing IT solutions and IT staffing to our clients. IT solutions and IT staffing revenue as a percentage of total revenue for the years ended December 31, 2008, 2007 and 2006 is as follows:

	2008		2007		2006
IT solutions	34	%	34	%	30	%
IT staffing	66	%	66	%	70	%
Total	100	%	100	%	100	%

The higher margin solutions business increased by $9.4 million or 8.4% from 2007 to 2008.

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The Company promotes a majority of its services through three vertical market focus areas: Technology Service Providers, Healthcare (which includes services provided to healthcare providers, health insurers, and life sciences companies), and Financial Services. The remainder of CTG’s revenue is derived from general markets. CTG’s revenue by vertical market for the years ended December 31, 2008, 2007 and 2006 is as follows:

	2008		2007		2006
Technology service providers	34	%	34	%	39	%
Healthcare	26	%	26	%	25	%
Financial services	8	%	11	%	10	%
General markets	32	%	29	%	26	%
Total	100	%	100	%	100	%

The Company’s healthcare revenue increased by $8.2 million or 9.7% from 2007 to 2008.

The IT services industry is extremely competitive and characterized by continuous changes in customer requirements and improvements in technologies. Our competition varies significantly by geographic region, as well as by the type of service provided. Many of our competitors are larger than CTG, and have greater financial, technical, sales and marketing resources. In addition, the Company frequently competes with a client’s own internal IT staff. Our industry is being impacted by the growing use of lower-cost offshore delivery capabilities (primarily India). There can be no assurance that we will be able to continue to compete successfully with existing or future competitors or that future competition will not have a material adverse effect on our results of operations and financial condition.

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, when the services have been rendered, when the price is determinable, and when collectibility of the amounts due is reasonably assured. For time-and-material contracts, revenue is recognized as hours are incurred and costs are expended. For contracts with periodic billing schedules, primarily monthly, revenue is recognized as services are rendered to the customer. Revenue for fixed price contracts is recognized as per the proportional method of accounting using an input-based approach whereby salary and indirect labor costs incurred are measured and compared with the total estimate of costs at completion for a project. Revenue is recognized based upon the percentage of completion calculation of total incurred costs to total estimated costs. The Company infrequently works on fixed-price projects that include significant amounts of material or other non-labor related costs which could distort the percent completed within a percentage-of-completion calculation. The Company’s estimate of the total labor costs it expects to incur over the term of the contract is based on the nature of the project and our past experience on similar projects, and includes management judgments and estimates which affect the amount of revenue recognized on fixed-price contracts in any accounting period.

The Company’s revenue from contracts accounted for under time-and-material, progress billing, and percentage-of-completion methods for the years ended December 31, 2008, 2007 and 2006 is as follows:

	2008		2007		2006
Time-and-material	90	%	88	%	90	%
Progress billing	7	%	8	%	6	%
Percentage-of-completion	3	%	4	%	4	%
Total	100	%	100	%	100	%

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Results of Operations

The table below sets forth data with the percentage information calculated as a percentage of consolidated revenue as reported on the Company’s consolidated statements of income as included in Item 8, “Financial Statements and Supplementary Data” in this report.

Year ended December 31,	2008		2007		2006
(percentage of revenue)
Revenue	100.0	%	100.0	%	100.0	%
Direct costs	77.7	%	77.7	%	77.3	%
Selling, general, and administrative expenses	18.6	%	20.3	%	20.6	%
Operating income	3.7	%	2.0	%	2.1	%
Interest and other income (expense), net	0.1	%	0.1	%	(0.2	)%
Income before income taxes	3.8	%	2.1	%	1.9	%
Provision for income taxes	1.6	%	0.8	%	0.8	%
Net income	2.2	%	1.3	%	1.1	%

2008 as compared with 2007

In 2008, the Company recorded revenue of $353.2 million, an increase of 8.6% as compared with revenue of $325.3 million recorded in 2007. Revenue from the Company’s North American operations totaled $275.0 million in 2008, an increase of 8.6% when compared with revenue of $253.2 million in 2007. Revenue from the Company’s European operations totaled $78.2 million in 2008, an increase of 8.5% when compared with 2007 revenue from European operations of $72.1 million. The European revenue represented 22.1% and 22.2% of 2008 and 2007 consolidated revenue, respectively. The Company’s revenue includes reimbursable expenses billed to customers. These expenses totaled $8.6 million and $7.9 million in 2008 and 2007, respectively.

During October 2008, the Company was informed by a significant customer of a reduction in their need for approximately 250 of CTG’s staff, or approximately $21 million in annual revenue. The reduction began in the 2008 fourth quarter and reduced strategic staffing revenue in 2008 by approximately $4 million. Over the next several months the significant customer increased the reduction in the need for the company’s personnel to an aggregate of 425 billable staff or approximately $36 million in annualized revenue. The Company has appropriately adjusted its selling, general, and administrative expenses as a result of the billable staff reductions. The reduction was not a result of CTG’s performance, but rather a change in our customer’s business needs.

In North America, the revenue increase in 2008 as compared with 2007 is primarily the result of an increase in both the Company’s solutions and staffing businesses. The Company’s North American solutions business grew by 16.8% in 2008 as compared with 2007, driven by business wins resulting from investments the Company has made primarily in its healthcare business. These investments were primarily in new offerings, sales territories and additional sales staff. North American staffing revenue increased 4.4% in 2008 as compared with 2007, primarily driven by strong demand in the technology services market for the first half of 2008.

The increase in year-over-year revenue in Europe was primarily due to the strength of the currencies of Belgium, the United Kingdom, Luxembourg, and Germany, the countries in which the Company’s European subsidiaries operate. In Belgium, Luxembourg and Germany, the functional currency is the Euro, while in the United Kingdom the functional currency is the British pound. In 2008 as compared with 2007, the average value of the Euro increased 7.3%, while the average value of the British pound decreased 7.3%. Had there been no change in these exchange rates from 2007 to 2008, total European revenue would have been approximately $4.3 million lower in 2008, or $73.9 million as compared with the $78.2 million reported.

IBM is CTG’s largest customer. CTG provides services to various IBM divisions in many locations. During the second quarter of 2008, the Company and IBM agreed to extend the current National Technical Services

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(“NTS Agreement”) contract until July 1, 2011. As part of the NTS Agreement, the Company also provides its services as a predominant supplier to IBM’s Integrated Technology Services and Systems and Technology Group business units. These agreements accounted for approximately 96% of all of the services provided to IBM by the Company in 2008. In 2008, 2007, and 2006, IBM accounted for $108.3 million or 30.6%, $96.0 million or 29.5%, and $110.5 million or 33.8% of the Company’s consolidated revenue, respectively. We expect to continue to derive a significant portion of our revenue from IBM in future years. However, a significant decline or the loss of the revenue from IBM would have a significant negative effect on our operating results. The Company’s accounts receivable from IBM at December 31, 2008 totaled $8.5 million. No other customer accounted for more than 10% of the Company’s revenue in 2008, 2007 or 2006.

Direct costs, defined as costs for billable staff including billable out-of-pocket expenses, were 77.7% of both 2008 and 2007 consolidated revenue. The Company’s solution business increased 8.4% during 2008 as compared with 2007, while the staffing business increased 8.7% during that time period. Direct costs as a percentage of revenue did not change year-over-year primarily due to the increase in the solutions business which generally yields higher margins and offset the increase in the Company’s staffing business which generally yields lower margins.

Selling, general and administrative (SG&A) expenses were 18.6% of revenue in 2008 as compared with 20.3% of revenue in 2007. Overall, the decrease in SG&A expense as a percentage of revenue reflects the Company’s continued efforts to control and reduce its SG&A costs throughout the Company as a percentage of revenue. Additionally, during the second and third quarters of 2007, the Company received two unsolicited merger proposals from RCM Technologies, Inc. After consideration of the proposals, the Company’s Board of Directors unanimously determined that the proposals were inadequate and did not reflect the value inherent in CTG’s business and the Company’s potential growth opportunities. In 2008 and 2007, the Company recorded $0.2 million and $0.7 million, respectively, included in SG&A expenses related to advisory fees incurred in conjunction with its consideration of the two unsolicited merger proposals.

Operating income was 3.7% of revenue in 2008 as compared with 2.0% of revenue in 2007. The Company’s operating income as a percentage of revenue generally increased throughout 2008 primarily due to the higher operating margins associated with the Company’s new solution offerings and the reduction in SG&A costs. Additionally, operating income in 2007 was reduced due to the advisory fees described above. Operating income from North American operations was $11.1 million in 2008 as compared with $4.6 million in 2007, while European operations recorded operating income of $2.0 million in 2008 and $1.9 million in 2007. European operating income was comparable year-over-year as the $0.1 million increase from 2007 to 2008 was primarily due to the increase in the exchange rates in Belgium, Luxembourg and Germany offset by the decrease in the exchange rate in the United Kingdom.

Interest and other income, net was 0.1% of revenue in both 2008 and 2007. During 2008, the Company recorded a net exchange gain on intercompany balances totaling approximately $0.5 million on balances settled during 2008 and those balances outstanding between its subsidiaries at December 31, 2008. Additionally, there was less interest expense as a percentage of revenue as compared with 2007 as outstanding borrowings under the revolving credit agreement were generally less in 2008, and interest rates fell throughout 2008. During 2008, the average outstanding debt balance was $3.8 million as compared with $5.0 million in 2007. Additionally, during the 2007 first quarter, the Company sold an investment resulting in a gain of approximately $0.6 million.

The Company’s effective tax rate (ETR) is calculated quarterly based upon current assumptions relating to the full years’ estimated operating results, and various tax related items. The Company’s normal ETR is approximately 38 to 42%. The 2008 ETR was 41.2%. The 2008 ETR was affected by an addition to the valuation allowance for net operating losses in foreign countries of approximately $0.4 million, offset by a reduction in the Company’s tax reserves of approximately $0.1 million and Federal income tax credits of approximately $0.1 million. The 2007 ETR was 37.6%, as the Company decreased the valuation allowance for the net operating loss for U.S. state jurisdictions by approximately $0.2 million, which was offset by adding approximately $0.1 million to its tax reserves due to changes in estimate of recoverability.

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Net income for 2008 was 2.2% of revenue or $0.49 per diluted share, compared with net income of 1.3% of revenue or $0.25 per diluted share in 2007. Diluted earnings per share were calculated using 15.9 million weighted-average equivalent shares outstanding in 2008 and 16.7 million 2007. The dilutive effect of incremental shares outstanding under the Company’s equity-based compensation plans in 2008 was wholly offset by purchases of shares for treasury by the Company during 2008.

2007 as compared with 2006

In 2007, the Company recorded revenue of $325.3 million, a decrease of 0.6% as compared with revenue of $327.3 million recorded in 2006. Revenue from the Company’s North American operations totaled $253.2 million in 2007, a decrease of 5.7% when compared with revenue of $268.4 million in 2006. Revenue from the Company’s European operations totaled $72.1 million in 2007, an increase of 22.4% when compared with 2006 revenue from European operations of $58.9 million. European revenue represented 22.2% and 18.0% of 2007 and 2006 consolidated revenue, respectively. The Company’s revenue includes reimbursable expenses billed to customers. These expenses totaled $7.9 million and $9.4 million in 2007 and 2006, respectively.

In North America, the revenue decrease in 2007 as compared with 2006 is primarily the result of the reduction in demand that occurred from a significant customer in the 2006 third quarter, partially offset by increases in the Company’s solutions business. The 2006 customer headcount reduction resulted in an estimated annual loss of approximately $35 million in revenue. The areas of greatest demand in the solutions business have been testing, clinical transformation projects, and transitional outsourcing.

The significant increase in revenue in the Company’s European operations was in part due to the addition of billable staff as compared with the prior year as demand for the Company’s solution offerings, primarily in the testing area, which was strong for most of 2007. The staffing business in Europe remained relatively consistent year-over-year. Significantly adding to the increase in year-over-year revenue for European operations was the strength of the currencies of Belgium, the United Kingdom, Luxembourg, and Germany the countries in which the Company’s European subsidiaries operate. In Belgium, Luxembourg and Germany, the functional currency is the Euro, while in the United Kingdom the functional currency is the British pound. Had there been no change in these exchange rates from 2006 to 2007, total European revenue would have been approximately $6.1 million lower in 2007, or $66.0 million as compared with the $72.1 million reported.

In 2007, IBM was the Company’s largest customer, accounting for $96.0 million or 29.5% of consolidated revenue as compared with $110.5 million or 33.8% of 2006 consolidated revenue. During 2004, the Company signed an addendum to the Technical Services Agreement it has with IBM making it a predominant supplier to IBM’s Systems and Technology Group which has driven a large portion of the increase in the demand for the Company’s staffing services. In 2006, the Company signed an addendum to this agreement which extends its expiration date to December 31, 2008. The Company’s accounts receivable from IBM at December 31, 2007 and December 31, 2006 totaled $9.9 million and $9.3 million, respectively. No other customer accounted for more than 10% of the Company’s revenue in either 2007 or 2006.

Direct costs, defined as costs for billable staff including billable out-of-pocket expenses, were 77.7% of 2007 revenue as compared with 77.3% of 2006 revenue. The slight increase in direct costs as a percentage of revenue in 2007 as compared with 2006 is primarily due to a decrease in utilization of billable personnel late in 2007 as compared with 2006, primarily in our European operations. This decrease in utilization was partially offset by an increase in the amount of solutions business in the Company’s sales mix during 2007, which generally yields higher margins than the Company’s staffing business.

SG&A expenses were 20.3% of revenue in 2007 as compared with 20.6% of revenue in 2006. Overall, the decrease in SG&A expense as a percentage of revenue reflects the Company’s continued efforts to control and reduce its SG&A costs throughout the Company as a percentage of revenue. Offsetting these reductions in SG&A costs, were expenses associated with two unsolicited merger proposals from RCM Technologies, Inc. the

22

Company received during the second and third quarters of 2007. After consideration of the proposals, the Company’s Board of Directors unanimously determined that the proposals were inadequate and did not reflect the value inherent in CTG’s business and the Company’s potential growth opportunities. In 2007, included in SG&A expenses, the Company recorded $0.7 million related to advisory fees incurred in conjunction with its consideration of the two unsolicited merger proposals. Additionally, in the 2007 fourth quarter, the Company reserved for approximately $0.2 million of its accounts receivable balances related to a customer that declared bankruptcy.

Operating income was 2.0% of revenue in 2007 as compared with 2.1% of revenue in 2006. The Company’s operating income as a percentage of revenue generally increased throughout 2007 primarily due to a shift in the Company’s business mix to a higher percentage of solutions business as compared with staffing. However, operating income in 2007 was reduced due to the advisory fees and accounts receivable reserve described above. Operating income from North American operations was $4.6 million in 2007 as compared with $4.1 million in 2006, while European operations recorded operating income of $1.9 million in 2007 and $2.8 million in 2006. European operating income decreased year-over-year due to lower utilization of its billable personnel in 2007 and higher administrative costs to support the revenue growth in Europe.

Interest and other income (expense), net was 0.1% of revenue in 2007 and (0.2)% in 2006. During the 2007 first quarter, the Company sold an investment resulting in a gain of approximately $0.6 million. Additionally, there was less interest expense as a percentage of revenue in 2007 as compared with 2006 as the Company entered into an advance payment program with a significant customer in 2006 that affected only a portion of the first quarter of 2006. During 2007, the average outstanding debt balance under the revolving credit agreement was $5.0 million as compared with $6.6 million in 2006.

The Company’s effective tax rate (ETR) is calculated quarterly based upon current assumptions relating to the full years estimated operating results, and various tax related items. The Company’s normal ETR is approximately 38 to 42%. The 2007 ETR was 37.6%, and included a decrease to the valuation allowance for the net operating loss for U.S. state jurisdictions by approximately $0.2 million, which was offset by adding approximately $0.1 million to its tax reserves due to changes in estimate of recoverability. The 2006 ETR was 43.2% and included adding approximately $0.1 million to its tax reserves due to a change in estimate of recoverability, and an increase in the valuation allowance for net operating losses for Canada by approximately $0.1 million in the 2006 fourth quarter.

The Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (Interpretation 48) on January 1, 2007. Upon implementation of Interpretation 48, the Company was not required to recognize any increase in its liability for unrecognized tax benefits.

Net income for 2007 was 1.3% of revenue or $0.25 per diluted share compared with net income of 1.1% of revenue or $0.21 per diluted share in 2006. Diluted earnings per share were calculated using 16.7 million weighted-average equivalent shares outstanding in both 2007 and 2006. The dilutive effect of incremental shares outstanding under the Company’s equity-based compensation plans in 2007 was offset by purchases of shares for treasury by the Company during 2007.

Recent Accounting Pronouncements

In September 2006, the FASB issued FAS 157, “Fair Value Measurements.” In February 2008, the FASB issued FASB Staff Position 157-2, “Effective Date of FASB Statement 157,” which provides a one year deferral of the effective date of FAS 157 for non-financial assets and liabilities (such as goodwill), except those that are recognized or disclosed in the Company’s financial statements at fair value at least annually. Accordingly, the Company adopted the provisions of FAS 157 only for its financial assets and liabilities effective January 1, 2008. FAS 157 defines fair value as the exchange price that would be received for an asset or paid for a liability in the principal or most advantageous market for the asset or liability, in an orderly transaction between market

23

participants. As of December 31, 2008, the Company’s assets considered for fair value measurement and disclosure under this FAS are its investment balances held in the Company’s deferred compensation plan. The adoption of this FAS had no impact on the Company’s consolidated results of operations or financial condition. Although the Company is currently evaluating the effect that the adoption of FASB Staff Position 157-2 will have on its financial condition or results of operations, it does not believe the impact, if any, will be material.

In December 2008, the FASB issued FASB Staff Position (FSP) FAS 132 (R)—1, “Employers’ Disclosures about Postretirement Benefit Plan Assets,” which amends FASB Statement No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. These disclosures include how investment allocation decisions are made, including the factors that are pertinent to an understanding of investment policies and strategies, the major categories of plan assets, the inputs and valuation techniques used to measure the fair value of plan assets, the effect of fair value measurements using significant unobservable inputs (Level 3) on changes in plan assets for the period, and significant concentrations of risk within plan assets. The disclosures about plan assets required by this FSP are required for fiscal years ending after December 15, 2009.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles requires the Company’s management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company’s significant accounting policies are included in note 1 to the consolidated financial statements contained in this Form 10-K under Item 8, “Financial Statements and Supplementary Data.” These policies, along with the underlying assumptions and judgments made by the Company’s management in their application, have a significant impact on the Company’s consolidated financial statements. The Company identifies its most critical accounting policies as those that are the most pervasive and important to the portrayal of the Company’s financial position and results of operations, and that require the most difficult, subjective and/or complex judgments by management regarding estimates about matters that are inherently uncertain. The Company’s most critical accounting policies are those related to goodwill valuation and income taxes, specifically relating to deferred taxes and valuation allowances.

Goodwill Valuation

The Company has goodwill on its books which originated from the purchase in 1999 of a healthcare information technology provider. The goodwill balance of $35.7 million is evaluated annually as of the Company’s October fiscal month-end, or more frequently if facts and circumstances indicate impairment may exist. This evaluation, as applicable, is based on estimates and assumptions that may be used to analyze the appraised value of similar transactions from which the goodwill arose, the appraised value of similar companies, or estimates of future discounted cash flows. The estimates and assumptions on which the Company’s evaluations are based involve judgments and are based on currently available information, any of which could prove wrong or inaccurate when made, or become wrong or inaccurate as a result of subsequent events.

At the respective measurement dates for 2008, 2007, and 2006, with the assistance of an independent appraisal company, the Company completed its annual valuation of the business to which the Company’s goodwill relates. The valuations indicated that the estimated fair value of the business exceeded the carrying value of the business in each period. Additionally, given the declining market conditions during 2008, the Company reviewed its goodwill balance at December 31, 2008 to determine if a triggering event may have occurred which would be an indication of a potential impairment. The Company’s review included analyzing the enterprise value of the consolidated company and reconciling it to the carrying value of the Company’s business units, including the business unit to which the goodwill relates. The Company also updated the future forecasts and the estimate of the future discounted cash flow analysis for this business

24

unit. In both of these instances, the estimated fair value of the business continued to exceed the carrying value of the business at December 31, 2008. Accordingly, the Company determined that there was no triggering event, and therefore no indication of impairment existed at December 31, 2008. Accordingly, there are no facts or circumstances that arose during 2008, 2007 or 2006 that led management to believe the goodwill was impaired.

Income Taxes—Deferred Taxes and Valuation Allowances

At December 31, 2008, the Company had a total of approximately $5.8 million of current and non-current net deferred tax assets recorded on its consolidated balance sheet. The changes in deferred tax assets and liabilities from period to period are determined based upon the changes in differences between the basis of assets and liabilities for financial reporting purposes and the basis of assets and liabilities for tax purposes, as measured by the enacted tax rates when these differences are estimated to reverse. The Company has made certain assumptions regarding the timing of the reversal of these assets and liabilities, and whether taxable income in future periods will be sufficient to recognize all or a part of any gross deferred tax asset of the Company.

At December 31, 2008, the Company had deferred tax assets recorded resulting from net operating losses totaling approximately $2.7 million. The Company has analyzed each jurisdiction’s tax position, including forecasting potential taxable income in future periods and the expiration of the net operating loss carryforwards as applicable, and determined that it is unclear whether all of these deferred tax assets will be realized at any point in the future. Accordingly, at December 31, 2008, the Company had offset a portion of these assets with a valuation allowance totaling $2.4 million, resulting in a net deferred tax asset from net operating loss carryforwards of approximately $0.3 million.

The Company’s deferred tax assets and their potential realizability are evaluated each quarter to determine if any changes should be made to the valuation allowance. Any change in the valuation allowance in the future could result in a change in the Company’s ETR. An additional 1% increase in the ETR in 2008 would have reduced net income by approximately $133,000.

Other Estimates

The Company has also made a number of estimates and assumptions relating to the reporting of its assets and liabilities and the disclosure of contingent assets and liabilities to prepare the consolidated financial statements pursuant to the rules and regulations of the SEC. Such estimates primarily relate to the valuation of stock options for recording equity-based compensation expense, allowances for doubtful accounts receivable, investment valuation, legal matters, and estimates of progress toward completion and direct profit or loss on contracts, as applicable. As future events and their affects can not be determined with precision, actual results could differ from these estimates. Changes in the economic climates in which the Company operates may affect these estimates and will be reflected in the Company’s financial statements in the event they occur.

Financial Condition and Liquidity

Cash provided by operating activities in 2008 was $16.6 million. Net income was $7.8 million, while other non-cash adjustments, primarily consisting of depreciation expense, equity-based compensation, deferred income taxes, and deferred compensation totaled $3.8 million. The accounts receivable balance decreased $1.9 million primarily due to an improvement in the timing of the collection of outstanding invoices resulting in a decrease in days sales outstanding to 57 days at December 31, 2008 from 58 days at December 31, 2007. Accrued compensation increased $3.8 million primarily due to the timing of the last pay date of the US bi-weekly payroll in relation to year-end. Advance billings on contracts increased $0.5 million due to the timing of billings on customer accounts near the end of 2008. Taxes payable decreased $0.9 million due to the timing of estimated tax payments prior to year-end.

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Investing activities used $3.3 million in 2008, primarily resulting from the $3.1 million spent for additions to property and equipment. Contributions to the Computer Task Group, Incorporated Non-qualified Key Employee Deferred Compensation Plan which are classified as investment purchases were offset by sales of those investments for the participants in that plan. The Company has no significant commitments for the purchase of property or equipment at December 31, 2008.

Financing activities used $5.3 million of cash in 2008. As of December 31, 2008, there were no net borrowings on the Company’s revolving credit line. The Company is required to meet certain financial covenants in order to maintain borrowings under its revolving line of credit agreement, which allows the Company to borrow up to $35 million in loans and letter of credit commitments, pay dividends, and make acquisitions. The Company was in compliance with these covenants at December 31, 2008. The Company borrows or repays its revolving debt as needed based upon its working capital obligations, including the timing of the U.S. bi-weekly payroll. Daily average borrowings for 2008 were approximately $3.8 million.

During 2008, the Company used $5.7 million to purchase approximately 1.1 million shares of its stock for treasury. At December 31, 2008, approximately 0.3 million shares remain authorized for future purchases. During February 2009, the Company’s Board of Directors authorized an additional 1.0 million shares be added to the remaining shares in the buyback authorization.

At December 31, 2008, the Company has restricted use of approximately $0.4 million of its cash and cash equivalents as the funds are held as a guarantee by a financial institution for leased office space.

The Company believes existing internally available funds, cash potentially generated from operations, and available borrowings under the Company’s revolving line of credit totaling approximately $34.5 million at December 31, 2008, will be sufficient to meet foreseeable working capital, capital expenditure, and stock repurchase requirements, and to allow for future internal growth and expansion.

Off-Balance Sheet Arrangements

The Company did not have off-balance sheet arrangements or transactions in either 2008, 2007 or 2006.

Quantitative and Qualitative Disclosures about Market Risk

The Company’s primary market risk exposures consist of interest rate risk associated with variable rate borrowings and foreign currency exchange risk associated with the Company’s European operations. See Item 7A, “Quantitative and Qualitative Disclosure about Market Risk” in this report.

Contractual Obligations

A summary of the Company’s contractual obligations at December 31, 2008 is as follows:

(in millions)		Total		Less than 1 year		Years 2-3		Years 4-5		More than 5 years
Long-term debt	A	$	—	$	—	$	—	$	—	$	—
Capital lease obligations	B		—		—		—		—		—
Operating lease obligations	C		18.4		6.0		7.3		2.2		2.9
Purchase obligations	D		1.1		0.8		0.3		—		—
Deferred compensation benefits (U.S.)	E		8.1		0.8		1.5		1.5		4.3
Deferred compensation benefits (Europe)	F		—		—		—		—		—
Other long-term liabilities	G		0.4		0.0		0.1		0.1		0.2
Total		$	28.0	$	7.6	$	9.2	$	3.8	$	7.4

A In February 2008, the Company entered into an amendment to its revolving credit agreement (Credit Agreement) which allows the Company to borrow up to $35 million. This Credit Agreement has a term of

26

three years and expires in April 2011. The Company uses this facility to fund its working capital obligations as needed, primarily including funding the U.S. bi-weekly payroll. The Company currently has three outstanding letters of credit totaling approximately $0.5 million that collateralize an office lease and employee benefit programs.

B The Company does not have any capital lease obligations outstanding at December 31, 2008.

C Operating lease obligations relate to the rental of office space, office equipment, and automobiles leased in the Company’s European operations. Total rental expense under operating leases in 2008, 2007, and 2006 was approximately $8.1 million, $7.4 million, and $6.3 million, respectively.

D The Company is currently obligated for purchase obligations in 2009 and 2010 for approximately $1.1 million, including $0.7 million for software maintenance and support fees, $0.1 million for professional organization memberships, $0.2 million for recruiting services, and $0.1 million for equipment.

E The Company is committed for deferred compensation benefits in the U.S. under two plans. The Executive Supplemental Benefit Plan (ESBP) provides certain former key executives with deferred compensation benefits. The ESBP was amended as of November 30, 1994 to freeze benefits for participants at that time. Currently, 14 individuals are receiving benefits under this plan. The ESBP is deemed to be unfunded as the Company has not specifically identified Company assets to be used to discharge the deferred compensation benefit liabilities.

The Company also has a non-qualified defined-contribution deferred compensation plan for certain key executives. Contributions to this plan in 2008 were $0.4 million. The Company anticipates making contributions totaling approximately $0.3 million in 2009 to this plan for amounts earned in 2008.

F The Company retained a contributory defined-benefit plan for its previous employees located in The Netherlands when the Company disposed of its subsidiary, CTG Nederland B.V. This plan was curtailed on January 1, 2003 for additional contributions. As this plan is fully funded at December 31, 2008, the Company does not anticipate making additional payments to fund the plan in future years.

G The Company has other long-term liabilities including payments for a postretirement benefit plan.

Item 7A. Quantitative and Qualitative Disclosure about Market Risk

The Company’s primary market risk exposures consist of interest rate risk associated with variable rate borrowings and foreign currency exchange risk associated with the Company’s European operations.

In February 2008, the Company entered into an amendment of its Credit Agreement which extended the expiration date of the agreement to April 2011. This Credit Agreement allows the Company to borrow up to $35 million based upon available collateral. At both December 31, 2008 and 2007, there were no amounts outstanding under the Credit Agreement. However, at December 31, 2008, there was $0.5 million outstanding under letters of credit under the Credit Agreement, whereas at December 31, 2007 there was $0.4 million outstanding.

The maximum amounts outstanding under the Company’s Credit Agreements during 2008, 2007, and 2006 were $13.8 million, $13.7 million, and $23.9 million, respectively. Average bank borrowings outstanding for the years 2008, 2007, and 2006 were $3.8 million, $5.0 million, and $6.6 million, respectively, and carried weighted-average interest rates of 5.0%, 7.0%, and 7.8%, respectively. Accordingly, during 2008, a one percent increase in the weighted-average interest rate would have cost the Company an additional $38,000. The Company incurred commitment fees totaling approximately $0.1 million in each of 2008, 2007 and 2006 relative to the agreements.

During 2008, revenue was affected by the year-over-year foreign currency exchange rate changes of Belgium, the United Kingdom, Luxembourg and Germany, which are the countries in which the Company’s European subsidiaries operate. In Belgium, Luxembourg and Germany, the functional currency is the Euro, while

27

in the United Kingdom, the functional currency is the British pound. Had there been no change in these exchange rates from the 2007 to 2008, total European revenue would have been approximately $4.3 million lower in 2008, or $73.9 million as compared with the $78.2 million reported. Operating income in Europe increased by approximately $0.1 million due to the year-over-year exchange rate changes in these countries. Additionally, the Company recorded a net exchange gain on intercompany balances totaling approximately $0.5 million on balances settled during 2008 and those balances outstanding between its subsidiaries at December 31, 2008. The Company has historically not used any market risk sensitive instruments to hedge its foreign currency exchange risk. The Company believes the market risk related to intercompany balances in future periods will not have a material affect on its results of operations.

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Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Computer Task Group, Incorporated:

We have audited the accompanying consolidated balance sheets of Computer Task Group, Incorporated and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2008. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements 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 Computer Task Group, Incorporated and subsidiaries as of December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Computer Task Group, Incorporated’s internal control over financial reporting as of December 31, 2008, 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 February 25, 2009 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ KPMG LLP

Buffalo, New York

February 25, 2009

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Consolidated Statements of Income

Year ended December 31,	2008			2007			2006
(amounts in thousands, except per-share data)
Revenue	$	353,213		$	325,285		$	327,253
Direct costs		274,533			252,889			253,101
Selling, general, and administrative expenses		65,598			65,872			67,298
Operating income		13,082			6,524			6,854
Gain on investments		—			650			—
Interest and other income		968			298			204
Interest and other expense		(712	)		(663	)		(909	)
Income before income taxes		13,338			6,809			6,149
Provision for income taxes		5,501			2,563			2,654
Net income	$	7,837		$	4,246		$	3,495
Net income per share
Basic	$	0.51		$	0.26		$	0.21
Diluted	$	0.49		$	0.25		$	0.21

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

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Consolidated Balance Sheets

December 31,	2008			2007
(amounts in thousands, except share balances)
Assets
Current Assets:
Cash and cash equivalents	$	10,973		$	4,290
Accounts receivable, net of allowances of $1,005 and $955 in 2008 and 2007, respectively		49,152			52,314
Prepaid and other current assets		2,272			3,278
Deferred income taxes		1,538			1,350
Total current assets		63,935			61,232
Property and equipment, net of accumulated depreciation of $21,874 and $28,899 in 2008 and 2007, respectively		6,767			5,741
Goodwill		35,678			35,678
Deferred income taxes		4,667			5,108
Other assets		4,231			4,098
Investments		562			604
Total assets	$	115,840		$	112,461
Liabilities And Shareholders’ Equity
Current Liabilities:
Accounts payable	$	8,247		$	10,109
Accrued compensation		24,574			21,299
Advance billings on contracts		1,431			908
Other current liabilities		4,802			4,988
Income taxes payable		107			717
Total current liabilities		39,161			38,021
Deferred compensation benefits		8,312			8,396
Other long-term liabilities		733			965
Total liabilities		48,206			47,382
Shareholders’ Equity:
Common stock, par value $.01 per share, 150,000,000 shares authorized; 27,017,824 shares issued		270			270
Capital in excess of par value		112,111			111,911
Retained earnings		57,236			49,481
Less: Treasury stock of 8,635,687 and 7,912,736 shares at cost, respectively		(42,970	)		(39,257	)
Stock Trusts of 3,363,335 and 3,377,217 shares at cost, respectively		(55,083	)		(55,142	)
Accumulated other comprehensive loss		(3,930	)		(2,184	)
Total shareholders’ equity		67,634			65,079
Total liabilities and shareholders’ equity	$	115,840		$	112,461

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

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Consolidated Statements of Cash Flows

Year ended December 31,	2008			2007			2006
(amounts in thousands)
Cash flows from operating activities:
Net income	$	7,837		$	4,246		$	3,495
Adjustments:
Depreciation expense		1,986			2,425			2,596
Equity-based compensation expense		991			863			856
Deferred income taxes		296			(261	)		316
Deferred compensation		481			1,340			(27	)
Gain on investments		—			(650	)		—
Loss on sales of property and equipment		53			—			6
Changes in assets and liabilities:
Decrease in accounts receivable		1,872			2,165			21,076
(Increase) decrease in prepaid and other current assets		920			(454	)		(640	)
Increase in other assets		(203	)		(1,295	)		(481	)
Increase (decrease) in accounts payable		(770	)		1,029			243
Increase (decrease) in accrued compensation		3,767			(2,655	)		404
Increase (decrease) in advance billings on contracts		518			(1,149	)		722
Increase (decrease) in other current liabilities		(110	)		(289	)		196
Increase (decrease) in income taxes payable		(880	)		225			314
Decrease in other long-term liabilities		(151	)		(232	)		(288	)
Net cash provided by operating activities		16,607			5,308			28,788
Cash flows from investing activities:
Additions to property and equipment		(3,148	)		(2,142	)		(1,830	)
Proceeds from sales of investments		—			809			—
Deferred compensation plan investments		(141	)		(113	)		—
Proceeds from insurance claim		—			187			—
Proceeds from sales of property and equipment		19			6			6
Net cash used in investing activities		(3,270	)		(1,253	)		(1,824	)
Cash flows from financing activities:
Payments on long-term revolving debt, net		—			—			(23,150	)
Change in cash overdraft, net		(687	)		(1,110	)		(387	)
Proceeds from Employee Stock Purchase Plan		121			129			147
Purchase of stock for treasury		(5,713	)		(4,415	)		(2,185	)
Proceeds from other stock plans		834			445			514
Excess tax benefits from equity-based compensation		99			45			114
Net cash used in financing activities		(5,346	)		(4,906	)		(24,947	)
Effect of exchange rate changes on cash and cash equivalents		(1,308	)		383			493
Net increase (decrease) in cash and cash equivalents		6,683			(468	)		2,510
Cash and cash equivalents at beginning of year		4,290			4,758			2,248
Cash and cash equivalents at end of year	$	10,973		$	4,290		$	4,758

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

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Consolidated Statements of Changes in Shareholders’ Equity

	Common Stock			Capital in Excess of Par Value			Retained Earnings		Treasury Stock					Stock Trusts					Accumulated Other Comprehensive Income (loss)			Total Shareholders’ Equity
	Shares	Amount							Shares		Amount			Shares		Amount
(amounts in thousands)
Balance as of December 31, 2005	27,018	$	270	$	111,172		$	41,740	6,526		$	(32,811	)	3,940		$	(57,542	)	$	(5,338	)	$	57,491
Employee Stock Purchase Plan share issuance	—		—		(2	)		—	—			—		(35	)		149			—			147
Stock Option Plan share issuance	—		—		(274	)		—	—			—		(185	)		788			—			514
Excess tax benefits from equity-based compensation	—		—		113			—	—			—		—			—			—			113
Restricted stock issuance/forfeiture	—		—		(407	)		—	2			(9	)	(97	)		416			—			—
Purchase of stock	—		—		—			—	492			(2,185	)	—			—			—			(2,185	)
Equity-based compensation	—		—		856			—	—			—		—			—			—			856
Pension loss adjustment, net of tax	—		—		—			—	—			—		—			—			(151	)		(151	)
Comprehensive income (loss):
Net income	—		—		—			3,495	—			—		—			—			—			3,495
Foreign currency adjustment	—		—		—			—	—			—		—			—			1,183			1,183
Minimum pension liability adjustment, net of tax	—		—		—			—	—			—		—			—			174			174
Unrealized loss on investments, net of tax	—		—		—			—	—			—		—			—			(6	)		(6	)
Total comprehensive income	—		—		—			3,495	—			—		—			—			1,351			4,846
Balance as of December 31, 2006	27,018		270		111,458			45,235	7,020			(35,005	)	3,623			(56,189	)		(4,138	)		61,631
Employee Stock Purchase Plan share issuance	—		—		10			—	—			—		(28	)		119			—			129
Stock Option Plan share issuance	—		—		(100	)		—	3			(14	)	(131	)		559			—			445
Excess tax benefits from equity-based compensation	—		—		45			—	—			—		—			—			—			45
Restricted stock plan share issuance/forfeiture	—		—		(339	)		—	7			(30	)	(87	)		369			—			—
Deferred compensation plan share issuance	—		—		(26	)		—	(42	)		207		—			—			—			181
Purchase of stock	—		—		—			—	925			(4,415	)	—			—			—			(4,415	)
Equity-based compensation	—		—		863			—	—			—		—			—			—			863
Comprehensive income (loss):
Net income	—		—		—			4,246	—			—		—			—			—			4,246
Foreign currency adjustment	—		—		—			—	—			—		—			—			1,258			1,258
Pension loss adjustment, net of tax	—		—		—			—	—			—		—			—			1,072			1,072
Unrealized gain on investments, net of tax	—		—		—			—	—			—		—			—			(376	)		(376	)
Total comprehensive income	—		—		—			4,246	—			—		—			—			1,954			6,200
Balance as of December 31, 2007	27,018		270		111,911			49,481	7,913			(39,257	)	3,377			(55,142	)		(2,184	)		65,079

(continued on next page)

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Consolidated Statements of Changes in Shareholders’ Equity (continued)

	Common Stock			Capital in Excess of Par Value			Retained Earnings			Treasury Stock					Stock Trusts					Accumulated Other Comprehensive Income (loss)			Total Shareholders’ Equity
	Shares	Amount								Shares		Amount			Shares		Amount
(amounts in thousands)
Adoption of EITF 06-04	—		—		—			(82	)	—			—		—			—			—			(82	)
Employee Stock Purchase Plan share issuance	—		—		(4	)		—		(18	)		93		(6	)		32			—			121
Stock Option Plan share issuance	—		—		(220	)		—		(209	)		1,027		(8	)		27			—			834
Excess tax benefits from equity-based compensation	—		—		99			—		—			—		—			—			—			99
Restricted stock plan share issuance/forfeiture	—		—		(588	)		—		(118	)		588		—			—			—			—
Deferred compensation plan share issuance	—		—		(78	)		—		(59	)		292		—			—			—			214
Purchase of stock	—		—		—			—		1,127			(5,713	)	—			—			—			(5,713	)
Equity-based compensation	—		—		991			—		—			—		—			—			—			991
Comprehensive income (loss):
Net income	—		—		—			7,837		—			—		—			—			—			7,837
Foreign currency adjustment	—		—		—			—		—			—		—			—			(1,921	)		(1,921	)
Pension loss adjustment, net of tax	—		—		—			—		—			—		—			—			175			175
Total comprehensive income (loss)	—		—		—			7,837		—			—		—			—			(1,746	)		6,091
Balance as of December 31, 2008	27,018	$	270	$	112,111		$	57,236		8,636		$	(42,970	)	3,363		$	(55,083	)	$	(3,930	)	$	67,634

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

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Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The consolidated financial statements include the accounts of Computer Task Group, Incorporated, and its subsidiaries (the Company or CTG), located primarily in North America and Europe. There are no unconsolidated entities, or off-balance sheet arrangements. All inter-company accounts and transactions have been eliminated. Certain amounts in the prior period’s consolidated financial statements have been reclassified to conform to the current year presentation. Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with U.S. generally accepted accounting principles. Such estimates primarily relate to the valuation of goodwill, valuation allowances for deferred tax assets, actuarial assumptions including discount rates and expected rates of return, as applicable, for the Company’s defined benefit and postretirement benefit plans, the allowance for doubtful accounts receivable, assumptions underlying stock option valuation, investment valuation, legal matters, other contingencies and estimates of progress toward completion and direct profit or loss on contracts. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions. Actual results could differ from those estimates.

The Company operates in one industry segment, providing IT services to its clients. These services include IT Solutions and IT Staffing. CTG provides these primary services to all of the markets that it serves. The services provided typically encompass the IT business solution life cycle, including phases for planning, developing, implementing, managing, and ultimately maintaining the IT solution. A typical customer is an organization with large, complex information and data processing requirements. The Company promotes a significant portion of its services through three vertical market focus areas: Technology Service Providers, Healthcare (which includes services provided to healthcare providers, health insurers, and life sciences companies) and Financial Services. The Company focuses on these three vertical areas as it believes that these areas are either higher growth markets than the general IT services market and the general economy, or are areas that provide greater potential for the Company’s growth due to the size of the vertical market. The remainder of CTG’s revenue is derived from general markets.

CTG’s revenue by vertical market for the years ended December 31, 2008, 2007 and 2006 is as follows:

	2008		2007		2006
Technology service providers	34	%	34	%	39	%
Healthcare	26	%	26	%	25	%
Financial services	8	%	11	%	10	%
General markets	32	%	29	%	26	%
Total	100	%	100	%	100	%

Revenue and Cost Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, when the services have been rendered, when the price is determinable, and when collectibility of the amounts due is reasonably assured. For time-and-material contracts, revenue is recognized as hours are incurred and costs are expended. For contracts with periodic billing schedules, primarily monthly, revenue is recognized as services are rendered to the customer. Revenue for fixed price contracts is recognized as per the proportional method of accounting using an input-based approach whereby salary and indirect labor costs incurred are measured and compared with the total estimate of costs of such items at completion for a project. Revenue is recognized based upon the percentage of completion calculation of total incurred costs to total estimated costs. The Company infrequently works on fixed-price projects that include significant amounts of material or other non-labor related costs which could distort the

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percent complete within a percentage-of-completion calculation. The Company’s estimate of the total labor costs it expects to incur over the term of the contract is based on the nature of the project and our past experience on similar projects, and includes management judgments and estimates which affect the amount of revenue recognized on fixed-price contracts in any accounting period.

The Company’s revenue from contracts accounted for under time-and-material, progress billing, and percentage-of-completion methods for the years ended December 31, 2008, 2007 and 2006 is as follows:

	2008		2007		2006
Time-and-material	90	%	88	%	90	%
Progress billing	7	%	8	%	6	%
Percentage-of-completion	3	%	4	%	4	%
Total	100	%	100	%	100	%

As required, the Company includes billable expenses in its accounts as both revenue and direct costs. These billable expenses totaled $8.6 million, $7.9 million, and $9.4 million in 2008, 2007 and 2006, respectively.

Selling, general, and administrative costs are charged to expense as incurred.

Bad debt expense, net of recoveries was approximately $0.1 million, $0.2 million, and $0.0 in 2008, 2007 and 2006, respectively.

Restricted Cash

At December 31, 2008, the Company has restricted use of approximately $0.4 million of its cash and cash equivalents as the funds are held as a guarantee by a financial institution for leased office space.

Fair Value

In September 2006, the Financial Accounting Standards Board (FASB) issued Financial Accounting Standard (FAS) 157, “Fair Value Measurements.” In February 2008, the FASB issued FASB Staff Position 157-2, “Effective Date of FASB Statement No. 157,” which provided a one-year deferral of the effective date of FAS 157 for non-financial assets and liabilities (such as goodwill), except those that are recognized or disclosed in the Company’s financial statements at fair value at least annually. Accordingly, the Company adopted the provisions of FAS 157 only for its financial assets and liabilities effective January 1, 2008. FAS 157 defines fair value as the exchange price that would be received for an asset or paid for a liability in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants.

The FAS describes a fair value hierarchy based upon three levels of input, which are:

Level 1—quoted prices in active markets for identical assets or liabilities (observable)

Level 2—inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in inactive markets, or other inputs that are observable or can be supported by observable market data for essentially the full term of the asset or liability (observable)

Level 3—unobservable inputs that are supported by little or no market activity, but are significant to determining the fair value of the asset or liability (unobservable)

The adoption of FAS 157, which the Company applied to its investments balances, had no impact on the Company’s consolidated results of operations or financial condition.

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Effective January 1, 2008, the Company adopted FAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” This FAS allows an entity to elect an irrevocable option to measure, on a contract by contract basis, specific financial instruments and certain other items that are currently not being measured at fair value. The Company did not elect to apply the fair value provisions of this standard for any specific contracts during the year ended December 31, 2008.

At December 31, 2008 and 2007, the carrying amounts of the Company’s cash and cash equivalents ($11.0 million and $4.3 million, respectively) approximated fair value.

Investments

The Company’s investments consist of mutual funds which are allocated to the Computer Task Group, Incorporated Non-qualified Key Employee Deferred Compensation Plan. At December 31, 2008, the Company’s investment balances for this plan, which are classified as trading securities, totaled $0.6 million. These investment balances are measured at fair value, and the fair value was determined using Level 1 (see “Fair Value” in note 1) inputs. These investments totaled $0.6 million at December 31, 2007 and were also classified as trading securities.

Unrealized gains and losses on these securities are recorded in earnings, and were nominal in 2008, 2007 and 2006. All other investments consisting of equity securities were sold during 2007 for a gain of approximately $0.6 million.

Property and Equipment

Property and equipment are generally stated at historical cost less accumulated depreciation. Depreciation is computed using the straight-line method based on estimated useful lives of one year to 30 years, and begins after an asset has been put into service. The cost of property or equipment sold or otherwise disposed of, along with related accumulated depreciation, is eliminated from the accounts, and the resulting gain or loss, if any, is reflected in current earnings. Maintenance and repairs are charged to expense when incurred, while significant improvements to existing assets are capitalized.

The Company accounts for capitalized software costs under either Statement of Position (SOP) 98-1 “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use,” or FAS 86 “Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed,” according to the intended use of the software. At December 31, 2008, the Company has capitalized a total of approximately $1.4 million for two projects under SOP 98-1 and $0.1 million for one project under FAS 86. During 2008, the Company began to amortize the project accounted for under FAS 86 as it is complete. Amortization for this project totaled less than $0.1 million at December 31, 2008. The capitalized portion of these balances is included in the “software” balance in note 2, “Property and Equipment.”

Leases

The Company is obligated under a number of long-term operating leases primarily for the rental of office space, office equipment and automobiles based in Europe. In instances where the Company has negotiated leases that contain rent holidays or escalation clauses, the expense for those leases is recognized monthly on a straight line basis over the term of the lease.

Goodwill

The Company has goodwill on its books which originated from the purchase in 1999 of a healthcare information technology provider. The goodwill balance of $35.7 million is evaluated annually as of the Company’s October fiscal month-end, or more frequently if facts and circumstances indicate impairment may

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exist. This evaluation, as applicable, is based on estimates and assumptions that may be used to analyze the appraised value of similar transactions from which the goodwill arose, the appraised value of similar companies, or estimates of future discounted cash flows. The estimates and assumptions on which the Company’s evaluations are based involve judgments and are based on currently available information, any of which could prove wrong or inaccurate when made, or become wrong or inaccurate as a result of subsequent events.

At the respective measurement dates for 2008, 2007, and 2006, with the assistance of an independent appraisal company, the Company completed its annual valuation of the business to which the Company’s goodwill relates. The valuations indicated that the estimated fair value of the business exceeded the carrying value of the business in each period. Additionally, given the declining market conditions during 2008, the Company reviewed its goodwill balance at December 31, 2008 to determine if a triggering event may have occurred which would be an indication of a potential impairment. The Company’s review included analyzing the enterprise value of the consolidated company and reconciling it to the carrying value of the Company’s business units, including the business unit to which the goodwill relates. The Company also updated the future forecasts and the estimate of the future discounted cash flow analysis for this business unit. In both of these instances, the estimated fair value of the business continued to exceed the carrying value of the business at December 31, 2008. Accordingly, the Company determined that there was no triggering event, and therefore no indication of impairment existed at December 31, 2008. Accordingly, there are no facts or circumstances that arose during 2008, 2007 or 2006 that led management to believe the goodwill was impaired.

Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of by sale are reported at the lower of the carrying amount or fair value less costs to sell. The Company does not have any long-lived assets that are impaired or that it intends to dispose of at December 31, 2008.

Income Taxes

The Company provides for deferred income taxes for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. In assessing the realizability of deferred tax assets, management considers within each tax jurisdiction, whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax-planning strategies in making this assessment.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in tax expense.

Equity-Based Compensation

The Company records the fair value of equity-based compensation expense for all equity-based compensation awards granted subsequent to January 1, 2006, and for the unvested portion of previously granted awards outstanding as of that date. The calculated fair value cost of its equity-based compensation awards are recognized in the Company’s income statement over the period in which an employee or director is required to provide the services for the award. Compensation cost is not recognized for employees or directors that do not render the requisite services. The Company recognized the expense for equity-based compensation in its 2008, 2007 and 2006 statements of income on a straight-line basis based upon awards that are ultimately expected to vest. See note 9, “Equity-Based Compensation.”

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Net Income Per Share

Basic and diluted earnings per share (EPS) for the years ended December 31, 2008, 2007, and 2006 are as follows:

For the year ended	Net Income		Weighted Average Shares	Earnings per Share
(amounts in thousands, except per-share data)
December 31, 2008
Basic EPS	$	7,837	15,328	$	0.51
Dilutive effect of outstanding equity instruments		—	550		(0.02	)
Diluted EPS	$	7,837	15,878	$	0.49
December 31, 2007
Basic EPS	$	4,246	16,181	$	0.26
Dilutive effect of outstanding equity instruments		—	473		(0.01	)
Diluted EPS	$	4,246	16,654	$	0.25
December 31, 2006
Basic EPS	$	3,495	16,417	$	0.21
Dilutive effect of outstanding equity instruments		—	328		—
Diluted EPS	$	3,495	16,745	$	0.21

Weighted-average shares represent the average number of issued shares less treasury shares and shares held in the Stock Trusts, and for the basic EPS calculations, unvested restricted stock.

Certain options representing 2.0 million, 1.7 million, and 1.8 million shares of common stock were outstanding at December 31, 2008, 2007, and 2006, respectively, but were not included in the computation of diluted earnings per share as their effect on the computation would have been anti-dilutive.

Foreign Currency

The functional currency of the Company’s foreign subsidiaries is the applicable local currency. The translation of the applicable foreign currencies into U.S. dollars is performed for assets and liabilities using current exchange rates in effect at the balance sheet date, for equity accounts using historical exchange rates, and for revenue and expense activity using the applicable month’s average exchange rates. The Company recorded gains totaling approximately $0.5 million in 2008, and $0 in 2007 and 2006 from foreign currency transactions for balances settled during the year and those balances outstanding between its subsidiaries at year-end.

Cash and Cash Equivalents, and Cash Overdrafts

For purposes of the statement of cash flows, cash and cash equivalents are defined as cash on hand, demand deposits, and short-term, highly liquid investments with a maturity of three months or less. Total cash equivalents at December 31, 2008 and 2007 totaled $7.7 million and $0.6 million, respectively and consisted of overnight interest-bearing deposits. Additionally, as the Company does not fund its bank accounts for the checks it has written until the checks are presented to the bank for payment, the change in cash overdraft, net represents the increase or decrease in outstanding checks year-over-year.

Taxes Collected from Customers

In instances where the Company collects taxes from its customers for remittance to governmental authorities, primarily in its European operations, revenue is not recorded as such taxes are recorded and presented on a net basis.

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Accumulated Other Comprehensive Loss

The components that make up accumulated other comprehensive loss on the consolidated balance sheets at December 31, 2008, 2007, and 2006 are as follows:

	2008			2007			2006
(amounts in thousands)
Foreign currency adjustment	$	(3,701	)	$	(1,780	)	$	(3,038	)
Pension loss adjustment, net of tax of $369 in 2008, $458 in 2007 and $950 in 2006		(229	)		(404	)		(1,476	)
Unrealized gain on investments, net of tax of $239 in 2006		—			—			376
	$	(3,930	)	$	(2,184	)	$	(4,138	)

For the years ended December 31, 2008, 2007 and 2006, the net tax expense associated with the pension loss adjustment, net was $0.1 million, $0.5 million and $0.1 million, respectively.

Postretirement Benefit Obligations Resulting from Insurance Contracts

In 2006, the Emerging Issues Task Force (EITF) issued EITF 06-04, “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements.” This EITF requires an entity to account for the liability for the cost of insurance related to the purchase of endorsement split-dollar life insurance arrangements for employees where the policy remains in place after the employee’s retirement. The Company adopted this EITF on January 1, 2008. The Company has several endorsement split-dollar life insurance policies for former executives that continued post employment. As required by the EITF, the Company calculated and recorded the present value of the postretirement benefit obligation as an adjustment to retained earnings as of January 1, 2008. This cumulative effect adjustment totaled approximately $82,000.

Recent Accounting Pronouncements

In February 2008, the FASB issued FASB Staff Position 157-2, “Effective Date of FASB Statement 157,” (FSP 157-2) which provides a one year deferral of the effective date of FAS 157 for non-financial assets and liabilities (such as goodwill), except those that are recognized or disclosed in the Company’s financial statements at fair value at least annually. The effective date of FSP 157-2 for the Company is the first quarter of 2009. Although the Company is currently evaluating the effect that the adoption of FSP 157-2 will have on its financial condition or results of operations, it does not believe the impact, if any, will be material.

In December 2008, the FASB issued FASB Staff Position (FSP) FAS 132 (R)—1, “Employers’ Disclosures about Postretirement Benefit Plan Assets,” which amends FASB Statement No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. These disclosures include how investment allocation decisions are made, including the factors that are pertinent to an understanding of investment policies and strategies, the major categories of plan assets, the inputs and valuation techniques used to measure the fair value of plan assets, the effect of fair value measurements using significant unobservable inputs (Level 3) on changes in plan assets for the period, and significant concentrations of risk within plan assets. The disclosures about plan assets required by this FSP are required for fiscal years ending after December 15, 2009.

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2. Property and Equipment

Property and equipment at December 31, 2008 and 2007 are summarized as follows:

December 31,	Useful Life	2008			2007
(amounts in thousands)	(years)
Land	—	$	378		$	378
Buildings	30		4,441			4,423
Equipment	2-5		10,328			12,221
Furniture	5-10		4,048			4,926
Software	1-5		6,131			8,751
Leasehold improvements	3-10		3,315			3,941
			28,641			34,640
Less accumulated depreciation			(21,874	)		(28,899	)
		$	6,767		$	5,741

During 2007, the Company received approximately $0.2 million in insurance proceeds related to damage to its corporate headquarters.

3. Debt

During February 2008, prior to its expiration, the Company entered into an amendment of its existing Credit Agreement which extended the term by three years. The Credit Agreement allows the Company to borrow up to $35 million, has a term of three years, and expires in April 2011. The Credit Agreement has interest rates ranging from 0 to 75 basis points over the prime rate and 150 to 225 basis points over LIBOR, and provides certain of the Company’s assets as security for outstanding borrowings. The Company is required to meet certain financial covenants in order to maintain borrowings under the Credit Agreement, pay dividends, and make acquisitions. At December 31, 2008 and 2007, there were no amounts outstanding under this Credit Agreement, and the Company was in compliance with these covenants. There was $0.5 million and $0.4 million, respectively, assigned to letters of credit under this Credit Agreement at December 31, 2008 and 2007.

The maximum amounts outstanding under the Credit Agreement during 2008, 2007, and 2006 were $13.8 million, $13.7 million, and $23.9 million, respectively. Average bank borrowings outstanding for the years 2008, 2007, and 2006 were $3.8 million, $5.0 million, and $6.6 million, respectively, and carried weighted-average interest rates of 5.0%, 7.0%, and 7.8%, respectively. The Company incurred commitment fees totaling approximately $0.1 million in each of 2008, 2007 and 2006 relative to the Credit Agreement.

Interest paid during 2008, 2007, and 2006 totaled $0.2 million, $0.4 million, and $0.6 million, respectively.

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4. Income Taxes

The provision for income taxes for 2008, 2007, and 2006 consists of the following:

	2008			2007			2006
(amounts in thousands)
Domestic and foreign components of income before income taxes are as follows:
Domestic	$	11,798		$	6,438		$	4,769
Foreign		1,540			371			1,380
	$	13,338		$	6,809		$	6,149
The provision (benefit) for income taxes consists of:
Current tax:
U.S. federal	$	3,344		$	1,753		$	1,208
Foreign		1,191			792			922
U.S. state and local		670			279			208
		5,205			2,824			2,338
Deferred tax:
U.S. federal		(215	)		(132	)		(179	)
Foreign		357			(8	)		353
U.S. state and local		154			(121	)		142
		296			(261	)		316
	$	5,501		$	2,563		$	2,654
The effective and statutory income tax rate can be reconciled as follows:
Tax at statutory rate of 34%	$	4,535		$	2,315		$	2,091
State tax, net of federal benefits		560			289			180
Benefit of state net operating losses previously offset by valuation allowances		(27	)		(185	)		3
Non-taxable income		(606	)		(783	)		(687	)
Non-deductible expenses		919			982			934
Change in estimate primarily related to foreign taxes		407			—			135
Change in estimate primarily related to state taxes and tax reserves		(128	)		65			91
Benefit of foreign net operating losses previously offset by valuation allowances		(56	)		(60	)		(17	)
Tax credits		(79	)		—			—
Other, net		(24	)		(60	)		(76	)
	$	5,501		$	2,563		$	2,654
Effective income tax rate		41.2	%		37.6	%		43.2	%

The Company’s effective tax rate (ETR) is calculated quarterly based upon current assumptions relating to the full years’ estimated operating results, and various tax related items. The Company’s normal ETR is approximately 38 to 42%. The 2008 ETR was 41.2%. The 2008 ETR was affected by an addition to the valuation allowance for net operating losses in foreign countries of approximately $0.4 million, offset by a reduction in the Company’s tax reserves of approximately $0.1 million and Federal income tax credits of approximately $0.1 million. The 2007 ETR was 37.6%, as the Company decreased the valuation allowance for the net operating loss for U.S. state jurisdictions by approximately $0.2 million, which was offset by adding approximately $0.1 million to its tax reserves due to changes in estimate of recoverability.

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The Company’s deferred tax assets and liabilities at December 31, 2008 and 2007 consist of the following:

December 31,	2008			2007
(amounts in thousands)
Assets
Deferred compensation	$	3,895		$	3,709
Loss carryforwards		2,661			2,954
Accruals deductible for tax purposes when paid		702			512
Depreciation		98			329
Allowance for doubtful accounts		250			300
Amortization		441			560
State taxes		612			669
Gross deferred tax assets		8,659			9,033
Deferred tax asset valuation allowance		(2,454	)		(2,492	)
Gross deferred tax assets less valuation allowance		6,205			6,541
Liabilities
Accrued income not recognized for tax		(286	)		(336	)
Other		(100	)		—
Gross deferred tax liabilities		(386	)		(336	)
Net deferred tax assets	$	5,819		$	6,205
Net deferred assets and liabilities are recorded as follows:
Net current assets	$	1,538		$	1,350
Net non-current assets		4,667			5,108
Net current liabilities		(99	)		—
Net non-current liabilities		(287	)		(253	)
Net deferred tax assets	$	5,819		$	6,205

At December 31, 2008, net current liabilities and net non-current liabilities are recorded on the consolidated balance sheet in other current liabilities and other long-term liabilities, respectively. In assessing the realizability of deferred tax assets, management considers, within each taxing jurisdiction, whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Factors that may affect the Company’s ability to achieve sufficient forecasted taxable income in future periods may include, but are not limited to, the following: increased competition, a decline in sales or margins, a loss of market share, the availability of qualified professional staff, and a decrease in demand for IT services. Based upon the levels of historical taxable income and projections for future taxable income over the years in which the deferred tax assets are deductible, at December 31, 2008, management believes that it is more likely than not that the Company will realize the benefits, net of the established valuation allowance, of these deferred tax assets in the future.

The Company has various state net operating loss carryforwards totaling approximately $6.1 million. These state net operating losses have a carryforward period of 5 to 20 years and begin to expire in 2009. The Company also has a Canadian net operating loss carryforward of $0.2 million which begins to expire in 2009. The Netherlands net operating loss carryforward of $8.6 million begins to expire in 2011, while in the United Kingdom the net operating loss carryforward is approximately $0.4 million, and has no expiration date.

At December 31, 2008, the Company has a deferred tax asset before the valuation allowance resulting from net operating losses in various states of approximately $0.3 million, in The Netherlands of approximately $2.2 million, and approximately $0.2 million in various other countries where it does business. Management of the

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Company has analyzed each jurisdiction’s tax position, including forecasting potential taxable income in future years, and the expiration of the net operating loss carryforwards as applicable, and determined that it is unclear whether all of the deferred tax asset totaling $2.7 million will be realized at any point in the future. Accordingly, at December 31, 2008, the Company has offset a portion of the asset with a valuation allowance totaling $2.4 million, resulting in a net deferred tax asset from net operating loss carryforwards of approximately $0.3 million. During 2008, the valuation allowance decreased by less than $0.1 million net, due to a variety of factors including foreign currency changes in The Netherlands of $0.1 million and $0.1 million related to the establishment of a net operating loss valuation allowance in certain foreign jurisdictions.

The Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (Interpretation 48) on January 1, 2007. Upon implementation of Interpretation 48, the Company was not required to recognize any increase in its liability for unrecognized tax benefits.

The Company files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years prior to 2004.

A reconciliation of unrecognized tax benefits for 2007 and 2008 is as follows:

(amounts in thousands)
Balance at January 1, 2007	$	247
Additions based on tax positions related to the current year		96
Reductions for lapse of statute of limitations		(29	)
Settlements		(25	)
Balance at December 31, 2007	$	289
Additions based on tax positions related to the current year		29
Additions for tax positions of prior years		7
Reductions for lapse of statute of limitations		(47	)
Settlements		(211	)
Balance at December 31, 2008	$	67

The balance at December 31, 2008 of $67,000 represents gross unrecognized tax benefits that if recognized would impact the Company’s effective tax rate. No significant increase or decrease in the total amount of unrecognized tax benefits is expected within the next twelve months.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in tax expense. As of the date of adoption, the Company had accrued approximately $15,000 in interest and penalties, as applicable. At December 31, 2008, the Company had approximately $7,000 (less the associated tax benefit) accrued for the payment of interest and penalties, as applicable.

The Company has established reserves for tax contingencies based upon the probable outcome of tax positions taken for financial statement purposes compared with positions taken on the Company’s tax returns. The Company reviews its tax-contingency reserves on a quarterly basis to ensure they are appropriately stated. Such reviews include consideration of factors such as the cause of the action, the degree of probability of an unfavorable outcome, the Company’s ability to estimate the liability, and the timing of the liability and how it will impact the Company’s other tax attributes. At December 31, 2008, the Company believes it has adequately provided for its tax-related liabilities.

Undistributed earnings of the Company’s foreign subsidiaries were minimal at December 31, 2008, and are considered to be indefinitely reinvested. Accordingly, no provision for U.S. federal and state income taxes has been provided thereon. Upon distribution of these earnings in the form of dividends or otherwise, the Company

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would be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries. In the event that the foreign entities’ earnings were distributed, it is estimated that U.S. federal and state income taxes, net of foreign credits, would be immaterial.

In 2008, 2007, and 2006, 140,000, 131,000, and 185,000 shares of common stock, respectively, were issued through the exercise of non-qualified stock options or through the disqualifying disposition of incentive stock options. The tax benefit to the Company from these transactions, which was credited to capital in excess of par value rather than recognized as a reduction of income tax expense, was $99,000, $45,000, and $113,000 in 2008, 2007, and 2006, respectively. These tax benefits have also been recognized in the consolidated balance sheets as a reduction of income taxes payable.

Net income tax payments during 2008, 2007, and 2006 totaled $4.3 million, $1.7 million, and $1.8 million, respectively.

5. Lease Commitments

At December 31, 2008, the Company was obligated under a number of long-term operating leases. Minimum future obligations under such leases are summarized as follows:

Year ending December 31,
(amounts in thousands)
2009	$	6,035
2010		4,515
2011		2,808
2012		1,512
2013		673
Later years		2,902
Minimum future obligations	$	18,445

The operating lease obligations relate to the rental of office space, office equipment, and automobiles leased in Europe. Total rental expense under such operating leases for 2008, 2007, and 2006 was approximately $8.1 million, $7.4 million, and $6.3 million, respectively.

6. Deferred Compensation Benefits

The Company maintains a non-qualified defined-benefit Executive Supplemental Benefit Plan (ESBP) that provides certain former key executives with deferred compensation benefits, based on years of service and base compensation, payable during retirement. The plan was amended as of November 30, 1994, to freeze benefits for participants at that time.

Net periodic pension cost for the years ended December 31, 2008, 2007, and 2006 for the ESBP is as follows:

Net Periodic Pension Cost—ESBP	2008		2007		2006
(amounts in thousands)
Interest cost	$	510	$	488	$	493
Amortization of actuarial loss		66		99		118
Net periodic pension cost	$	576	$	587	$	611

The Company also retained a contributory defined-benefit plan for its previous employees located in The Netherlands (NDBP) when the Company disposed of its subsidiary, CTG Nederland, B.V. Benefits paid are a function of a percentage of career average pay. This plan was curtailed for additional contributions in January 2003.

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In September 2006, the FASB issued FAS 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” (FAS 158). FAS 158 required the Company to recognize the overfunded or underfunded status of its defined benefit plans as either assets or liabilities, as applicable, in its consolidated balance sheets. The Company adopted these provisions of FAS 158 for its defined benefit plans for the year ended December 31, 2006. As of December 31, 2008, the FAS required the Company to measure the funded status of its defined benefit plans as of the date of its year-end (December 31). Previously, the Company had measured the funded status of the NDBP as of the end of its fiscal month of September. As the amount of net periodic pension benefit allocated to the period from October 1, 2007 to December 31, 2007 was not significant, no adjustment was made to retained earnings as of January 1, 2008 for this change in measurement date. Net periodic pension benefit for the periods ended December 31, 2008, September 29, 2007, and September 30, 2006 for the NDBP is as follows:

Net Periodic Pension Cost (Benefit)—NDBP	2008			2007			2006
(amounts in thousands)
Interest cost	$	300		$	265		$	241
Expected return on plan assets		(391	)		(338	)		(301	)
Amortization of actuarial loss		(5	)		(18	)		2
Net periodic pension benefit	$	(96	)	$	(91	)	$	(58	)

The change in benefit obligation and reconciliation of fair value of plan assets for the years ended December 31, 2008 and 2007 for the ESBP, and for the period ended December 31, 2008 and September 29, 2007 for the NDBP are as follows:

	ESBP						NDBP
Changes in Benefit Obligation	2008			2007			2008			2007
(amounts in thousands)
Benefit obligation at beginning of period	$	8,147		$	8,783		$	5,474		$	5,532
Interest cost		510			488			300			265
Benefits paid		(767	)		(703	)		(69	)		(67	)
Actuarial (gain) loss		242			(421	)		(169	)		(850	)
Effect of exchange- rate changes		—			—			(7	)		594
Benefit obligation at end of period		8,132			8,147			5,529			5,474
Reconciliation of Fair Value of Plan Assets
Fair value of plan assets at beginning of period		—			—			7,550			6,478
Actual return on plan assets		—			—			372			376
Employer contributions		767			703			—			—
Benefits paid		(767	)		(703	)		(69	)		(67	)
Effect of exchange-rate changes		—			—			33			763
Fair value of plan assets at end of period		—			—			7,886			7,550
Accrued benefit cost (asset)	$	8,132		$	8,147		$	(2,357	)	$	(2,076	)
Accrued benefit cost (asset) is included in the consolidated balance sheet as follows:
Non-current assets	$	—		$	—		$	(2,357	)	$	(2,076	)
Current liabilities	$	791		$	774		$	—		$	—
Non-current liabilities	$	7,341		$	7,373		$	—		$	—
Discount rate:
Benefit obligation		6.34	%		6.57	%		5.60	%		5.30	%
Net periodic pension cost		6.57	%		5.80	%		5.60	%		5.30	%
Salary increase rate		—			—			—			—
Expected return on plan assets		—			—			4.00	%		5.00	%

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For the ESBP, the accumulated benefit obligation at both December 31, 2008 and 2007 was $8.1 million. The amounts included in other comprehensive loss relating to the pension loss adjustment in 2008 and 2007, net of tax, were approximately $(0.1) million and $0.3 million, respectively. The discount rate used in 2008 was 6.34%, which is reflective of a series of bonds that are included in the Moody’s Aa long-term corporate bond yield whose cash flow approximates the payments to participants under the ESBP for the remainder of the plan. This rate was a decrease of 23 basis points from the rate used in the prior year and resulted in an increase in the plan’s liabilities of approximately $0.2 million. Benefits paid to participants are funded by the Company as needed, and are expected to total approximately $0.8 million in 2009. The plan is deemed unfunded as the Company has not specifically identified Company assets to be used to discharge the deferred compensation benefit liabilities. The Company has purchased insurance on the lives of certain plan participants in amounts considered sufficient to reimburse the Company for the costs associated with the plan for those participants. The Company does not anticipate making contributions to the plan other than for current year benefit payments as required in 2009 or future years.

For the NDBP, the accumulated benefit obligation was $5.5 million at both December 31, 2008 and September 29, 2007, respectively. The discount rate used in 2008 was 5.6%, which is reflective of a series of corporate bonds whose cash flow approximates the payments to participants under the NDBP for the remainder of the plan. This rate was a decrease of 30 basis points from the rate used in the prior year and resulted in a net decrease in the plan’s liabilities of approximately $0.2 million. In 2008, the assets in the NDBP were 100% invested by Aegon, with a guaranteed minimum return to the Company of 4%. In 2007, 20% of the assets were invested in the Aegon World Equity Fund, which invested in global equities, with a small portion of the fund in new or emerging economies. The remaining 80% of the assets were invested by Aegon, with a guaranteed minimum return to the Company of 4%. The historical return to the Company on these investments had been approximately 4.5%. The Company plans to maintain its current investment strategy in 2009. The expected return on plan assets in 2008 was based upon the guaranteed minimum return from Aegon of 4%. For 2007, the expected return on plan assets was a function of the average historical return of 4.5% on the 80% of the funds invested by Aegon, and a historical return of 9% on the 20% of the funds invested in the Aegon World Equity Fund. The Company does not anticipate making additional contributions to the plan in 2009 or future years, as the plan is currently fully funded.

Anticipated benefit payments for the ESBP and the NDBP expected to be paid in future years are as follows:

Year ending December 31,	ESBP		NDBP
(amounts in thousands)
2009	$	791	$	62
2010		786		77
2011		766		83
2012		755		94
2013		732		117
2014-2018		3,577		960
	$	7,407	$	1,393

The disclosures below include the ESBP, the NDBP, and the postretirement benefit plan discussed in note 7, “Employee Benefits,” under the caption “Other Postretirement Benefits.”

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The amounts included in accumulated other comprehensive loss, net of tax, that have not yet been recognized as components of net periodic benefit cost as of December 31, 2008 are as follows:

	ESBP		NDBP			Post- Retirement Plan			Total
(amounts in thousands)
Unrecognized actuarial (gain) loss	$	1,130	$	(858	)	$	(115	)	$	157
Unrecognized transition obligation		—		—			73			73
Unrecognized prior service cost		—		—			(1	)		(1	)
	$	1,130	$	(858	)	$	(43	)	$	229

The amounts included in accumulated other comprehensive loss, net of tax, that have not yet been recognized as components of net periodic benefit cost as of December 31, 2007 were as follows:

	ESBP		NDBP			Post- Retirement Plan			Total
(amounts in thousands)
Unrecognized actuarial (gain) loss	$	1,013	$	(739	)	$	41		$	315
Unrecognized transition obligation		—		—			90			90
Unrecognized prior service cost		—		—			(1	)		(1	)
	$	1,013	$	(739	)	$	130		$	404

The amounts recognized in other comprehensive loss, net of tax, for 2008, 2007, and 2006, which primarily consist of an actuarial (gain) loss and a transition obligation, totaled $175,000, $1,072,000, and $(174,000), respectively. Net periodic pension cost (benefit) for the ESBP and the NDBP, net periodic postretirement benefit cost, and the amounts recognized in other comprehensive loss, net of tax, for 2008, 2007, and 2006 totaled $724,000, $1,640,000, and $458,000, respectively.

The amounts in accumulated other comprehensive loss expected to be recognized as components of net periodic benefit cost during 2009 are as follows:

	ESBP		NDBP			Post- Retirement Plan			Total
(amounts in thousands)
Unrecognized actuarial (gain) loss	$	88	$	(9	)	$	(13	)	$	66
Unrecognized transition obligation		—		—			29			29
Unrecognized prior service cost		—		—			0			0
	$	88	$	(9	)	$	16		$	95

The Company also maintains a non-qualified defined-contribution deferred compensation plan for certain key executives. Company contributions to this plan, if any, are based on annually defined financial performance objectives. There were $0.4 million in contributions to the plan in 2008 for amounts earned in 2007, $0.4 million in contributions to the plan in 2007 for amounts earned in 2006, and $0.2 million in contributions to the plan in 2006 for amounts earned in 2005. The Company anticipates making contributions in 2009 totaling approximately $0.3 million to this plan for amounts earned in 2008. The investments in the plan are included in the total assets of the Company, and are discussed in note 1, “Investments.” During 2008, several participants in the plan exchanged a portion of their investments for stock units which represent shares of the Company’s common stock. In exchange for the funds received, the Company issued shares out of treasury stock equivalent to the number of share units received by the participants. These shares of common stock are not entitled to any voting rights and the holders will not receive dividends, if any are paid. The shares are being held by the Company, and will be released to the participants as prescribed by their payment elections under the plan.

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7. Employee Benefits

401(k) Profit-Sharing Retirement Plan

The Company maintains a contributory 401(k) profit-sharing retirement plan covering substantially all U.S. employees. The Company matches up to 50% of the first 6% of eligible wages contributed by the participants. Company contributions consist of cash, and may include the Company’s stock, were funded and charged to operations in the amounts of $2.5 million, $2.3 million, and $2.4 million for 2008, 2007, and 2006, respectively.

Other Retirement Plans

The Company maintains various other defined contribution retirement plans covering substantially all of the remaining European employees. Company contributions charged to operations were $0.2 million in each of 2008, 2007, and 2006, respectively.

The Company provides limited healthcare and life insurance benefits to nine retired employees and their spouses, totaling 13 participants, pursuant to contractual agreements.

Net periodic postretirement benefit cost for the years ended December 31, 2008, 2007, and 2006 is as follows:

Net Periodic Postretirement Benefit Cost	2008		2007		2006
(amounts in thousands)
Interest cost	$	40	$	39	$	41
Amortization of transition amount		29		29		29
Amortization of actuarial loss		—		4		9
Net periodic postretirement benefit cost	$	69	$	72	$	79

No adjustments were made to the 2008, 2007 or 2006 net periodic postretirement benefit cost due to Medicare reform as the amounts were deemed to be insignificant.

The change in postretirement benefit obligation at December 31, 2008 and 2007 is as follows:

Changes in Postretirement Benefit Obligation	2008			2007
(amounts in thousands)
Postretirement benefit obligation at beginning of year	$	655		$	706
Interest cost		40			39
Benefits paid		(75	)		(43	)
Actuarial gain		(241	)		(47	)
Postretirement benefit obligation at end of year		379			655
Fair value of plan assets at end of year		—			—
Accrued postretirement benefit obligation	$	379		$	655
Accrued postretirement benefit obligation is included in the consolidated balance sheet as follows:
Current liabilities	$	36		$	67
Non-current liabilities	$	343		$	588
Discount rate:
Benefit obligation		6.34	%		6.51	%
Net periodic postretirement benefit cost		6.51	%		5.80	%
Salary increase rate		—			—

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The discount rate used in 2008 to calculate the benefit obligation was 6.34%, which is reflective of a series of bonds that are included in the Moody’s Aa long-term corporate bond yield whose cash flow approximates the payments to participants for the remainder of the plan. For December 31, 2008, the Company updated its methodology for determining the average cost of benefits provided to retirees from prior years which caused a decrease in accrued post retirement benefit obligation from 2007 to 2008. Benefits paid to participants are funded by the Company as needed.

Anticipated benefit payments for the postretirement medical plan are expected to be paid in future years as follows:

Year ending December 31,
(amounts in thousands)
2009	$	37
2010		37
2011		38
2012		38
2013		38
2014-2018		167
	$	355

The rate of increase in healthcare costs is assumed to be 10% for medical, 6% for dental, and 8% for Medicare Part B in 2009, gradually declining to 5% by the year 2014 and remaining at that level thereafter. Increasing the assumed healthcare cost trend rate by one percentage point would increase the accrued postretirement benefit obligation by $17,800 at December 31, 2008, and the net periodic postretirement benefit cost by $2,900 for the year. A one-percentage-point decrease in the healthcare cost trend would decrease the accrued postretirement benefit obligation by $17,000 at December 31, 2008, and the net periodic postretirement benefit cost by $2,600 for the year.

Employee Health Insurance

The Company provides various health insurance plans for its employees, including a self-insured plan for its employees in the U.S.

8. Shareholders’ Equity

Employee Stock Purchase Plan

Under the Company’s First Employee Stock Purchase Plan (Plan), employees may apply up to 10% of their compensation to purchase the Company’s common stock. Shares are purchased at the closing market price on the business day preceding the date of purchase. As of December 31, 2008, approximately 96,000 shares remain unissued under the Plan, of the total of 11.5 million shares that had been authorized under the Plan. During 2008, 2007, and 2006, approximately 24,000, 28,000, and 35,000 shares, respectively, were purchased under the Plan at an average price of $4.80, $4.63, and $4.20 per share, respectively.

Shareholder Rights Plan

The Board of Directors adopted a Shareholder Rights Plan in January 1989 that was subsequently amended in 1999 to extend the expiration of the plan to November 2008. The plan expired in 2008 as it was not renewed.

Stock Trusts

The Company maintains a Stock Employee Compensation Trust (SECT) to provide funding for existing employee stock plans and benefit programs. Shares of the Company’s common stock are purchased by and

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released from the SECT by the trustee of the SECT at the request of the compensation committee of the Board of Directors. As of December 31, 2008, all shares remaining in the SECT were unallocated and, therefore, are not considered outstanding for purposes of calculating earnings per share.

SECT activity for the years ended December 31, 2008, 2007, and 2006 is as follows:

	2008		2007		2006
(amounts in thousands)
Share balance at beginning of year	3,318		3,564		3,881
Shares released:
Stock option plans	(8	)	(131	)	(185	)
Employee Stock Purchase Plan	(6	)	(28	)	(35	)
Restricted stock issuance	—		(87	)	(97	)
Share balance at end of year	3,304		3,318		3,564

During 1999, the Company created an Omnibus Stock Trust (OST) to provide funding for various employee benefit programs. During 1999, the OST purchased 59,000 shares of the Company’s common stock for $1.0 million. Shares of the Company’s common stock are released from the OST by the trustee at the request of the compensation committee of the Board of Directors. During 2008, 2007, and 2006, no shares were purchased or released by the OST.

Preferred Stock

At December 31, 2008 and 2007, the Company has 2,500,000 shares of par value $0.01 preferred stock authorized for issuance, but none outstanding.

9. Equity-Based Compensation

The Company accounts for its equity-based compensation expense using the provisions of FAS 123R, “Share-Based Payment” and related interpretations. The Company issues stock options and restricted stock in exchange for employee and director services. The calculated cost of its equity-based compensation awards is recognized in the Company’s consolidated statements of income over the period in which an employee or director is required to provide the services for the award. Compensation cost will not be recognized for employees or directors that do not render the requisite services. The Company recognizes the expense for equity-based compensation in its consolidated income statements on a straight-line basis based upon awards that are ultimately expected to vest.

For the years ended December 31, 2008, 2007, and 2006, the Company recognized compensation expense of $991,000, $863,000, and $856,000, respectively, in its consolidated statements of income as selling, general and administrative expenses. The tax benefit recorded for this compensation expense was $353,000, $294,000 and $260,000, respectively, resulting in a net after tax cost to the Company of $638,000 in 2008, $569,000 in 2007 and $596,000 in 2006.

On April 26, 2000, the shareholders approved the Company’s 2000 Equity Award Plan (Equity Plan). Under the provisions of the Equity Plan, stock options, restricted stock, stock appreciation rights, and other awards may be granted or awarded to employees and directors of the Company. The compensation committee of the Board of Directors determines the nature, amount, pricing, and vesting of the grant or award. All options and awards remain in effect until the earlier of the expiration, exercise, or surrender date. For the most part, options generally become exercisable in three or four equal annual installments, beginning one year from the date of grant. In certain limited instances, options granted at fair market value are expected to vest nine and one-half years from the date of grant. As of December 31, 2008, a total of 5,150,000 shares may be awarded under this plan, and 774,318 shares are available for grant as of that date.

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On April 24, 1991, the shareholders approved the Company’s 1991 Employee Stock Option Plan (1991 Plan). Under the provisions of the 1991 Plan, options may be granted to employees and directors of the Company. The option price for options granted under this plan is equal to or greater than the fair market value of the Company’s common stock on the date the option is granted. Incentive stock options generally become exercisable in four annual installments of 25% of the shares covered by the grant, beginning one year from the date of grant, and expire six years after becoming exercisable. Nonqualified stock options generally become exercisable in either four or five annual installments of 20 or 25% of the shares covered by the grant, beginning one year from the date of grant, and expire up to 15 years from the date of grant. All options remain in effect until the earlier of the expiration, exercise, or surrender date. There are no options available for grant under this plan as of December 31, 2008.

Under the Company’s 1991 Restricted Stock Plan, a total of 800,000 shares of restricted stock may be granted to certain key employees, and 704,750 shares are available for grant as of that date.

The Company utilizes the Black-Scholes option-pricing model to estimate the fair value of stock options granted on the date of grant. The per-option weighted-average fair value on the date of grant of stock options granted in 2008, 2007, and 2006 was $1.61, $1.72, and $2.17, respectively. The fair value of the options at the date of grant was estimated using the following weighted-average assumptions for the years ended December 31, 2008, 2007 and 2006:

	2008		2007		2006
Expected life (years)	3.3		3.4		4.0
Dividend yield	0.0	%	0.0	%	0.0	%
Risk-free interest rate	3.2	%	4.7	%	5.0	%
Expected volatility	42.0	%	47.4	%	55.2	%

The Company used historical volatility calculated using daily closing prices for its common stock over periods that match the expected term of the option granted to estimate the expected volatility for the grants made in 2006, 2007 and 2008. The risk-free interest rate assumption was based upon U.S. Treasury yields appropriate for the expected term of the Company’s stock options based upon the date of grant. The expected term of the stock options granted was based upon the options expected vesting schedule and historical exercise patterns. The expected dividend yield was based upon the Company’s recent history of paying dividends, and the expectation of paying dividends in the foreseeable future.

During 2006, 2007 and 2008, the Company issued restricted stock to certain employees and its independent directors. For the employees, the stock vests over a period of four years, with 25% of the stock issued vesting one year from the date of grant, and another 25% vesting each year thereafter until the stock is fully vested. The Company is recognizing compensation expense for these shares ratably over the expected term of the restricted stock, or four years. For the independent directors, the issued stock vests at retirement. As the directors are eligible for retirement from the Company’s Board of Directors at any point, the Company recognized the expense associated with these shares on the date of grant. The shares of restricted stock issued are considered outstanding, and are eligible to receive dividends, if any are paid, and can be voted. However, only vested shares of outstanding restricted stock are included in the calculation of basic earnings per share.

As of December 31, 2008, total remaining stock-based compensation expense for non-vested equity-based compensation is approximately $1.5 million, which is expected to be recognized on a weighted-average basis over the next 16 months. Historically, the Company has issued shares out of treasury stock and its SECT to fulfill the share requirements from stock option exercises and restricted stock grants.

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A summary of stock option activity under the Company Equity Plan and 1991 Plan is as follows:

	Equity Plan Options		Weighted- Average Exercise Price		1991 Plan Options		Weighted- Average Exercise Price
Outstanding at December 31, 2005	3,224,750		$	3.76	868,964		$	13.43
Granted	473,000		$	4.54	—			—
Exercised	(172,750	)	$	2.78	(12,000	)	$	2.88
Canceled and forfeited	(176,125	)	$	3.94	(27,000	)	$	17.87
Expired	—			—	(177,138	)	$	16.75
Outstanding at December 31, 2006	3,348,875		$	3.91	652,826		$	12.55
Granted	475,500		$	4.52	—			—
Exercised	(87,750	)	$	3.83	(42,750	)	$	2.87
Canceled and forfeited	(122,750	)	$	4.58	(60,875	)	$	21.74
Expired	—			—	(65,654	)	$	20.18
Outstanding at December 31, 2007	3,613,875		$	3.97	483,547		$	11.21
Granted	395,300		$	4.90	—			—
Exercised	(199,422	)	$	4.03	(23,500	)	$	3.07
Canceled and forfeited	(187,953	)	$	4.80	(11,000	)	$	15.23
Expired	(24,000	)	$	5.54	(118,987	)	$	18.07
Outstanding at December 31, 2008	3,597,800		$	4.01	330,060		$	9.18
Options exercisable at December 31, 2008	2,697,550		$	3.94	330,060		$	9.18

For 2008, 2007 and 2006, the intrinsic value of the options exercised under the Equity Plan was approximately $431,995, $101,300 and $279,000, respectively, while the intrinsic value of the options exercised under the 1991 Plan for the same years was $71,888, $72,100 and $19,800, respectively.

A summary of restricted stock activity for the year-to-date period ended December 31, 2008 under the Equity Plan and the 1991 Restricted Stock Plan is as follows:

	Equity Plan Restricted Stock		Weighted- Average Fair Value		1991 Restricted Stock Plan		Weighted- Average Fair Value
Outstanding at December 31, 2006	95,500		$	4.39	—			—
Granted	45,000		$	4.70	41,500		$	4.52
Released	(7,250	)	$	4.65	—			—
Canceled and forfeited	(1,500	)	$	4.65	(4,500	)	$	4.52
Outstanding at December 31, 2007	131,750		$	4.48	37,000		$	4.52
Granted	62,710		$	4.47	62,000		$	4.79
Released	(28,585	)	$	4.50	(8,250	)	$	4.52
Canceled and forfeited	(1,500	)	$	4.65	(3,750	)	$	4.63
Outstanding at December 31, 2008	164,375		$	4.47	87,000		$	4.71

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A summary of options outstanding as of December 31, 2008 for the Equity Plan and 1991 Plan is as follows:

Range of Exercise Prices	Number Outstanding	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Equity Plan
$1.40	180,000	$	1.40	9.0	$	327,600
$2.24 – $3.26	1,115,375	$	3.10	7.5	$	146,309
$3.48 – $4.90	1,797,175	$	4.44	7.3	$	—
$5.25 – $5.94	505,250	$	5.43	12.2	$	—
	3,597,800				$	473,909
1991 Plan
$2.88	25,250	$	2.88	1.5	$	8,711
$5.13 – $6.13	224,568	$	5.95	4.7	$	—
$16.19 – $21.94	59,922	$	17.41	2.1	$	—
$26.06 – $30.31	20,320	$	28.36	3.8	$	—
	330,060				$	8,711

A summary of options exercisable at December 31, 2008 for the Equity Plan and the 1991 Plan is as follows:

Range of Exercise Prices	Number Exercisable	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Equity Plan
$1.40	180,000	$	1.40	9.0	$	327,600
$2.24 – $3.26	885,375	$	3.13	7.6	$	92,209
$3.48 – $4.90	1,156,925	$	4.35	6.4	$	—
$5.25 – $5.94	475,250	$	5.44	8.5	$	—
	2,697,550				$	419,809
1991 Plan
$2.88	25,250	$	2.88	1.5	$	8,711
$5.13 – $6.13	224,568	$	5.95	4.7	$	—
$16.19 – $21.94	59,922	$	17.41	2.1	$	—
$26.06 – $30.31	20,320	$	28.36	3.8	$	—
	330,060				$	8,711

The aggregate intrinsic values as calculated in the above charts are based upon the Company’s closing stock price on December 31, 2008 of $3.22 per share.

10. Significant Customer

International Business Machines (IBM) is the Company’s largest customer. In 2008, 2007, and 2006, IBM accounted for $108.3 million or 30.6%, $96.0 million or 29.5%, and $110.5 million or 33.8% of the Company’s consolidated revenue, respectively. The Company’s accounts receivable from IBM at December 31, 2008 and 2007 amounted to $8.5 million and $9.9 million, respectively. The Company expects to continue to derive a significant portion of its revenue from IBM in 2009 and in future years. However, a significant decline in revenue from IBM would have a significant negative effect on the Company’s revenue and profits. No other customer accounted for more than 10% of revenue in 2008, 2007, or 2006.

54

11. Contingencies

The Company and its subsidiaries are involved from time to time in various legal proceedings and tax audits arising in the ordinary course of business. At December 31, 2008 and 2007, the Company is in discussion with various governmental agencies relative to tax matters, including income, sales and use, and property and franchise taxes. The outcome of these audits and legal proceedings, if any, involving the Company and its subsidiaries cannot be predicted with certainty, and the amount of any liability that could arise with respect to such audits cannot be accurately predicted. As management has made an estimate of its potential liability for these audits at December 31, 2008 and 2007, the Company does not expect these matters to have a material adverse effect on the financial position, results of operations, or cash flows of the Company.

12. Enterprise -Wide Disclosures

The Company operates in one industry segment, providing information technology (IT) professional services to its clients. The services provided include strategic and flexible staffing and the planning, design, implementation, and maintenance of comprehensive IT solutions. All of the Company’s revenue is generated from these services. CTG’s reportable information is based on geographical areas. The accounting policies of the individual geographical areas are the same as those described in note 1, “Summary of Significant Accounting Policies.”

Financial Information About Geographic Areas	2008		2007		2006
(amounts in thousands)
Revenue from External Customers
United States	$	272,242	$	250,097	$	265,386
Belgium		53,773		46,499		38,821
Other European countries		24,437		25,598		20,126
Other countries		2,761		3,091		2,920
Total revenue	$	353,213	$	325,285	$	327,253
Long-lived Assets
United States	$	5,710	$	4,513	$	5,102
Belgium		826		921		519
Other European countries		231		307		297
Total long-lived assets	$	6,767	$	5,741	$	5,918
Deferred Tax Assets, Net of Valuation Allowance
United States	$	6,205	$	6,297	$	6,260
Europe		—		146		189
Other countries		—		98		21
Total deferred tax assets, net	$	6,205	$	6,541	$	6,470

55

13. Quarterly Financial Data (Unaudited)

	Quarters
	First			Second			Third			Fourth			Total
(amounts in thousands, except per-share data)
2008
Revenue	$	86,683		$	94,071		$	89,131		$	83,328		$	353,213
Direct costs		67,941			72,425			69,488			64,679			274,533
Gross profit		18,742			21,646			19,643			18,649			78,680
Selling, general, and administrative expenses		16,360			17,658			16,167			15,413			65,598
Operating income		2,382			3,988			3,476			3,236			13,082
Interest and other income (expense), net		(48	)		(69	)		(55	)		428	**		256
Income before income taxes		2,334			3,919			3,421			3,664			13,338
Provision for income taxes		930			1,869			1,340			1,362			5,501
Net income	$	1,404		$	2,050		$	2,081		$	2,302		$	7,837
Basic net income per share	$	0.09		$	0.13		$	0.14		$	0.15		$	0.51
Diluted net income per share	$	0.09		$	0.13		$	0.13		$	0.15		$	0.49
	Quarters
	First			Second			Third			Fourth			Total
(amounts in thousands, except per-share data)
2007
Revenue	$	80,016		$	80,140		$	80,625		$	84,504		$	325,285
Direct costs		62,586			62,173			62,347			65,783			252,889
Gross profit		17,430			17,967			18,278			18,721			72,396
Selling, general, and administrative expenses		16,150			16,206			16,644			16,872			65,872
Operating income		1,280			1,761			1,634			1,849			6,524
Interest and other income (expense), net		514			(127	)		(161	)		59			285
Income before income taxes		1,794			1,634			1,473			1,908			6,809
Provision for income taxes		672			635			559			697			2,563
Net income	$	1,122		$	999		$	914		$	1,211		$	4,246
Basic net income per share	$	0.07		$	0.06		$	0.06		$	0.08		$	0.26
Diluted net income per share	$	0.07		$	0.06		$	0.06		$	0.07		$	0.25

** During the 2008 fourth quarter, the Company recorded a net foreign currency exchange gain on intercompany balances totaling approximately $0.5 million on balances settled during the quarter and those balances outstanding between its subsidiaries at December 31, 2008.

56

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management has evaluated, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operations of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act) as of the end of the period covered by this annual report. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this annual report.

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

The Company’s management is responsible for establishing and maintaining an adequate system of 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 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 (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) 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 (iii) 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, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Further, because of changes in conditions, effectiveness of internal control over financial reporting may deteriorate.

Management of the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, the Company’s management did not identify any control deficiencies it considered to be material weaknesses under the rules specified by the Public Company Accounting Oversight Board’s Auditing Standard No. 5, and therefore concluded that its internal control over financial reporting was effective as of December 31, 2008.

Our independent registered public accounting firm has issued an audit report on our effectiveness of internal control over financial reporting. Their report appears in Item 9A (b), Attestation Report of the Registered Public Accounting Firm.

57

(b) Attestation Report of the Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Computer Task Group, Incorporated:

We have audited Computer Task Group, Incorporated’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Computer Task Group, Incorporated’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, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting (Item 9A(a)). Our responsibility is to express an opinion on 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, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included 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, Computer Task Group, Incorporated maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Computer Task Group, Incorporated as of December 31, 2008 and 2007, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2008, and our report dated February 25, 2009 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Buffalo, New York

February 25, 2009

58

(c) Changes in Internal Control Over Financial Reporting

The Company continues to review, revise and improve the effectiveness of the Company’s internal controls on a continuous basis. There have been no significant changes in the Company’s internal controls over financial reporting in connection with the Company’s fourth quarter evaluation that would materially affect, or are reasonably likely to materially affect the Company’s internal controls over financial reporting.

Item 9B. Other Information

None

59

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required in response to this item is incorporated herein by reference to the information set forth under “Election of Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “The Board of Directors and Committees” in relation to the “Audit Committee” subsection, and “Corporate Governance and Website Information” in the Company’s Proxy Statement for the Annual Meeting of Stockholders scheduled to be held on May 13, 2009 (Proxy Statement) to be filed with the SEC not later than 120 days after the end of the year ended December 31, 2008, except insofar as information with respect to executive officers is presented in Part I, Item 1 of this report pursuant to General Instruction G(3) of Form 10-K.

Item 11. Executive Compensation

The information required in response to this item is incorporated herein by reference to the information under the caption “ Compensation Discussion and Analysis” presented in the Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Except as set forth below, the information required in response to this item is incorporated herein by reference to the information under the caption “Security Ownership of the Company’s Common Shares by Certain Beneficial Owners and by Management” presented in the Proxy Statement.

The following table sets forth, as of December 31, 2008, certain information related to the Company’s compensation plans under which shares of its common stock are authorized for issuance:

Equity Compensation Plan Information as of December 31, 2008

	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by security holders
2000 Equity Award Plan	3,597,800	$	4.01	774,318
1991 Employee Stock Option Plan	330,060	$	9.18	—
Equity compensation plans not approved by security holders
None	—		—	—
Total	3,927,860	$	4.45	774,318

At December 31, 2008, the Company did not have any outstanding rights or warrants. All awards outstanding are either stock options or restricted stock.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required in response to this item is incorporated herein by reference to the information under the caption “Certain Relationships and Related Person Transactions, and Director Independence” presented in the Proxy Statement.

Item 14. Principal Accountant Fees and Services

The information required in response to this item is incorporated herein by reference to the information under the caption “Appointment of Auditors for Fiscal 2008 and Fees” presented in the Proxy Statement.

60

PART IV

Item 15. Exhibits and Financial Statement Schedule

(A) Index to Consolidated Financial Statements and Financial Statement Schedule

(1)	Financial Statements:
	Report of Independent Registered Public Accounting Firm	29
	Consolidated Statements of Income	30
	Consolidated Balance Sheets	31
	Consolidated Statements of Cash Flows	32
	Consolidated Statements of Changes in Shareholders’ Equity	33
	Notes to Consolidated Financial Statements	35
(2)	Index to Consolidated Financial Statement Schedule
	Report of Independent Registered Public Accounting Firm on Financial Statement Schedule	62
	Financial statement schedule:
	Schedule II—Valuation and Qualifying Accounts	63

(B) Exhibits

The Exhibits to this annual report on Form 10-K are listed on the attached Exhibit Index appearing on pages 65 to 67.

61

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Computer Task Group, Incorporated:

Under date of February 25, 2009, we reported on the consolidated balance sheets of Computer Task Group, Incorporated and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2008, which are included in the Form 10-K. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedule as listed in the accompanying index. This financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion on this financial statement schedule based on our audits.

In our opinion, such 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.

/s/ KPMG LLP

Buffalo, New York

February 25, 2009

62

COMPUTER TASK GROUP, INCORPORATED

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

(amounts in thousands)

Description	Balance at January 1		Additions			Deductions			Balance at December 31
2008
Accounts deducted from accounts receivable
Allowance for doubtful accounts	$	955	$	503	(A)	$	(453	) (A)	$	1,005
Accounts deducted from deferred tax assets
Deferred tax asset valuation allowance	$	2,492	$	308	(B)	$	(346	) (B)	$	2,454
Accounts deducted from other assets
Reserves	$	575	$	—		$	—		$	575
2007
Accounts deducted from accounts receivable
Allowance for doubtful accounts	$	866	$	303	(A)	$	(214	) (A)	$	955
Accounts deducted from deferred tax assets
Deferred tax asset valuation allowance	$	2,768	$	619	(B)	$	(895	) (B)	$	2,492
Accounts deducted from other assets
Reserves	$	575	$	—		$	—		$	575
2006
Accounts deducted from accounts receivable
Allowance for doubtful accounts	$	1,087	$	306	(A)	$	(527	) (A)	$	866
Accounts deducted from deferred tax assets
Deferred tax asset valuation allowance	$	2,559	$	387	(B)	$	(178	) (B)	$	2,768
Accounts deducted from other assets
Reserves	$	575	$	—		$	—		$	575

^(A) Reflects additions charged principally to costs and expenses, less deductions for accounts written off or collected, and foreign currency translation

^(B) Reflects additions and deductions for foreign currency translation, and deductions credited to expense

63

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.

COMPUTER TASK GROUP, INCORPORATED
By	/s/    James R. Boldt
	James R. Boldt,
	Chairman and Chief Executive Officer

Dated: February 25, 2009

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
(i)	Principal Executive Officer	Chairman and Chief Executive Officer	February 25, 2009
	/s/    James R. Boldt         James R. Boldt
(ii)	Principal Accounting and Principal Financial Officer	Chief Financial Officer	February 25, 2009
	/s/     Brendan M. Harrington         Brendan M. Harrington
(iii)	Directors
	/s/    Thomas E. Baker         Thomas E. Baker	Director	February 25, 2009
	/s/    James R. Boldt         James R. Boldt	Director	February 25, 2009
	/s/    Randall L. Clark         Randall L. Clark	Director	February 25, 2009
	/s/    Randolph A. Marks         Randolph A. Marks	Director	February 25, 2009
	/s/    William D. McGuire         William D. McGuire	Director	February 25, 2009
	/s/    John M. Palms         John M. Palms	Director	February 25, 2009
	/s/    Daniel J. Sullivan         Daniel J. Sullivan	Director	February 25, 2009

64

EXHIBIT INDEX

Exhibit		Description	Page Number or (Reference)
2.		Plan of acquisition, reorganization, arrangement, liquidation or succession	*
3.	(a)	Restated Certificate of Incorporation of Registrant	(1)
	(b)	Restated By-laws of Registrant	(2)
4	(a)	Restated Certificate of Incorporation of Registrant	(1)
	(b)	Restated By-laws of Registrant	(2)
	(c)	Specimen Common Stock Certificate
	(d)	Rights Agreement dated as of January 15, 1989, and amendment dated June 28, 1989, between Registrant and The First National Bank of Boston, as Rights Agent	(3)
	(e)	Form of Rights Certificate	(2)
9.		Voting Trust Agreement	*
10.	(a)	Non-Compete Agreement, dated as of March 1, 1984, between Registrant and Randolph A. Marks	(2) +
	(b)	Stock Employee Compensation Trust Agreement, dated May 3, 1994, between Registrant and Thomas R. Beecher, Jr., as trustee	(2) +
	(c)	Demand Grid Note, dated October 29, 1997, between Registrant and Computer Task Group, Incorporated Stock Employee Compensation Trust	(2) +
	(d)	Pledge Agreement, between the Registrant and Thomas R. Beecher, Jr., as Trustee of the Computer Task Group, Incorporated Stock Employee Compensation Trust	(2) +
	(e)	Stock Purchase Agreement, dated as of February 25, 1981, between Registrant and Randolph A. Marks	(4) +
10.	(f)	Description of Disability Insurance and Health Arrangements for Executive Officers	(5) +
	(g)	2008 Key Employee Compensation Plans	(6) +
	(h)	Computer Task Group, Incorporated Non-Qualified Key Employee Deferred Compensation Plan	(2) +
	(i)	1991 Restricted Stock Plan	(1) +
	(j)	Computer Task Group, Incorporated 2000 Equity Award Plan	(7) +
	(k)	Executive Supplemental Benefit Plan 1997 Restatement	(1) +
	(l)	First Amendment to the Computer Task Group, Incorporated Executive Supplemental Benefit Plan 1997 Restatement	(1) +
	(m)	Compensation Arrangements for the Named Executive Officers	68 +
	(n)	Change in Control Agreement, dated January 1, 2009, between the Registrant and James R. Boldt, as amended and restated	69 +
	(o)	Employment Agreement, dated January 1, 2009, between the Registrant and James R. Boldt, as amended and restated	80 +

65

EXHIBIT INDEX (Continued)

Exhibit		Description	Page Number or (Reference)
	(p)	Officer Change in Control Agreement	91 +
	(q)	First Employee Stock Purchase Plan (Eighth Amendment and Restatement)	(1) +
	(r)	Loan Agreement By and Among Manufacturers and Traders Trust Company and Computer Task Group, Incorporated	(8)
	(s)	Third Amendment to the Loan Agreement, dated February 4, 2008, among Computer Task Group, Incorporated, Manufacturers and Traders Trust Company and Key Bank National Association	(9)
10.	(t)	1991 Employee Stock Option Plan	(10)
11.		Statement re: computation of per share earnings	*
12.		Statement re: computation of ratios	*
13.		Annual Report to Shareholders	*
14.		Code of Ethics	(11)
16.		Letter re: change in certifying accountant	*
18.		Letter re: change in accounting principles	*
21.		Subsidiaries of the Registrant	100
22.		Published report regarding matters submitted to a vote of security holders	*
23.		Consent of experts and counsel	101
24.		Power of Attorney	*
31.	(a)	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	102
	(b)	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	103
32.		Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	104
33.		Report on assessment of compliance with servicing criteria for asset-backed securities	*
34.		Attestation report on assessment of compliance with servicing criteria for asset-backed securities	*
35.		Service compliance statement	*
99.		Additional exhibits	*
100.		XBRL-Related documents	*

* None or requirement not applicable

+ Management contract or compensatory plan or arrangement

(1) Filed as an Exhibit to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2007, and incorporated herein by reference

(2) Filed as an Exhibit to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2006, and incorporated herein by reference

(3) Filed as an Exhibit to the Registrant’s Form 8-A/A filed on January 13, 1999, and incorporated herein by reference

66

EXHIBIT INDEX (Continued)

(4) Filed as an Exhibit to the Registrant’s Registration Statement No. 2—71086 on Form S-7 filed on February 27, 1981, and incorporated herein by reference

(5) Filed as an Exhibit to Amendment No. 1 to Registration Statement No. 2-71086 on Form S-7 filed on March 24, 1981, and incorporated herein by reference

(6) Included in the Registrant’s definitive Proxy Statement dated April 2009 under the caption entitled “Annual Cash Incentive Compensation,” and incorporated herein by reference

(7) Filed as an Exhibit to the Registrants Form 8-K on November 18, 2008, and incorporated herein by reference

(8) Filed as an Exhibit to the Registrants Form 8-K on April 21, 2005, and incorporated herein by reference

(9) Filed as an Exhibit to the Registrants Form 8-K on February 8, 2008, and incorporated herein by reference

(10) Filed as an Exhibit to the Registrants Annual Report on Form 10-K for the year ended December 31, 1996, and incorporated herein by reference

(11) Included in the Registrant’s definitive Proxy Statement dated April 2009 under the caption entitled “Corporate Governance and Website Information,” and incorporated herein by reference

67

EX-10.(M)

EXHIBIT 10 (m)

COMPUTER TASK GROUP, INCORPORATED

COMPENSATION ARRANGEMENTS FOR THE NAMED EXECUTIVE OFFICERS

Set forth below is a summary of the annual and incentive compensation paid by Computer Task Group, Incorporated (the Company) to its named executives (defined in Regulation S-K Item 402(a)(3)) in their current positions as of the date of the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008. All of the Company’s executive officers are at-will employees whose compensation and employment status may be changed at any time at the discretion of the Company’s Board of Directors, subject only to the terms of employment agreements, as applicable, between the Company and these executive officers.

Effective January 1, 2009, the named executive officers are scheduled to receive the following annual base salaries in their current positions:

	Current Annual Salary
James R. Boldt Chairman, President and Chief Executive Officer	$	450,000
Brendan M. Harrington Senior Vice President, Chief Financial Officer	$	237,000
Michael J. Colson Senior Vice President, Solutions	$	246,000
Filip J.L. Gyde (1) Senior Vice President, General Manager, CTG Europe	$	300,511
Thomas J. Niehaus Senior Vice President and General Manager, CTG HealthCare Solutions	$	243,000

Executive officers are also eligible to receive incentive compensation each year primarily based upon the achievement of certain targets. These targets may include specific levels of revenue growth, gross profit, operating income or earnings per share. Bonuses were awarded to the named executives for 2008 as follows:

	2008 Bonus
James R. Boldt	$	666,053
Brendan M. Harrington	$	170,466
Michael J. Colson	$	308,515
Filip J.L. Gyde	$	126,184
Thomas J. Niehaus	$	180,769

(1) Mr. Gyde is paid in Euros. This amount represents his base pay of 213,174 Euros translated into U.S. dollars at the January 1, 2009 exchange rate.

68

EX-10.(N)

EXHIBIT 10 (n)

CHANGE IN CONTROL AGREEMENT

As Amended and Restated Effective January 1, 2009

THIS AGREEMENT, effective as of July 16, 2001 (the “Effective Date”), is between Computer Task Group, Incorporated, a New York corporation with its executive offices at 800 Delaware Avenue, Buffalo, New York 14209 (the “Corporation”), and James R. Boldt, an individual residing at 142 Audubon Drive, Amherst, New York 14226 (the “Executive”). The Agreement is amended and restated effective January 1, 2009.

RECITALS:

WHEREAS, the Executive is employed as the President and Chief Executive Officer of the Corporation; and

WHEREAS, it is in the best interests of the Corporation to reinforce and encourage the Executive’s continued disinterested full attention and undistracted dedication to the duties of the Executive currently and in the potentially disturbing circumstances of a possible change in control of the Corporation by providing some degree of personal financial security to the Executive; and

WHEREAS, it is in the best interests of the Corporation to enable the Executive, without being influenced by the uncertainties of the Executive’s own situation, to assess and advise the Corporation whether proposals concerning any potential change in control are in the best interests of the Corporation and its shareholders and to take other action regarding these proposals as the Corporation might determine to be appropriate; and

WHEREAS, to induce the Executive to remain in the employ of the Corporation, the Board of Directors has determined it is desirable to pay the Executive the compensation set forth below if the Executive’s employment with the Corporation terminates in one of the circumstances described below in connection with a change in control of the Corporation; and

WHEREAS, this Agreement has been amended and restated effective January 1, 2009 to coordinate with a certain Employment Agreement and to include provisions intended to comply with final regulations promulgated under Internal Revenue Code (“Code”) Section 409A and shall be construed to the extent practicable so as to avoid causing any amounts payable to the Executive hereunder to be includable in his gross income under Code Section 409A (a) (1).

NOW, THEREFORE, in consideration of the promises and of the covenants contained in this Agreement, the Corporation and the Executive agree as follows:

1. DEFINITIONS. The following definitions apply for purposes of this Agreement.

(a) “Aggregate Exercise Price” means:

(i) in the case of options to acquire common stock of the Corporation owned by the Executive, the total amount of cash or immediately available funds the Executive would be required to pay to the Corporation to purchase all of the common stock of the Corporation that, on the date as of which the Aggregate Exercise Price is to be determined, the Executive is entitled to purchase under the terms of all issued, outstanding and unexercised options to purchase common stock of the Corporation that are outstanding and exercisable on the date as of which the Aggregate Exercise Price of those options is to be determined; and

69

(ii) in the case of options to acquire Successor Equity, the total amount of cash or immediately available funds the Executive would be required to pay to the Successor to purchase all the Successor Equity that, on the date as of which the Aggregate Exercise Price is to be determined, the Executive is entitled to purchase under the terms of all issued, outstanding and unexercised options to purchase Successor Equity that are outstanding and exercisable on the date as of which the Aggregate Exercise Price of those options is to be determined.

(b) “Built in Gain” means an amount equal to:

(i) the Highest Sale Price as of the date of a Change in Control multiplied by the total number of shares of common stock of the Corporation that the Executive could acquire by exercising all of the options to acquire common stock of the Corporation that, as of the date of the Change in Control, were issued to the Executive, outstanding and unexercised, minus

(ii) the Aggregate Exercise Price of those options.

(c) “Board of Directors” or “Board” means the Board of Directors of the Corporation.

(d) “Cause” means a finding by the Board of Directors, with notice in writing to the Executive setting forth in reasonable detail its reasons, that any of the following conditions exist:

(i) The Executive’s willful and continued failure to substantially perform his duties as President and Chief Executive Officer (other than as a result of the Executive’s Disability).

(ii) A willful act or omission by the Executive constituting fraud or other malfeasance, including without limitation acts of dishonesty constituting a felony offense under the laws of the United States or any state thereof, and any act or omission by the Executive constituting immoral conduct, which in any such case is injurious to the financial condition or business reputation of the Corporation.

(iii) A material breach by the Executive of the Employment Agreement.

For purposes of this definition, an act or failure to act will be deemed “willful” only if it is effected by the Executive not in good faith and without a reasonable belief that his action or failure to act was in or not opposed to the Corporation’s best interests.

(e) “Change in Control” means any one of the following occurrences:

(i) Approval by the stockholders of the Corporation of the dissolution or liquidation of the Corporation;

(ii) Approval by the stockholders of the Corporation of an agreement to merge or consolidate, or otherwise reorganize, with or into one or more entities that are not Subsidiaries or other affiliates, as a result of which less than 50% of the outstanding voting securities of the surviving or resulting entity immediately after the reorganization are, or will be, owned, directly or indirectly, by stockholders of the Corporation immediately before such reorganization (assuming for purposes of such determination that there is no change in the record ownership of the Corporation’s securities from the record date for such approval until such reorganization and that such record owners hold no securities of the other parties to such reorganization, but including in such determination any securities of the other parties to such reorganization held by affiliates of the Corporation);

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(iii) Approval by the stockholders of the Corporation of the sale of substantially all of the Corporation’s business and/or assets to a person or entity that is not a Subsidiary or other affiliate; or

(iv) Any “Person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended from time to time, but excluding any person described in and satisfying the conditions of Rule 13d-1(b)(1) thereunder), other than the Corporation, any Subsidiary of the Corporation, any employee benefit plan of the Corporation or of any of its Subsidiaries or any Person holding common shares of the Corporation for or pursuant to the terms of any such employee benefit plan, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing more than 20% of the combined voting power of the Corporation’s then outstanding securities entitled to then vote generally in the election of directors of the Corporation; or

(v) During any period not longer than two consecutive years, individuals who at the beginning of such period constituted the Board cease to constitute at least a majority thereof, unless the election, or the nomination for election by the Corporation’s stockholders, of each new Board member was approved by a vote of at least three-quarters of the Board members then still in office who were Board members at the beginning of such period (including for these purposes, new members whose election or nomination was so approved).

(f) “Code” means the Internal Revenue Code of 1986, as amended.

(g) “Conversion Options” means an option or options to purchase Successor Equity, which option or options may be granted by the Successor to the Executive and are exercisable in full immediately following the Change in Control for an Aggregate Exercise Price that does not exceed the Aggregate Exercise Price of the options to purchase common stock of the Corporation owned by the Executive on the date of the Change in Control and which options, if exercised by the Executive in full immediately following that Change in Control, would provide for the ownership by the Executive of Successor Equity that, immediately following the acquisition of that Successor Equity by the Executive, may be sold by the Executive, free of any restrictions imposed on the sale of securities by the Securities Act of 1933, and which satisfy the requirements of Regulation §1.409A-1(b)(5)(v)(D) so that the exchange of options to purchase stock of the Corporation for Conversion Options will not be treated as the grant of a new stock right or change in the form of payment for purposes of said Regulation. Under no circumstances is the Executive required to accept a grant of Conversion Options from the Successor.

(h) “Corporation” means Computer Task Group, Incorporated.

(i) “Disability” means a disability that exists for a period of at least 12 months and because of which the Executive is physically or mentally unable to substantially perform his regular duties as President or Chief Executive Officer of the Corporation, as the case may be.

(j) “Employment Agreement” means a certain employment agreement between the Corporation and the Executive which is effective as of July 16, 2001, as such agreement may be amended or superseded.

(k) “Good Reason” means the occurrence of one or more of the following events, provided that the Executive shall give the Corporation a written notice, within 90 days following the initial occurrence of the event, describing the event that the Executive claims to be Good Reason and stating the Executive’s intention to terminate employment unless the Corporation takes appropriate corrective action:

(i) A material diminution in the Executive’s responsibilities, duties, title, reporting responsibilities within the business organization, status, role or authority.

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(ii) A material reduction by the Corporation in the Executive’s annual base salary as in effect on the date of a Change in Control or as in effect thereafter if that base salary has been increased.

(iii) A material reduction by the Corporation in the aggregate value of benefits provided to the Executive, as in effect on the date of a Change in Control or as in effect after that date if those benefits have been increased. “Benefits” includes all profit sharing, 401(k), retirement, pension, health, medical, dental, disability, insurance, automobile, severance, vacation, leave, reimbursement, and similar benefits.

(iv) A material breach by the Corporation of any provision of this Agreement or of any other agreement requiring the payment of compensation to the Executive.

(v) Removal from, or failure to re-elect, the Executive to the position of President or Chief Executive Officer.

(vi) A requirement, in the Executive’s reasonable judgment, that the services required to be performed by the Executive would necessitate the Executive moving his residence at least 50 miles from the Buffalo, New York area.

The Corporation shall have 30 days following the date of receipt of the written notice from the Executive stating his claim of Good Reason in which to take appropriate corrective action. If the Corporation does not correct the Good Reason condition, the Executive’s Good Reason termination will be deemed to have occurred on the day following the 30-day period.

(l) “Highest Sale Price” means:

(i) with respect to the common stock of the Corporation, the highest closing sale price at which common stock of the Corporation has been sold, in an established securities market, during the 12 consecutive month period ending on the date as of which the Highest Sale Price of the common stock of the Corporation is to be determined; and

(ii) with respect to Successor Equity, the highest closing sale price at which Successor Equity has been sold, in an established securities market, during the 12 consecutive month period ending on the date of which the Highest Sale Price of the Successor Equity is to be determined.

(m) “Regulation” means Treasury Regulations promulgated under Code Section 409A as amended.

(n) “Subsidiary” means any corporation or other entity a majority of whose outstanding voting stock or voting power is beneficially owned directly or indirectly by the Corporation.

(o) “Successor” means, the person, firm, corporation or other entity that, as a result of a Change in Control, has succeeded, directly or indirectly, to all or substantially all the assets, rights, properties, liabilities and obligations of the Corporation.

(p) “Successor Equity” means capital stock or any other equity interest in the Successor.

(q) “Termination of Employment” has the meaning provided in Regulation §1.409A-1(h) (1) (ii). If the Executive provides services as an independent contractor, the Executive will not be considered to have a Termination of Employment until the Executive has ceased providing services both as an employee and as an independent contractor. The preceding sentence shall not apply with respect to nonqualified deferred compensation plan in which the Executive participates as an employee to the extent that the Executive’s sole activity as an independent contractor with respect to the Corporation is to serve on the Corporation’s Board of Directors.

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2. BENEFITS UPON CHANGE IN CONTROL. The Corporation will provide the benefits listed below in Sections 2(a) and 2(b) on a Change in Control. All amounts payable on a Change in Control under all subsections of this Section will be made by bank check or wire transfer at the Change in Control, or, if that is not within the control of the Corporation, not later than the tenth business day following the Change in Control except as otherwise provided in Section 2(a) or 2(b). For purposes of this Section, references to payments by the Corporation include payments from any entity related to the Corporation, such as the Corporation’s Stock Employee Compensation Trusts.

(a) STOCK RIGHTS. As of the date of the Change in Control, the Executive will become fully vested in, and entitled to exercise immediately all stock-related awards he has been granted under any plans or agreements of the Corporation, including without limitation, awards under the 1991 Stock Option Plan and the 2000 Equity Award Plan, other than any stock-related award that constitutes a “deferral of compensation” within the meaning of Code Section 409A and the Regulations. The Executive will be entitled to exercise all these awards for a period of not less than 12 months following the Change in Control provided that such exercise period shall not in any event extend beyond the last day of the original exercise period of the relevant stock-related award. The acceleration of vesting and exercisability under this Section will apply notwithstanding any provision in the 2000 Equity Award Plan or any other plan or agreement that would prevent the acceleration and vesting of the awards or cause them to be canceled, rescinded or otherwise impaired.

(b) DEFERRED COMPENSATION. All deferred or otherwise contingent compensation of the Executive will become (i) vested and (ii) immediately payable in cash provided, however, that any such compensation that constitutes deferred compensation within the meaning of Code Section 409A and the Regulations thereunder shall be payable only at the time and in the manner provided under the relevant deferred compensation plan. For purposes only of (ii) in the preceding sentence, a Change in Control under Section 1(e) (ii) will be determined only by substituting 70% for 50% in that Section 1(e) (ii).

3. BENEFITS UPON TERMINATION. The Corporation will provide the benefits listed below in subsections (a) through (f) on the termination of the Executive’s employment (i) by the Corporation for any reason other than Cause or by the Executive for Good Reason (“Involuntary Termination”) in either case within 6 months before or between 6 and 24 months after a Change in Control, or (ii) by the Executive for any reason (“Voluntary Termination”) within 6 months after a Change in Control. For purposes of this Section, references to payments by the Corporation include payments from any entity related to the Corporation, such as the Stock Employee Compensation Trusts. Also, references to payments by the Successor include payments from the Corporation’s Stock Employee Compensation Trusts if those trusts are permitted to make the payments.

(a) SALARY.

(i) Payment In Event of Executive’s Involuntary Termination.

(A) First Payment. If the Executive has an Involuntary Termination of Employment (I) during the period beginning 6 months before and ending on the day before the date of a Change in Control, or (II) during the period beginning on the 6-month anniversary of and ending 24 months after the date of a Change in Control, the Executive shall receive an initial lump sum payment at the time and in the amount provided under Section 9(a)(i)(B) of the Employment Agreement (“annual total compensation”).

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(B) Second Payment. If the Executive becomes entitled to the First Payment under Section 3(a)(i)(A), the Executive shall receive a second lump sum payment equal to 2.99 times his full rate of salary in effect, including directors’ fees, if any, (whether or not deferred) on the date immediately prior to the Change in Control or, if greater, the amount in effect at any date after the Change in Control provided, however, that the amount of payment under this Section 3(a)(i)(B) shall be reduced by the amount payable under Section 3(a)(i)(A). The lump sum payment pursuant to this Section 3(a) (i) (B) shall be made on the day following the 6-month anniversary of the Executive’s Termination of Employment. The payments pursuant to Section 3(a)(i)(A) and this Section 3(a)(i)(B) are intended to constitute separate “payments” within the meaning of Regulation §1.409A-2(b)(2).

(ii) Voluntary Termination. If the Executive has a Voluntary Termination of Employment during the period beginning on the date of the Change in Control and ending on the day before the 6-month anniversary of said date, the Executive shall receive an lump sum payment equal to 2.99 times his full rate of salary in effect, including directors’ fees, if any, (whether or not deferred) on the date immediately prior to the Change in Control or, if greater, the amount in effect at any date after the Change in Control. The lump sum payment shall be made on the day following the 6-month anniversary of the Executive’s Termination of Employment.

(b) BONUS. The Executive will receive a cash bonus equal to 2.99 times the highest annual bonus payable (whether or not deferred) to him in the 3 calendar years preceding the year in which the Change in Control occurs.

(c) FRINGE BENEFITS. The Executive will receive a lump sum payment equal to 25% of the sum of (i) one times his full rate of salary, as defined in (a), and (ii) highest annual bonus, as defined in (b). This payment represents the value to which the parties agree the Executive otherwise would be entitled with respect to fringe benefits (including without limitation profit sharing, 401(k), retirement, pension, health, medical, dental, disability, insurance, automobile, severance, vacation, leave, reimbursement, and similar benefits) for 36 months. Notwithstanding any payment under this Section 3(c), the Executive shall remain entitled to exercise his COBRA rights under any group health plan maintained by the Corporation or the Successor as applicable.

(d) INDEMNIFICATION. For a 60-month period following the date of the Executive’s termination of employment, the Corporation will continue any indemnification agreement with the Executive and will provide directors’ and officers’ liability insurance insuring the Executive that coverage will have limits and scope of coverage not less than that in effect immediately prior to the Change in Control.

(e) CASH-OUT OF STOCK OPTIONS AND OTHER EQUITY-RELATED COMPENSATION.

(i) IN CORPORATION. If the Executive continues to own, on the later of the date of his Termination of Employment or the date of the Change in Control (the “Determination Date”), unexercised options to purchase common stock of the Corporation, the options shall be cancelled, and the Executive shall receive a lump sum amount equal to:

(A) the Highest Sale Price of the common stock of the Corporation determined as of the Determination Date; MULTIPLIED BY

(B) the aggregate number of shares of common stock of the Corporation the Executive is entitled to purchase pursuant to the terms of all unexercised options to purchase any common stock of the Corporation owned by the Executive on the Determination Date; MINUS

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(C) the Aggregate Exercise Price of the issued and outstanding unexercised options to purchase common stock of the Corporation owned by the Executive on the Determination Date.

(ii) IN SUCCESSOR. If Executive owns, on the later of the date of his Termination of Employment (the “Determination Date”), unexercised Conversion Options, the Conversion Options shall be cancelled, and the Executive shall receive a lump sum amount equal to:

(A) the Highest Sale Price, determined as of the Determination Date, of each unit of Successor Equity that could be acquired by the Executive on the exercise of all outstanding Conversion Options; MULTIPLIED BY

(B) the aggregate number of units of Successor Equity the Executive is entitled to purchase pursuant to the terms of all Conversion Options owned by the Executive and exercisable on the Determination Date; MINUS

(C) the Aggregate Exercise Price of the issued and outstanding unexercised Conversion Options.

(f) TIME OF PAYMENT. Payments under subsections (a) (ii), (b), (c) and (e) of this Section 3 shall be made on the day following the six month anniversary of the Executive’s Termination of Employment.

(g) ESTABLISHMENT OF RABBI TRUST. On or before the date of a Change in Control or, if later, on or before the date of the Executive’s Termination of Employment, the Corporation shall transfer cash and/or liquid assets having a value equal to the amounts that will become payable to the Executive under subsection (a) (other than the amount payable under subsection (a)(i)(A) if applicable), (b), (c) and (e) of this Section 3 to an irrevocable grantor trust established with a bank trustee that is reasonably acceptable to the Executive. The trust agreement shall be similar to the form of agreement provided in IRS Revenue Procedure 92-64 (concerning rabbi trusts) and shall provide that no amount held in the trust shall revert to the Corporation or its Successor or be used for any other purpose (other than the payment of the Corporation’s creditors in the event of its insolvency) until the amounts that will become payable to the Executive under subsections (a) (other than the amount payable under subsection (a)(i)(A) if applicable), (b), (c) and (e) of this Section 3 have been paid.

4. WITHHOLDING. The Corporation will deduct or withhold from all salary and bonus payments, and from all other payments made to the Executive pursuant to this Agreement, all amounts that may be required to be deducted or withheld under any applicable Social Security contribution, income tax withholding or other similar law now in effect or that may become effective during the term of this Agreement.

5. OTHER TERMINATION. Upon termination of the Executive’s employment for Cause or because of death or Disability, or not within the time related to a Change in Control as described in Section 3, no benefits will be payable under this Agreement.

6. ADDITIONAL PAYMENTS.

(a) Entitlement to Gross-up Payment. Notwithstanding anything in this Agreement, the 2000 Equity Award Plan, or any other agreement or plan to the contrary, in the event it is determined that any payments or distributions by the Corporation or any affiliate (as defined under the Securities Act of 1933, as amended, and the regulations thereunder) thereof or any other person to or for the benefit of the Executive, whether paid or payable pursuant to the terms of this Agreement, or pursuant to any other agreement or arrangement with the Corporation or any such affiliate (“Payments”), would be subject to the excise tax imposed by Section 4999 of the Code, or any successor provision, or any interest or penalties with respect to the excise tax (the excise tax, together with any interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then

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(i) If liability for the Excise Tax can be avoided by reducing the total amount payable to the Executive under Sections 3(a) and (b) by an amount not exceeding 10% of the total thereof (the “Reduction Amount”), the amount payable to the Executive pursuant to Section 3(a) (i) (B) or 3(a) (ii), as applicable, shall be reduced by the Reduction Amount.

(ii) If liability for the Excise Tax cannot be avoided by reducing the total amount payable to the Executive by the Reduction Amount, then payment of amounts due the Executive under Section 3 shall not be reduced by the Reduction Amount and the Executive shall be entitled to receive an additional payment from the Corporation (a “Gross-Up Payment”) in an amount that after payment by the Executive of all taxes (including, without limitation, any interest or penalties imposed with respect to such taxes and any Excise Tax) imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

(b) Calculation of Gross-up Payment. The amount of the Gross-Up Payment will be calculated by the Corporation’s independent accounting firm, engaged immediately prior to the event that triggered the payment, in consultation with the Corporation’s outside legal counsel. For purposes of making the calculations required by this Section, the accounting firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code, provided that the accounting firm’s determinations must be made with substantial authority (within the meaning of Section 6662 of the Code).

(c) Time and Form of Gross-up Payment. The Gross-Up Payment shall be made in a lump sum at the same time as the payment made pursuant to Section 3(a) (i) (B) or 3(a) (ii), as applicable. If the precise amount of the Gross-Up Payment cannot be determined on the date it is to be paid, an amount equal to the best estimate of the Gross-Up Payment will be made on that date and, within 10 days after the precise calculation is obtained, either the Corporation will pay any additional amount to the Executive or the Executive will pay any excess amount to the Corporation, as the case may be. In all events, the Gross-up Payment will be made by the end of the Executive’s taxable year next following the Executive’s taxable year in which the Executive remits the related taxes.

(d) Claim of Additional Gross-up Payment. If subsequently the Internal Revenue Service (the “IRS”) claims that any additional Excise Tax is owing, an additional Gross-Up Payment will be paid to the Executive within 30 days of the Executive providing substantiation of the claim made by the IRS.

(e) Cooperation of Executive In Contesting Excise Tax. After payment to the Executive of the Gross-Up Payment, the Executive will provide to the Corporation any information reasonably requested by the Corporation relating to the Excise Tax, the Executive will take those actions as the Corporation reasonable requests to contest the Excise Tax, cooperate in good faith with the Corporation to effectively contest the Excise Tax and permit the Corporation to participate in any proceedings contesting the Excise Tax. The Corporation will bear and pay directly all costs and expenses (including any interest or penalties on the Excise Tax), and indemnify and hold the Executive harmless, on an after-tax basis, from all such costs and expenses related to such contest.

(f) Refund of Excess Gross-up Payment. Should it ultimately be determined that any amount of an Excise Tax is not properly owed, the Executive will refund to the Corporation the related amount of the Gross-Up Payment immediately following receipt of such payment from the US Treasury.

7. NON-EXCLUSIVITY OF RIGHTS. Except as otherwise specifically provided, nothing in this Agreement prevents or limits the Executive’s continued or future participation in any benefit, incentive, or other plan, practice, or program provided by the Corporation and for which the Executive may qualify. Any amount of vested benefit or any amount to which the Executive is otherwise entitled under any plan, practice, or program of the Corporation will be payable in accordance with the plan, practice, or program, except as

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specifically modified by this Agreement. However, if the Executive receives the payments under Section 3, the Executive will not be entitled to any severance payments (which excludes for this purpose all types of equity-based compensation not cashed out under Section 2(c) or 3(e)) otherwise payable under any other agreement, plan, or practice providing for severance compensation.

8. NO OBLIGATION TO SEEK OTHER EMPLOYMENT. The Executive will not be obligated to seek other employment or to take other action to mitigate any amount payable to him under this Agreement.

9. SUCCESSORS. This Agreement is personal to the Executive and may not be assigned by the Executive other than by will or the laws of descent and distribution. This Agreement will inure to the benefit of and be enforceable by the Executive’s legal representatives or successors in interest. Notwithstanding any other provision of this Agreement, the Executive may designate a successor or successors in interest to receive any amounts due under this Agreement after the Executive’s death. A designation of a successor in interest must be made in writing, signed by the Executive, and delivered to the Corporation. Except as otherwise provided in this Agreement, if the Executive has not designated a successor in interest, payment of benefits under this Agreement will be made to the Executive’s estate. This Section will not supersede any designation of beneficiary or successor in interest made by the Executive or provided for under any other plan, practice, or program of the Corporation. This Agreement will inure to the benefit of and be binding upon the Corporation and its successors and assigns. The Corporation will require any successor (whether direct or indirect, by acquisition of assets, merger, consolidation or otherwise) to all or substantially all of the operations or assets of the Corporation or any successor, and without regard to the form of transaction used to acquire the operations or assets of the Corporation, to assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no succession had taken place. As used in this Agreement, “Corporation” means the Corporation and any successor to its operations or assets as set forth in this Section that is required by this clause to assume and agree to perform this Agreement or that otherwise assumes and agrees to perform this Agreement.

10. BENEFIT CLAIMS. In the event the Executive, or his beneficiaries, as the case may be, and the Corporation disagree as to their respective rights and obligations under this Agreement, and the Executive or his beneficiaries are successful in establishing, privately or otherwise, that his or their position is substantially correct, or that the Corporation’s position is substantially wrong or unreasonable, or in the event that the disagreement is resolved by settlement, the Corporation will pay all costs and expenses, including counsel fees, that the Executive or his beneficiaries may incur in connection therewith directly to the provider of the services or as may otherwise be directed by the Executive or his beneficiaries. The Corporation will not delay or reduce the amount of any payment provided for hereunder or setoff or counterclaim against any such amount for any reason whatsoever; it is the intention of the Corporation and the Executive that the amounts payable to the Executive or his beneficiaries hereunder will continue to be paid in all events in the manner and at the times herein provided. All payments made by the Corporation hereunder will be final and the Corporation will not seek to recover all or any part of any portion of any payments hereunder for any reason.

11. FAILURE, DELAY OR WAIVER. No course of action or failure to act by the Corporation or the Executive will constitute a waiver by the party of any right or remedy under this Agreement, and no waiver by either party of any right or remedy under this Agreement will be effective unless made in writing.

12. SEVERABILITY. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be enforceable under applicable law. However, if any provision of this Agreement is deemed unenforceable under applicable law by a court having jurisdiction, the provision will be unenforceable only to the extent necessary to make it enforceable without invalidating the remainder thereof or any of the remaining provisions of this Agreement.

13. NOTICE. All written communications to parties required hereunder must be in writing and (a) delivered in person, (b) mailed by registered or certified mail, return receipt requested, (such mailed notice to be effective 4 days after the date it is mailed) or (c) sent by facsimile transmission, with

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confirmation sent by way of one of the above methods, to the party at the address given below for the party (or to any other address as the party designates in a writing complying with this Section, delivered to the other party):

If to the Corporation:

Computer Task Group, Incorporated

800 Delaware Avenue

Buffalo, New York 14209

Attention: General Counsel

Telephone: 716-882-8000

Telecopier: 716-887-7370

If to the Executive:

James R. Boldt

142 Audubon Drive

Amherst, New York 14226

Telephone: 716-839-0907

14. MISCELLANEOUS. This Agreement (a) may not be amended, modified or terminated orally or by any course of conduct pursued by the Corporation or the Executive, but may be amended, modified or terminated only by a written agreement duly executed by the Corporation and the Executive, (b) is binding upon and inures to the benefit of the Corporation and the Executive and each of their respective heirs, representatives, successors and assignees, except that the Executive may not assign any of his rights or obligations pursuant to this Agreement, (c) except as otherwise specifically provided in this Agreement, constitutes the entire agreement between the Corporation and the Executive with respect to the subject matter of this Agreement, and supersedes all oral and written proposals, representations, understandings and agreements previously made or existing with respect to such subject matter, including that certain employment agreement dated October 17, 2000 and any similar agreements, and (d) will be governed by, and interpreted and construed in accordance with, the laws of the State of New York, without regard to principles of conflicts of law.

15 TERM.

(a) Except as provided in (b), this Agreement will not be terminated earlier than 36 months after its Effective Date. The Agreement will be extended automatically for additional 12-month periods unless one party notifies the other prior to the beginning of the successive 36 month period that it is terminating the Agreement. The intention of the preceding sentence is that if a party does not give notice, at least 36 months remain in the Agreement.

(b) This Agreement will terminate when the Corporation has made the last payment provided for under it, including without limitation, any payments payable at any time under Sections 9 and 10. However, the obligations under Section 3(d) will survive any termination and will remain in full force and effect for the period specified.

16. RULE GOVERNING PAYMENT DATES. In any case where this Agreement requires the payment of an amount during a period of two or more days that overlaps two calendar years, the payee shall have no right to determine the calendar year in which payment actually occurs.

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IN WITNESS WHEREOF, the parties have duly executed this restatement of the Agreement on the              day of December, 2008, to be effective January 1, 2009.

Computer Task Group, Incorporated

By

Title

Executive

James R. Boldt

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EX-10.(O)

EXHIBIT 10 (o)

EMPLOYMENT AGREEMENT

Amended and Restated Effective January 1, 2009

THIS AGREEMENT, effective as of July 16, 2001 is between Computer Task Group, Incorporated, a New York corporation with its executive offices at 800 Delaware Avenue, Buffalo, New York 14209 (the “Corporation”), and James R. Boldt, an individual residing at 142 Audubon Drive, Amherst, New York 14226 (the “Executive”). The Agreement is amended and restated effective January 1, 2009.

RECITALS:

WHEREAS, the Executive will be employed as the President and Chief Executive Officer of the Corporation; and

WHEREAS, the Corporation and the Executive desire to set forth the terms upon which the Executive will be employed by the Corporation; and

WHEREAS, this Agreement has been amended and restated effective January 1, 2009 to coordinate with a certain Change in Control Agreement and to include provisions intended to comply with final regulations promulgated under Internal Revenue Code (“Code”) Section 409A and shall be construed to the extent practicable so as to avoid causing any amounts payable to the Executive hereunder to be includable in his gross income under Code Section 409A (a) (1).

NOW, THEREFORE, in consideration of the promises and of the covenants contained in this Agreement, the Corporation and the Executive agree as follows:

1. DEFINITIONS. The following definitions apply for purposes of this Agreement.

(a) “Board of Directors” or “Board” means the Board of Directors of the Corporation.

(b) “Cause” means a finding by the Board of Directors that any of following conditions exist:

(i) The Executive’s willful and continued failure to substantially perform his material duties under this Agreement (other than as a result of his Disability) if such failure is not substantially cured within 15 days after written notice is provided to the Executive.

(ii) The Executive’s willful breach in a substantive and material manner of his fiduciary duty or duty of loyalty to the Corporation which is injurious to the financial condition in more than a de minimus manner or the business reputation of the Corporation.

(iii) The Executive’s indictment for a felony offense under the laws of the United States or any state thereof (other than for a violation of motor or vehicular laws).

(iv) Material breach by the Executive of any restrictive covenant contained in Sections 10 and 11 of this Agreement. For purposes of this definition, no act or failure to act will be deemed “willful” unless effected by the Executive not in good faith and without a reasonable belief that his action or failure to act was in or not opposed to the Corporation’s best interests.

(c) “Change in Control Agreement” means a certain change in control agreement between the Corporation and the Executive which is effective as of July 16, 2001, as such agreement may be amended.

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(d) “Code” means the Internal Revenue Code of 1986, as amended.

(e) “Corporation” means Computer Task Group, Incorporated, or any successor organization.

(f) “Disability” means a disability that has existed for a period of 6 consecutive months and because of which the Executive is physically or mentally unable to substantially perform his regular duties as President or Chief Executive Officer of the Corporation, as the case may be.

(g) “Effective Date” means July 16, 2001.

(i) “Good Reason” means the occurrence of one or more of the following events, provided that the Executive shall give the Corporation a written notice, within 90 days following the initial occurrence of the event, describing the event that the Executive claims to be Good Reason and stating the Executive’s intention to terminate employment unless the Corporation takes appropriate corrective action:

(i) A material diminution in the Executive’s responsibilities, duties, title, reporting responsibilities within the business organization, status, role or authority.

(ii) A material reduction by the Corporation in the Executive’s annual base salary as in effect from time to time.

(iii) A material reduction by the Corporation in the aggregate value of benefits provided to the Executive, as in effect from time to time except where such reduction is applied uniformly to all officers or all employees of the Corporation, as applicable. “Benefits” includes all profit sharing, 401(k), retirement, pension, health, medical, dental, disability, insurance, automobile, severance, vacation, leave, reimbursement, and similar benefits.

(iv) A material breach by the Corporation of any provision of this Agreement or of any other agreement requiring the payment of compensation to the Executive.

(v) Removal from, or failure to re-elect, the Executive to the position of President or Chief Executive Officer.

(vi) A requirement, in the Executive’s reasonable judgment, that the services required to be performed by the Executive would necessitate the Executive moving his residence at least 50 miles from the Buffalo, New York area.

The Corporation shall have 30 days following the date of receipt of the written notice from the Executive stating his claim of Good Reason in which to take appropriate corrective action. If the Corporation does not correct the Good Reason condition, the Executive’s Good Reason termination will be deemed to have occurred on the day following the 30-day period.

(j) “Regulation” means Treasury Regulations promulgated under Code Section 409A as amended.

(k) “Specified Employee” has the meaning provided in Regulation §1.409A-1(i). The default rules for said definition shall apply unless the Corporation has adopted other rules in a duly adopted instrument applicable with respect to all nonqualified deferred compensation plans of the Corporation.

(l) “Termination of Employment” has the meaning provided in Regulation §1.409A-1(h) (1) (ii). If the Executive provides services as an independent contractor, the Executive will not be considered to have a Termination of Employment until the Executive has ceased providing services both as an employee and as an independent contractor. The preceding sentence shall not apply with respect to a nonqualified deferred compensation plan in which the Executive participates as an employee to the extent that the Executive’s sole activity as an independent contractor with respect to the Corporation is to serve on the Corporation’s Board of Directors.

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2. EMPLOYMENT; DUTIES. Subject to the terms and conditions set forth in this Agreement, the Corporation hereby agrees to employ the Executive, and the Executive hereby will assume the positions of President and Chief Executive Officer of the Corporation, in full charge of the operation of its business and affairs, subject to the provisions of the by-laws of the Corporation in respect of the duties and responsibilities assigned from time to time by the Board of Directors to the President and Chief Executive Officer, and subject also at all times to the control of the Board of Directors. Subject to the yearly election by the Board of Directors in the exercise of its judgment, it is contemplated that the Executive will continue to be elected to the positions of President and Chief Executive Officer. The Executive will perform those duties and discharge those responsibilities as are commensurate with his position, and as the Board of Directors may from time to time reasonably direct, that are commensurate with his position. The Executive agrees to perform his duties and discharge his responsibilities in a faithful manner and to the best of his ability and to use all reasonable efforts to promote the interests of the Corporation. The Executive may not accept other gainful employment except with the prior consent of the Board of Directors of the Corporation. With the prior consent of the Board of Directors of the Corporation, the Executive may become a director, trustee or other fiduciary of other corporations, trusts or entities. Notwithstanding the foregoing, the Executive may manage his passive investments and be involved in charitable, civic and religious interests so long as they do not materially interfere with the performance of the Executive’s duties hereunder.

3. COMPENSATION.

(a) During the term of the Executive’s employment under this Agreement, the Executive will receive a base salary at the rate of Four Hundred Thousand ($450,000.00) Dollars per year, payable in equal bi-weekly installments. On an annual basis, the Compensation Committee of the Board of Directors will, in good faith, review the base salary of the Executive to consider appropriate increases (but not decreases) in the base salary. If the Executive dies during the period of time of his service under this Agreement, service for any part of the month of his death will be considered service for the entire month.

(b) During the term of the Executive’s employment under this Agreement, the Executive will be eligible to receive an annual cash incentive from the Corporation as determined by the Board of Directors. The annual cash incentive plan for 2001 is attached hereto as Exhibit 3(b). Notwithstanding anything herein to the contrary, the Executive is hereby guaranteed to receive a minimum cash incentive of $50,000 for the year 2001.

(c) As of the Effective Date, the Executive shall receive 400,000 stock options with respect to the Corporation’s common stock. The price of the options will be the closing share price of the Corporation’s common stock, as reported by the New York Stock Exchange, as of the Effective Date or if there is no closing price for that date, then on the next business day on which such closing price is reported. The options will vest in accordance with the vesting schedule set forth in Exhibit 3(c).

(d) The Corporation will deduct or withhold from all salary and incentive payments, and from all other payments made to the Executive pursuant to this Agreement, all amounts that may be required to be deducted or withheld under any applicable Social Security contribution, income tax withholding or other similar law now in effect or that may become effective during the term of this Agreement.

4. OTHER BENEFITS AND TERMS. During the term of the Executive’s employment under this Agreement, the Executive will be entitled to the following additional benefits:

(a) The Executive will be entitled to participate in, the Corporation’s health and medical benefit plans, any pension, profit sharing and retirement plans, and any insurance policies or programs from time to time generally offered to all or substantially all executive employees who are employed by the Corporation. These plans, policies and programs are subject to change at the sole discretion of the Corporation.

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(b) The Executive will also receive the following:

(i) Life insurance benefits will be provided at an amount not less than three times base salary (subject to a physical examination);

(ii) Disability insurance in an amount equal to two-thirds anticipated total annual cash compensation;

(iii) Executive Supplemental Medical Plan which will provide up to $10,000.00 per year in supplemental medical and dental coverage for items not covered under other CTG medical and dental plans or HMOs (but not including voluntary cosmetic surgery);

(iv) Travel insurance with aggregate coverage inclusive of the insurance provided under the Corporation’s American Express card program, in an amount equal to four times base compensation;

(v) Reimbursement of up to $4,000.00 per year for personal tax advice;

(vi) Participation in the Corporation’s Deferred Compensation Plan subject to the contribution rates as determined by the Compensation Committee; and

(vii) Annual luncheon club dues.

5. VACATIONS. The Executive will be entitled to five weeks of paid vacation and nine paid holidays each year. Unused vacation in any year may not be carried over to subsequent years.

6. REIMBURSEMENT FOR EXPENSES. The Corporation will reimburse the Executive in accordance with its expense reimbursement policy for expenses that the Executive may from time to time reasonably incur on behalf of the Corporation in the performance of his responsibilities and duties.

7. PERIOD OF EMPLOYMENT. Subject to the provisions of this Section, the period of employment of the Executive under this Agreement will begin on the Effective Date and shall continue until 60 days after either party provides 60 days prior written notice to the other party that it desires to terminate the Executive’s employment.

Notwithstanding the foregoing:

(a) The Executive’s employment will terminate: (i) on the date determined by the Corporation if the Corporation believes it has Cause, (ii) on the 30th day following the date on which the Corporation receives the written notice described in Section 1(g) if the Executive has claimed the existence of Good Reason and the Corporation has failed to take appropriate corrective action, (iii) on the date of the Executive’s death, (iv) on the date on which the Executive has incurred a Disability, as agreed by the Executive and the Corporation or, if they are unable to agree, on the date a physician’s written determination that the Executive has incurred a Disability is delivered to the Corporation and the Executive in accordance with Section 9(e), or (v) such other date as is mutually agreed upon by the Executive and the Corporation.

(b) In the event the Executive’s employment is terminated for any reason, the Executive shall resign on the date of such termination of employment from any and all positions he may have as a director of the Corporation and its subsidiary corporations. The Executive understands and agrees that the Corporation shall be entitled to have such equitable relief, including the right to specific performance, to enforce the provisions of this Section.

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Any notice of termination of employment given by a party must specify the particular termination provision of this Agreement relied upon by the party and must set forth in reasonable detail the facts and circumstances that provide a basis for the termination.

8. INDEMNIFICATION. The Corporation agrees that if the Executive is made a party, or is threatened to be made a party, to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether or not the basis of such Proceeding is the Executive’s alleged action in an official capacity while serving as a director, officer, member, employee or agent, the Executive shall be indemnified and held harmless by the Corporation to the fullest extent legally permitted or authorized by the Corporation’s certificate of incorporation or bylaws or resolutions of the Corporation’s Board of Directors or, if greater, by the laws of the State of New York, against all cost, expense, liability and loss (including, without limitation, attorney’s fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Executive in connection therewith, and such indemnification shall continue as to the Executive’s heirs, executors and administrators.

The Corporation also agrees that if the Executive is made a party, or is threatened to be made a party, to any action, suit or proceeding by reason of the termination of his employment with his prior employer or his accepting employment with the Corporation, he shall be indemnified and held harmless by the Corporation against all cost, expense, liability and loss (including attorney’s fees) reasonably incurred or suffered by the Executive in connection therewith.

9. BENEFITS UPON TERMINATION. The Corporation will provide the following benefits upon the termination of the Executive’s employment with the Corporation.

(a) UPON TERMINATION BY THE CORPORATION OTHER THAN FOR CAUSE OR UPON TERMINATION BY THE EXECUTIVE FOR GOOD REASON. Upon the Executive’s termination of his employment for Good Reason or the Corporation’s termination of the Executive’s employment for any reason other than Cause, the Corporation will provide, in exchange for the Executive signing a mutually acceptable release agreement, the following:

(i) SALARY AND MEDICAL BENEFITS.

(A) Current Salary and Medical Benefits. The Executive will receive his full salary and fringe benefits through the date of Termination of Employment together with any unpaid incentive for a prior period that is then due and owing to the Executive.

(B) Post-Termination Salary. The Executive shall receive an amount equal to the average of the “annual total compensation” paid to the Executive in the rolling 3-year period ending on the date of the Executive’s Termination of Employment. For purposes of this Section 9, the term “annual total compensation” shall mean only the base cash compensation paid to the Executive only in his capacity as President and Chief Executive Officer in bi-weekly amounts plus any cash incentive compensation actually paid to the Executive during such rolling 3-year period. Such term shall not include any other form of compensation or benefit paid or provided to the Executive. Such amount shall be paid to the Executive in a lump sum within 30 days following the date of the Executive’s Termination of Employment or, if later, within 30 days following the date on which the Executive signs a mutually acceptable release agreement provided, however, that in all events such amount shall be paid before March 15 of the calendar year following the calendar year in which occurs the Executive’s Termination of Employment. The parties affirm that it is their intent that such amount be excluded from the application of Code Section 409A by reason of the “short-term deferral” rule set forth at Regulation §1.409A-1(b)(4).

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(C) Post-Termination Medical Benefits. During the 12-month period following the date of the Executive’s Termination of Employment, the Executive shall continue to receive medical and dental benefits pursuant to such plans as are in effect on the date of Termination of Employment provided, however, that in the event that the Executive is a Specified Employee, the Executive shall pay for any such benefits received during the first six months following termination of employment to the extent, if any, that such benefits are not allowable as a deduction under Code Section 213 (disregarding the requirement of section 213(a) that the deduction is available only to the extent that such expenses exceed 7.5 percent of adjusted gross income).

(D) Extension of Post-Termination Salary. The Executive shall receive a second payment on the day following the six month anniversary of the date of his Termination of Employment which second payment shall be a lump sum amount equal to 50% of the amount paid to the Executive pursuant to Section 9(a) (i) (B). The payments pursuant to Section 9(a)(i)(B) and this Section 9(a)(i)(D) are intended by the parties to constitute separate “payments” within the meaning of Regulation §1.409A-2(b)(2). In the event that the Executive is employed by another firm or entity or is otherwise providing his services to anyone in return for compensation before the last day of the eighteenth calendar month beginning on or after his Termination of Employment, the Executive shall promptly repay to the Corporation all or a portion of the amount paid to the Executive pursuant to this Section 9(a) (i) (D). The amount to be repaid shall be determined by multiplying the amount paid to the Executive pursuant to this Section 9(a)(i)(D) times a fraction where the numerator is the number of days during which the Executive is employed by another firm or entity or is otherwise providing his services to anyone in return for compensation during the six calendar month period beginning with the thirteenth calendar month beginning on or after his Termination of Employment and the denominator is the total number of days in such six calendar month period. The Executive agrees to immediately notify the Corporation once he becomes so employed or provides his services in return for compensation.

(E) Extension of Post-Termination Medical Benefits. During the six calendar month period beginning on or after the twelve month anniversary of the Executive’s Termination of Employment, the Executive shall continue to receive medical and dental benefits pursuant to such plans as are in effect on the date of Termination of Employment paid for by the Corporation provided, however, that the Corporation shall cease to have any obligation to pay for such benefits after the calendar month in which the Executive becomes employed or provides his services for compensation.

(ii) ACCRUED VACATION. The Executive will receive payment for accrued but unused vacation, which payment will be equitably prorated based on the period of active employment for that portion of the fiscal year in which the Executive’s termination of employment becomes effective. Payment for accrued but unused vacation will be paid in one lump sum within 30 days following the date of the Executive’s Termination of Employment.

(b) UPON TERMINATION BY THE EXECUTIVE ABSENT GOOD REASON OR BY THE CORPORATION FOR CAUSE. Upon the Executive’s termination of employment absent Good Reason or by the Corporation for Cause, the Corporation will provide the following:

(i) SALARY. The Executive will receive only his bi-weekly salary and fringe benefits through the date of Termination of Employment together with any unpaid incentive for a prior period that is then due and owing to the Executive.

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(ii) ACCRUED VACATION. The Executive will receive payment for accrued but unused vacation, which payment will be equitably prorated based on the period of active employment for that portion of the fiscal year in which the Executive’s termination of employment becomes effective. Payment for accrued but unused vacation will be paid in one lump sum within 30 days following the date of the Executive’s Termination of Employment.

(c) UPON TERMINATION FOR DEATH OR DISABILITY. Upon termination of the Executive’s employment because of death, the Corporation will pay an amount equal to the post-termination salary provided for in Section 9(a) (i) (B) above to the Executive’s estate in a lump sum. Upon termination of the Executive’s employment because of Disability, the Corporation will pay an amount equal to the post-termination salary provided for in Section 9(a)(i)(B) to the Executive in a lump sum and will provide the post-termination medical benefits provided for in Section 9(a)(i)(C). A lump sum payment made pursuant to this Section 9(c) shall be made as soon as practicable following the Executive’s Termination of Employment but, in all events, shall be made before March 15 of the calendar year following the calendar year in which the Executive’s death or Disability occurs.

(d) UPON TERMINATION FOLLOWING A CHANGE IN CONTROL. In the event that a “Change in Control” (as defined in the Change in Control Agreement) occurs on or before the six month anniversary of the Executive’s Termination of Employment by the Corporation for any reason other than Cause, or by the Executive for Good Reason, the Corporation shall pay the Executive the amounts provided in Sections 9(a)(i)(A) and (B), and Section 9(a)(ii), and shall provide the Executive the medical benefits provide for in Section 9(a)(i)(C) through the last day of the calendar month in which the Change in Control occurs. No other payments shall be made under this Section 9. All other amounts payable to the Executive shall be governed by the terms of the aforementioned Change in Control Agreement in lieu of any other payments or benefits under this Agreement.

(e) DETERMINATION OF DISABILITY. Any question as to the existence of a physical or mental condition which would give rise to the Disability of the Executive upon which the Executive and the Corporation cannot agree will be determined by a qualified independent physician selected by the Executive and reasonably acceptable to the Corporation (or, if the Executive is unable to make a selection, the selection of the physician will be made by any adult member of his immediate family). The physician’s written determination to the Corporation and to the Executive will be final and conclusive for all purposes of this Agreement.

(f) CONTINUATION OF HEALTHCARE COVERAGE. For purposes of COBRA continuation healthcare coverage, the “qualifying event” will be deemed to have occurred on the effective date of termination of the Executive’s employment.

10. CONFIDENTIALITY\ASSIGNMENT OF RIGHTS. During the course of his employment, the Executive will have access to confidential information relating to the lines of business of the Corporation, its trade secrets, marketing techniques, technical and cost data, information concerning customers and suppliers, information relating to product lines, and other valuable and confidential information relating to the business operations of the Corporation not generally available to the public (the “Confidential Information”). The parties hereby acknowledge that any unauthorized disclosure or misuse of the Confidential Information could cause irreparable damage to the Corporation. The parties also agree that covenants by the Executive not to make unauthorized use or disclosures of the Confidential Information are essential to the growth and stability of the business of the Corporation. Accordingly, the Executive agrees to the confidentiality covenants set forth in this Section.

The Executive agrees that, except as required by his duties with the Corporation or as authorized by the Corporation in writing, he will not use or disclose to anyone at any time, regardless of whether before or after the Executive ceases to be employed by the Corporation, any of the Confidential Information obtained by him in the course of his employment with the Corporation. The Executive shall

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not be deemed to have violated this Section 10 by disclosure of Confidential Information that at the time of disclosure (a) is publicly available or becomes publicly available through no act or omission of the Executive, or (b) is disclosed as required by court order or as otherwise required by law, on the condition that notice of the requirement for such disclosure is given to the Corporation prior to make any disclosure.

The Executive agrees that since irreparable damage could result from his breach of the covenants in this Section, in addition to any and all other remedies available to the Corporation, the Corporation will have the remedies of a restraining order, injunction or other equitable relief to enforce the provisions thereof. The Executive consents to jurisdiction in Erie County, New York on the date of the commencement of any action for purposes of any claims under this Section. In addition, the Executive agrees that the issues in any action brought under this Section will be limited to claims under this Section, and all other claims or counterclaims under other provisions of this Agreement will be excluded.

The Executive hereby sells, assigns and transfers to the Corporation all of his right, title and interest in and to all inventions, discoveries, improvements and copyrightable subject matter (the “rights”) which during the term of the Executive’s employment are made or conceived by him, alone or with others and which are within or arise out of any general field of the Corporation’s business or arise out of any work he performs or information he receives regarding the business of the Corporation while employed by the Corporation. The Executive shall fully disclose to the Corporation as promptly as available all information known or possessed by him concerning the rights referred to in the preceding sentence, and upon request by the Corporation and without any further remuneration in any form to him by the Corporation, but at the expense of the Corporation, execute all applications for patents and for copyright registration, assignments thereof and other instruments and do all things which the Corporation may deem necessary to vest and maintain in it the entire right, title and interest in and to all such rights.

11. NON-COMPETITION. In consideration of the compensation and other benefits to be paid to the Executive under and in connection with this Agreement, the Executive agrees that, beginning on the Effective Date of this Agreement and continuing until the Covenant Expiration Date (as defined in Subsection (b) below), he will not, directly or indirectly, for his own account or as agent, employee, officer, director, trustee, consultant, partner, stockholder or equity owner of any corporation or any other entity (except that he may passively own securities constituting less than 1% of any class of securities of a public company), or member of any firm or otherwise,

(i) engage or attempt to engage, in the Restricted Territory (as defined in Subsection (d) below), in any business activity which is directly or indirectly competitive with the business conducted by the Corporation or any Affiliate at the Reference Date (as defined in Subsection (c) below),

(ii) employ or solicit the employment of any person who is employed by the Corporation or any Affiliate at the Reference Date or at any time during the six-month period preceding the Reference Date, except that the Executive will be free to employ or solicit the employment of any such person whose employment with the Corporation or any Affiliate has terminated for any reason (without any interference from the Executive) and who has not been employed by the Corporation or any Affiliate for at least 6 months,

(iii) canvass or solicit business in competition with any business conducted by the Corporation or any Affiliate at the Reference Date from any person or entity who during the six-month period preceding the Reference Date was a customer of the Corporation or any Affiliate or from any person or entity which the Executive has reason to believe might in the future become a customer of the Corporation or any Affiliate as a result of marketing efforts, contacts or other facts and circumstances of which the Executive is aware,

(iv) willfully dissuade or discourage any person or entity from using, employing or conducting business with the Corporation or any Affiliate or

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(v) intentionally disrupt or interfere with, or seek to disrupt or interfere with, the business or contractual relationship between the Corporation or any Affiliate and any supplier who during the six-month period preceding the Reference Date shall have supplied components, materials or services to the Corporation or any Affiliate.

Notwithstanding the foregoing, the restrictions imposed by this Section shall not in any manner be construed to prohibit, directly or indirectly, the Executive from serving as an employee or consultant of the Corporation or any Affiliate. For purposes of this Agreement, the following terms have the meanings given to them below:

a. “AFFILIATE” means any joint venture, partnership or subsidiary now or hereafter directly or indirectly owned or controlled by the Corporation. For purposes of clarification, an entity shall not be deemed to be indirectly or directly owned or controlled by the Corporation solely by reason of the ownership or control of such entity by shareholders of the Corporation.

b. “COVENANT EXPIRATION DATE” means the date which is one (1) year after the Termination Date (as defined in this Section).

c. “REFERENCE DATE” means (A) for purposes of applying the covenants set forth in this Section at any time prior to the Termination Date, the then current date, or (B) for purposes of applying the covenants set forth in this Section at any time on or after the Termination Date, the Termination Date.

d. “RESTRICTED TERRITORY” means anywhere in the world where the Corporation or any Affiliate conducts or plans to conduct the Business or any other business activity, as the case may be, at the Reference Date.

e. “TERMINATION DATE” means the date of termination of the Executive’s employment with the Corporation; PROVIDED, HOWEVER, that the Executive’s employment will not be deemed to have terminated so long as the Executive continues to be employed or engaged as an employee or consultant of the Corporation or any Affiliate, even if such employment or engagement continues after the expiration of the term of this Agreement, whether pursuant to this Agreement or otherwise.

12. SUCCESSORS. This Agreement is personal to the Executive and may not be assigned by the Executive other than by will or the laws of descent and distribution. This Agreement will inure to the benefit of and be enforceable by the Executive’s legal representatives or successors in interest. Notwithstanding any other provision of this Agreement, the Executive may designate a successor or successors in interest to receive any amounts due under this Agreement after the Executive’s death. If he has not designated a successor in interest, payment of benefits under this Agreement will be made to his wife, if surviving, and if not surviving, to his estate. A designation of a successor in interest must be made in writing, signed by the Executive, and delivered to the Employer pursuant to Section 16. Except as otherwise provided in this Agreement, if the Executive has not designated a successor in interest, payment of benefits under this Agreement will be made to the Executive’s estate. This Section will not supersede any designation of beneficiary or successor in interest made by the Executive or provided for under any other plan, practice, or program of the Employer.

This Agreement will inure to the benefit of and be binding upon the Corporation and its successors and assigns.

The Corporation will require any successor (whether direct or indirect, by acquisition of assets, merger, consolidation or otherwise) to all or substantially all of the operations or assets of the Corporation or any successor and without regard to the form of transaction used to acquire the operations or assets of the Corporation, to assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no succession had taken place. As used in this Agreement, “Corporation” means the Corporation and any successor to its operations or assets as set forth in this Section that is required by this clause to assume and agree to perform this Agreement or that otherwise assumes and agrees to perform this Agreement.

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13. FAILURE, DELAY OR WAIVER. No course of action or failure to act by the Corporation or the Executive will constitute a waiver by the party of any right or remedy under this Agreement, and no waiver by either party of any right or remedy under this Agreement will be effective unless made in writing.

14. SEVERABILITY. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be enforceable under applicable law. However, if any provision of this Agreement is deemed unenforceable under applicable law by a court having jurisdiction, the provision will be unenforceable only to the extent necessary to make it enforceable without invalidating the remainder thereof or any of the remaining provisions of this Agreement.

15. NOTICE. All written communications to parties required hereunder must be in writing and (a) delivered in person, (b) mailed by registered or certified mail, return receipt requested, (such mailed notice to be effective 4 days after the date it is mailed) or (c) sent by facsimile transmission, with confirmation sent by way of one of the above methods, to the party at the address given below for the party (or to any other address as the party designates in a writing complying with this Section, delivered to the other party):

If to the Corporation:

Computer Task Group, Incorporated

800 Delaware Avenue

Buffalo, New York 14209

Attention: General Counsel

Telephone: 716-882-8000

Telecopier: 716-887-7370

If to the Executive:

James R. Boldt

142 Audubon Drive

Amherst, New York 14226

Telephone: 716-839-0907

16. MISCELLANEOUS. This Agreement may not be amended, modified or terminated orally or by any course of conduct pursued by the Corporation or the Executive, but may be amended, modified or terminated only by a written agreement duly executed by the Corporation and the Executive and is binding upon and inures to the benefit of the Corporation and the Executive and each of their respective heirs, representatives, successors and assignees, except that the Executive may not assign any of his rights or obligations pursuant to this Agreement. Except as otherwise provided in this Agreement, this Agreement constitutes the entire agreement between the Corporation and the Executive with respect to the subject matter of this Agreement, and supersedes all oral and written proposals, representations, understandings and agreements previously made or existing with respect to such subject matter.

17. TERMINATION OF THIS AGREEMENT. This Agreement will terminate when the Corporation has made the last payment provided for hereunder; provided, however, that the obligations set forth under Sections 8, 9, 10 and 11 of this Agreement will survive any termination and will remain in full force and effect.

18. MULTIPLE COUNTERPARTS. This Agreement may be executed in one or more counter parts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any party may execute this Agreement by facsimile signature and the other party shall be entitled to rely on such facsimile signature as evidence that this Agreement has been duly executed by such party. Any party executing this Agreement by facsimile signature shall immediately forward to the other party an original page by overnight mail.

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19. GOVERNING LAW. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York without reference to principles of conflict of laws.

20. REPRESENTATION BY EXECUTIVE. The Executive represents to the Corporation that he is not subject to any agreement between him and any other person, firm or organization that prevents or restricts in any way his ability to provide services to the Corporation pursuant to this Agreement or that would otherwise be violated by the performance of his obligations under this Agreement. The Executive understands and agrees that a breach of this representation shall be considered to be a material breach of this Agreement and shall be grounds for immediate termination of employment and shall be treated in the same manner as termination for Cause.

21. RULE GOVERNING PAYMENT DATES. In any case where this Agreement requires the payment of an amount during a period of two or more days that overlaps two calendar years, the payee shall have no right to determine the calendar year in which payment actually occurs.

IN WITNESS WHEREOF, the parties have duly executed this restatement of the Agreement on the         day of December, 2008, to be effective January 1, 2009.

Computer Task Group, Incorporated

By

Title

Executive

James R. Boldt

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EX-10.(P)

EXHIBIT 10 (p)

CHANGE IN CONTROL AGREEMENT

As Amended and Restated Effective January 1, 2009

THIS AGREEMENT, effective as of                          (the “Effective Date”), is between Computer Task Group, Incorporated, a New York corporation with its executive offices at 800 Delaware Avenue, Buffalo, New York 14209 (the “Corporation”), and                          , an individual residing at                                               (the “Executive”). The Agreement is amended and restated effective January 1, 2009.

RECITALS:

WHEREAS, the Executive is employed by the Corporation; and

WHEREAS, it is in the best interests of the Corporation to reinforce and encourage the Executive’s continued disinterested full attention and undistracted dedication to the duties of the Executive currently and in the potentially disturbing circumstances of a possible change in control of the Corporation by providing some degree of personal financial security to the Executive; and

WHEREAS, it is in the best interests of the Corporation to enable the Executive, without being influenced by the uncertainties of the Executive’s own situation, to assess and advise the Corporation whether proposals concerning any potential change in control are in the best interests of the Corporation and its shareholders and to take other action regarding these proposals as the Corporation might determine to be appropriate; and

WHEREAS, to induce the Executive to remain in the employ of the Corporation, the Board of Directors has determined it is desirable to pay the Executive the compensation set forth below if the Executive’s employment with the Corporation terminates in one of the circumstances described below in connection with a change in control of the Corporation; and

WHEREAS, this Agreement has been amended and restated effective January 1, 2009 to comply with final regulations promulgated under Internal Revenue Code (“Code”) Section 409A and shall be construed to the extent practicable so as to avoid causing any amounts payable to the Executive hereunder to be includable in his gross income under Code Section 409A(a)(1).

NOW, THEREFORE, in consideration of the promises and of the covenants contained in this Agreement, the Corporation and the Executive agree as follows:

DEFINITIONS. The following definitions apply for purposes of this Agreement.

(a) “Aggregate Exercise Price” means:

(i) in the case of options to acquire common stock of the Corporation owned by the Executive, the total amount of cash or immediately available funds the Executive would be required to pay to the Corporation to purchase all of the common stock of the Corporation that, on the date as of which the Aggregate Exercise Price is to be determined, the Executive is entitled to purchase under the terms of all issued, outstanding and unexercised options to purchase common stock of the Corporation that are outstanding and exercisable on the date as of which the Aggregate Exercise Price of those options is to be determined; and

(ii) in the case of options to acquire Successor Equity, the total amount of cash or immediately available funds the Executive would be required to pay to the Successor to

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purchase all the Successor Equity that, on the date as of which the Aggregate Exercise Price is to be determined, the Executive is entitled to purchase under the terms of all issued, outstanding and unexercised options to purchase Successor Equity that are outstanding and exercisable on the date as of which the Aggregate Exercise Price of those options is to be determined.

(b) “Built in Gain” means an amount equal to:

(i) the Highest Sale Price as of the date of a Change in Control multiplied by the total number of shares of common stock of the Corporation that the Executive could acquire by exercising all of the options to acquire common stock of the Corporation that, as of the date of the Change in Control, were issued to the Executive, outstanding and unexercised, minus

(ii) the Aggregate Exercise Price of those options.

(c) “Board of Directors” or “Board” means the Board of Directors of the Corporation.

(d) “Cause” means a finding by the Board of Directors, with notice in writing to the Executive setting forth in reasonable detail its reasons, that any of the following conditions exist:

(i) The Executive’s willful and continued failure substantially to perform his duties as an executive employee of the Corporation (other than as a result of the Executive’s Disability).

(ii) A willful act or omission by the Executive constituting fraud or other malfeasance, including without limitation acts of dishonesty constituting a felony offense under the laws of the United States or any state thereof, and any act or omission by the Executive constituting immoral conduct, which in any such case is injurious to the financial condition or business reputation of the Corporation.

(iii) A material breach by the Executive of the provisions of his agreement with the Corporation relating to confidentiality and proprietary information and trade secrets.

For purposes of this definition, an act or failure to act will be deemed “willful” only if it is effected by the Executive not in good faith and without a reasonable belief that his action or failure to act was in or not opposed to the Corporation’s best interests.

(e) “Change in Control” means any one of the following occurrences:

(i) Approval by the stockholders of the Corporation of the dissolution or liquidation of the Corporation;

(ii) Approval by the stockholders of the Corporation of an agreement to merge or consolidate, or otherwise reorganize, with or into one or more entities that are not Subsidiaries or other affiliates, as a result of which less than two-thirds of the outstanding voting securities of the surviving or resulting entity immediately after the reorganization are, or will be, owned, directly or indirectly, by stockholders of the Corporation immediately before such reorganization (assuming for purposes of such determination that there is no change in the record ownership of the Corporation’s securities from the record date for such approval until such reorganization and that such record owners hold no securities of the other parties to such reorganization, but including in such determination any securities of the other parties to such reorganization held by affiliates of the Corporation);

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(iii) Approval by the stockholders of the Corporation of the sale of substantially all of the Corporation’s business and/or assets to a person or entity that is not a Subsidiary or other affiliate; or

(iv) Any “Person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended from time to time, but excluding any person described in and satisfying the conditions of Rule 13d-1(b)(1) thereunder), other than the Corporation, any Subsidiary of the Corporation, any employee benefit plan of the Corporation or of any of its Subsidiaries or any Person holding common shares of the Corporation for or pursuant to the terms of any such employee benefit plan, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing more than 20% of the combined voting power of the Corporation’s then outstanding securities entitled to then vote generally in the election of directors of the Corporation; or

(v) During any period not longer than two consecutive years, individuals who at the beginning of such period constituted the Board cease to constitute at least a majority thereof, unless the election, or the nomination for election by the Corporation’s stockholders, of each new Board member was approved by a vote of at least three-quarters of the Board members then still in office who were Board members at the beginning of such period (including for these purposes, new members whose election or nomination was so approved).

(f) “Code” means the Internal Revenue Code of1986, as amended.

(g) “Conversion Options” means an option or options to purchase Successor Equity, which option or options may be granted by the Successor to the Executive and are exercisable in full immediately following the Change in Control for an Aggregate Exercise Price that does not exceed the Aggregate Exercise Price of the options to purchase common stock of the Corporation owned by the Executive on the date of the Change in Control and which options, if exercised by the Executive in full immediately following that Change in Control, would provide for the ownership by the Executive of Successor Equity that, immediately following the acquisition of that Successor Equity by the Executive, may be sold by the Executive, free of any restrictions imposed on the sale of securities by the Securities Act of 1933, and which satisfy the requirements of Regulation §1.409A-1(b)(5)(v)(D) so that the exchange of options to purchase stock of the Corporation for Conversion Options will not be treated as the grant of a new stock right or change in the form of payment for purposes of said Regulation. Under no circumstances is the Executive required to accept a grant of Conversion Options from the Successor.

(h) “Corporation” means Computer Task Group, Incorporated.

(i) “Disability” means a disability that exists for a period of at least 6 months and because of which the Executive is physically or mentally unable to substantially perform his regular duties as an executive employee of the Corporation.

(j) “Good Reason” means the occurrence of one or more of the following events, provided that the Executive shall give the Corporation a written notice, within 90 days following the initial occurrence of the event, describing the event that the Executive claims to be Good Reason and stating the Executive’s intention to terminate employment unless the Corporation takes appropriate corrective action:

(i) A material diminution in the Executive’s responsibilities, duties, role or authority within the business organization.

(ii) A material reduction by the Corporation in the Executive’s annual base salary as in effect on the date of a Change in Control or as in effect thereafter if that base salary has been increased.

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(iii) A material reduction by the Corporation in the aggregate value of benefits provided to the Executive, as in effect on the date of a Change in Control or as in effect after that date if those benefits have been increased. “Benefits” includes all profit sharing, 401(k), retirement, pension, health, medical, dental, disability, insurance, automobile, severance, vacation, leave, reimbursement, and similar benefits.

(iv) A material breach by the Corporation of any provision of this Agreement or of any other agreement requiring the payment of compensation to the Executive.

(v) Removal from, or failure to re-elect, the Executive to the position of Senior Vice President, Secretary and General Counsel.

(vi) A requirement, in the Executive’s reasonable judgment, that the services required to be performed by the Executive would necessitate the Executive moving his residence at least 50 miles from the Buffalo, New York area.

The Corporation shall have 30 days following the date of receipt of the written notice from the Executive stating his claim of Good Reason in which to take appropriate corrective action. If the Corporation does not correct the Good Reason condition, the Executive’s Good Reason termination will be deemed to have occurred on the day following the 30-day period.

(l) “Highest Sale Price” means:

(i) with respect to the common stock of the Corporation, the highest closing sale price at which common stock of the Corporation has been sold, in an established securities market, during the 12 consecutive month period ending on the date as of which the Highest Sale Price of the common stock of the Corporation is to be determined; and

(ii) with respect to Successor Equity, the highest closing sale price at which Successor Equity has been sold, in an established securities market, during the 12 consecutive month period ending on the date of which the Highest Sale Price of the Successor Equity is to be determined.

(m) “Regulation” means Treasury Regulations promulgated under Code Section 409A as amended.

(n) “Subsidiary” means any corporation or other entity a majority of whose outstanding voting stock or voting power is beneficially owned directly or indirectly by the Corporation.

(o) “Successor” means, the person, firm, corporation or other entity that, as a result of a Change in Control, has succeeded, directly or indirectly, to all or substantially all the assets, rights, properties, liabilities and obligations of the Corporation.

(p) “Successor Equity” means capital stock or any other equity interest in the Successor.

(q) “Termination of Employment” has the meaning provided in Regulation §1.409A-1(h) (1) (ii). If the Executive provides services as an independent contractor, the Executive will not be considered to have a Termination of Employment until the Executive has ceased providing services both as an employee and as an independent contractor. The preceding sentence shall not apply with respect to nonqualified deferred compensation plan in which the Executive participates as an employee to the extent that the Executive’s sole activity as an independent contractor with respect to the Corporation is to serve on the Corporation’s Board of Directors.

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BENEFITS UPON CHANGE IN CONTROL. The Corporation will provide the benefits listed below in Sections 0(a) and 0(b) on a Change in Control. All amounts payable on a Change in Control under all subsections of this Section will be made by bank check or wire transfer at the Change in Control, or, if that is not within the control of the Corporation, not later than the tenth business day following the Change in Control except as otherwise provided in Section 0(a) or 0(b). For purposes of this Section, references to payments by the Corporation include payments from any entity related to the Corporation, such as the Corporation’s Stock Employee Compensation Trusts.

(a) STOCK RIGHTS. As of the date of the Change in Control, the Executive will become fully vested in, and entitled to exercise immediately all stock-related awards he has been granted under any plans or agreements of the Corporation, including without limitation, awards under the 1991 Stock Option Plan and the 2000 Equity Award Plan, other than any stock-related award that constitutes a “deferral of compensation” within the meaning of Code Section 409A and the Regulations. The Executive will be entitled to exercise all these awards for a period of not less than 12 months following the Change in Control provided that such exercise period shall not in any event extend beyond the last day of the original exercise period of the relevant stock-related award. The acceleration of vesting and exercisability under this Section will apply notwithstanding any provision in the 2000 Equity Award Plan or any other plan or agreement that would prevent the acceleration and vesting of the awards or cause them to be canceled, rescinded or otherwise impaired.

(b) DEFERRED COMPENSATION. All deferred or otherwise contingent compensation of the Executive will become (i) vested and (ii) immediately payable in cash provided, however, that any such compensation that constitutes deferred compensation within the meaning of Code Section 409A and the Regulations thereunder shall be payable only at the time and in the manner provided under the relevant deferred compensation plan. For purposes only of (ii) in the preceding sentence, a Change in Control under Section 0(e) (ii) will be determined only by substituting 70% for 50% in that Section 0(e) (ii).

BENEFITS UPON TERMINATION. The Corporation will provide the benefits listed below in Sections 0(a) through (f) on the termination of the Executive’s employment by the Corporation for any reason other than Cause or by the Executive for Good Reason (“Involuntary Termination”) in either case within 6 months before a Change in Control or within 24 months after a Change in Control. For purposes of this Section, references to payments by the Corporation include payments from any entity related to the Corporation, such as the Stock Employee Compensation Trusts. Also, references to payments by the Successor include payments from the Corporation’s Stock Employee Compensation Trusts if those trusts are permitted to make the payments.

(a) SALARY. The Executive will receive two (2) times his or her full rate of salary, (whether or not deferred) on the date immediately prior to the Change in Control or, if greater, the amount in effect at any date after the Change in Control.

(b) BONUS. The Executive will receive a cash bonus equal to two (2) times the average annual bonus payable (whether or not deferred) to him or her in the 3 calendar years preceding the year in which the Change in Control occurs.

(c) FRINGE BENEFITS. The Executive will receive a lump sum payment equal to 25% of the sum of (i) one times his full rate of salary, as defined in Section 0(a), and (ii) highest annual bonus, as defined in Section 0(b). This payment represents the value to which the parties agree the Executive otherwise would be entitled with respect to fringe benefits (including without limitation profit sharing, 401(k), retirement, pension, health, medical, dental, disability, insurance, automobile, severance, vacation, leave, reimbursement, and similar benefits) for 24 months. Notwithstanding any payment under this Section 0(c), the Executive shall remain entitled to exercise his COBRA rights under any group health plan maintained by the Corporation or the Successor as applicable.

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(d) INDEMNIFICATION. For a 60-month period following the date of the Executive’s termination of employment, the Corporation will continue any indemnification agreement with the Executive and will provide directors’ and officers’ liability insurance insuring the Executive that coverage will have limits and scope of coverage not less than that in effect immediately prior to the Change in Control.

(e) CASH-OUT OF STOCK OPTIONS AND OTHER EQUITY-RELATED COMPENSATION.

(i) IN CORPORATION. If the Executive continues to own, on the later of the date of his Termination of Employment or the date of the Change in Control (the “Determination Date”), unexercised options to purchase common stock of the Corporation, the options shall be cancelled, and the Executive shall receive a lump sum amount equal to:

(A) the Highest Sale Price of the common stock of the Corporation determined as of the Determination Date; MULTIPLIED BY

(B) the aggregate number of shares of common stock of the Corporation the Executive is entitled to purchase pursuant to the terms of all unexercised options to purchase any common stock of the Corporation owned by the Executive on the Determination Date; MINUS

(C) the Aggregate Exercise Price of the issued and outstanding unexercised options to purchase common stock of the Corporation owned by the Executive on the Determination Date.

(ii) IN SUCCESSOR. If Executive owns, on the later of the date of his Termination of Employment (the “Determination Date”), unexercised Conversion Options, the Conversion Options shall be cancelled, and the Executive shall receive a lump sum amount equal to:

(A) the Highest Sale Price, determined as of the Determination Date, of each unit of Successor Equity that could be acquired by the Executive on the exercise of all outstanding Conversion Options; MULTIPLIED BY

(B) the aggregate number of units of Successor Equity the Executive is entitled to purchase pursuant to the terms of all Conversion Options owned by the Executive and exercisable on the Determination Date; MINUS

(C) the Aggregate Exercise Price of the issued and outstanding unexercised Conversion Options.

(f) TIME OF PAYMENT. Payments under subsections (a), (b), (c) and (e) of this Section 0 shall be made on the day following the six month anniversary of the Executive’s Termination of Employment.

(g) ESTABLISHMENT OF RABBI TRUST. On or before the date of a Change in Control or, if later, on or before the date of the Executive’s Termination of Employment, the Corporation shall transfer cash and/or liquid assets having a value equal to the amounts that will become payable to the Executive under subsection (a), (b), (c) and (e) of this Section 0 to an irrevocable grantor trust established with a bank trustee that is reasonably acceptable to the Executive. The trust agreement shall be similar to the form of agreement provided in IRS Revenue Procedure 92-64 (concerning rabbi trusts) and shall provide that no amount held in the trust shall revert to the Corporation or its Successor or be used for any other purpose (other than the payment of the Corporation’s creditors in the event of its insolvency) until the amounts that will become payable to the Executive under subsections (a), (b), (c) and (e) of this Section 0 have been paid.

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WITHHOLDING. The Corporation will deduct or withhold from all salary and bonus payments, and from all other payments made to the Executive pursuant to this Agreement, all amounts that may be required to be deducted or withheld under any applicable Social Security contribution, income tax withholding or other similar law now in effect or that may become effective during the term of this Agreement.

OTHER TERMINATION. Upon termination of the Executive’s employment for Cause or because of death or Disability, or not within the time related to a Change in Control as described in Section 0, no benefits will be payable under this Agreement.

NON-EXCLUSIVITY OF RIGHTS. Except as otherwise specifically provided, nothing in this Agreement prevents or limits the Executive’s continued or future participation in any benefit, incentive, or other plan, practice, or program provided by the Corporation and for which the Executive may qualify. Any amount of vested benefit or any amount to which the Executive is otherwise entitled under any plan, practice, or program of the Corporation will be payable in accordance with the plan, practice, or program, except as specifically modified by this Agreement. However, if the Executive receives the payments under Section 0, the Executive will not be entitled to any severance payments (which excludes for this purpose all types of equity-based compensation not cashed out under Section 0(e)) otherwise payable under any other agreement, plan, or practice providing for severance compensation.

NO OBLIGATION TO SEEK OTHER EMPLOYMENT. The Executive will not be obligated to seek other employment or to take other action to mitigate any amount payable to him under this Agreement.

SUCCESSORS. This Agreement is personal to the Executive and may not be assigned by the Executive other than by will or the laws of descent and distribution. This Agreement will inure to the benefit of and be enforceable by the Executive’s legal representatives or successors in interest. Notwithstanding any other provision of this Agreement, the Executive may designate a successor or successors in interest to receive any amounts due under this Agreement after the Executive’s death. A designation of a successor in interest must be made in writing, signed by the Executive, and delivered to the Corporation. Except as otherwise provided in this Agreement, if the Executive has not designated a successor in interest, payment of benefits under this Agreement will be made to the Executive’s estate. This Section will not supersede any designation of beneficiary or successor in interest made by the Executive or provided for under any other plan, practice, or program of the Corporation. This Agreement will inure to the benefit of and be binding upon the Corporation and its successors and assigns. The Corporation will require any successor (whether direct or indirect, by acquisition of assets, merger, consolidation or otherwise) to all or substantially all of the operations or assets of the Corporation or any successor, and without regard to the form of transaction used to acquire the operations or assets of the Corporation, to assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no succession had taken place. As used in this Agreement, “Corporation” means the Corporation and any successor to its operations or assets as set forth in this Section that is required by this clause to assume and agree to perform this Agreement or that otherwise assumes and agrees to perform this Agreement.

BENEFIT CLAIMS. In the event the Executive, or his beneficiaries, as the case may be, and the Corporation disagree as to their respective rights and obligations under this Agreement, and the Executive or his beneficiaries are successful in establishing, privately or otherwise, that his or their position is substantially correct, or that the Corporation’s position is substantially wrong or unreasonable, or in the event that the disagreement is resolved by settlement, the Corporation will pay all costs and expenses, including counsel fees, that the Executive or his beneficiaries may incur in connection therewith directly to the provider of the services or as may otherwise be directed by the Executive or his beneficiaries. The Corporation will not delay or reduce the amount of any payment provided for

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hereunder or setoff or counterclaim against any such amount for any reason whatsoever; it is the intention of the Corporation and the Executive that the amounts payable to the Executive or his beneficiaries hereunder will continue to be paid in all events in the manner and at the times herein provided. All payments made by the Corporation hereunder will be final and the Corporation will not seek to recover all or any part of any portion of any payments hereunder for any reason.

FAILURE, DELAY OR WAIVER. No course of action or failure to act by the Corporation or the Executive will constitute a waiver by the party of any right or remedy under this Agreement, and no waiver by either party of any right or remedy under this Agreement will be effective unless made in writing.

SEVERABILITY. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be enforceable under applicable law. However, if any provision of this Agreement is deemed unenforceable under applicable law by a court having jurisdiction, the provision will be unenforceable only to the extent necessary to make it enforceable without invalidating the remainder thereof or any of the remaining provisions of this Agreement.

NOTICE. All written communications to parties required hereunder must be in writing and (a) delivered in person, (b) mailed by registered or certified mail, return receipt requested, (such mailed notice to be effective 4 days after the date it is mailed) or (c) sent by facsimile transmission, with confirmation sent by way of one of the above methods, to the party at the address given below for the party (or to any other address as the party designates in a writing complying with this Section, delivered to the other party):

If to the Corporation:

Computer Task Group, Incorporated

800 Delaware Avenue

Buffalo, New York 14209

Attention: General Counsel

Telephone: 716-882-8000

Telecopier: 716-887-7370

If to the Executive:

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MISCELLANEOUS. This Agreement (a) may not be amended, modified or terminated orally or by any course of conduct pursued by the Corporation or the Executive, but may be amended, modified or terminated only by a written agreement duly executed by the Corporation and the Executive, (b) is binding upon and inures to the benefit of the Corporation and the Executive and each of their respective heirs, representatives, successors and assignees, except that the Executive may not assign any of his or her rights or obligations pursuant to this Agreement, (c) except as otherwise specifically provided in this Agreement, constitutes the entire agreement between the Corporation and the Executive with respect to the subject matter of this Agreement, and supersedes all oral and written proposals, representations, understandings and agreements previously made or existing with respect to such subject matter, excluding for this purpose any non-disclosure, confidentiality and other similar agreements, and (d) will be governed by, and interpreted and construed in accordance with, the laws of the State of New York, without regard to principles of conflicts of law.

TERM.

(a) Except as provided in Section 0(b), this Agreement will not be terminated earlier than 36 months after its Effective Date. The Agreement will be extended automatically for additional 12-month periods unless one party notifies the other prior to the beginning of the successive 36 month period that it is terminating the Agreement. The intention of the preceding sentence is that if a party does not give notice, at least 36 months remain in the Agreement.

(b) This Agreement will terminate when the Corporation has made the last payment provided for under it, including without limitation, any payments payable at any time under Sections 0 and 0. However, the indemnification obligations under Section 0(d) will survive any termination and will remain in full force and effect for the period specified.

RULE GOVERNING PAYMENT DATES. In any case where this Agreement requires the payment of an amount during a period of two or more days that overlaps two calendar years, the payee shall have no right to determine the calendar year in which payment actually occurs.

IN WITNESS WHEREOF, the parties have duly executed this restatement of the Agreement on the              day of             , to be effective January 1, 2009.

Computer Task Group, Incorporated

By

Title

Executive

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EX-21

EXHIBIT 21

COMPUTER TASK GROUP, INCORPORATED

SUBSIDIARIES OF COMPUTER TASK GROUP, INCORPORATED

The following is a list of all of the subsidiaries of the Registrant as of December 31, 2008. All financial statements of such subsidiaries are included in the consolidated financial statements of the Registrant, and all of the voting securities of each subsidiary are wholly-owned by the Registrant:

Subsidiary	State/Country or Jurisdiction of Incorporation
—Computer Task Group of Delaware, Inc.	Delaware
—CTG of Buffalo, Inc.	New York
—Computer Task Group (Holdings) Ltd.	United Kingdom
—Computer Task Group of Kansas, Inc. (a subsidiary of Computer Task Group (Holdings) Ltd.)	Missouri
—Computer Task Group of Canada, Inc.	Canada
—Computer Task Group International, Inc.	Delaware
—Computer Task Group Europe B.V. (a subsidiary of Computer Task Group International, Inc.)	The Netherlands
—Computer Task Group (U.K.) Ltd. (a subsidiary of Computer Task Group Europe B.V.)	United Kingdom
—Computer Task Group Belgium N.V. (a subsidiary of Computer Task Group Europe B.V.)	Belgium
—Rendeck Macro-4 Software B.V. (a subsidiary of Computer Task Group Europe B.V.)	The Netherlands
—Computer Task Group of Luxembourg PSF (a subsidiary of Computer Task Group, Incorporated)	Luxembourg
—Computer Task Group IT Solutions, S.A. (a subsidiary of Computer Task Group Europe B.V.)	Luxembourg
—CTG Deutschland GmbH	Germany

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EX-23

EXHIBIT 23

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Computer Task Group, Incorporated:

We consent to the incorporation by reference in the Registration Statements No. 33-41995, 33-50160, 33-61493, 333-12237, 333-39936, 333-51162, 333-66766, 333-91148, 333-118314, 333-143080 and 333-152827 on Form S-8 and Registration Statement No. 333-43263 on Form S-3 of Computer Task Group, Incorporated of our reports dated February 25, 2009, with respect to the consolidated balance sheets of Computer Task Group, Incorporated and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2008, the related financial statement schedule, and the effectiveness of internal control over financial reporting as of December 31, 2008, which reports appear in the December 31, 2008 annual report on Form 10-K of Computer Task Group, Incorporated.

/s/ KPMG LLP

Buffalo, New York

February 25, 2009

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EX-31.(A)

EXHIBIT 31(a)

CERTIFICATION

I, James R. Boldt, certify that:

1. I have reviewed this report on Form 10-K of Computer Task Group, Incorporated;

2. 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;

3. 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;

4. 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 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

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

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: February 25, 2009	/s/    JAMES R. BOLDT
	James R. Boldt Chairman and Chief Executive Officer

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EX-31.(B)

EXHIBIT 31(b)

CERTIFICATION

I, Brendan M. Harrington, certify that:

1. I have reviewed this report on Form 10-K of Computer Task Group, Incorporated;

2. 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;

3. 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;

4. 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 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

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

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: February 25, 2009	/s/    BRENDAN M. HARRINGTON
	Brendan M. Harrington Chief Financial Officer

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EX-32

EXHIBIT 32

CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Computer Task Group, Incorporated, a New York corporation (the “Company”), does hereby certify with respect to the Annual Report of the Company on Form 10-K for the year ended December 31, 2008 as filed with the Securities and Exchange Commission (the “Form 10-K”) that:

(1) the Form 10-K 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 Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to Computer Task Group, Incorporated and will be retained by Computer Task Group, Incorporated and furnished to the Securities and Exchange Commission or its staff upon request.

Date: February 25, 2009	/s/    JAMES R. BOLDT
	James R. Boldt Chairman and Chief Executive Officer
Date: February 25, 2009	/s/    BRENDAN M. HARRINGTON
	Brendan M. Harrington Chief Financial Officer

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