<PAGE>

                        UNITED STATES
             SECURITIES AND EXCHANGE COMMISSION
                   WASHINGTON D.C.  20549

                          FORM 10-Q
                      ----------------


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

          For the quarter ended September 30, 1999

               Commission file number 0-19433


                          [LOGO]



                Technology Solutions Company
            Incorporated in the State of Delaware
           Employer Identification No. 36-3584201


                  205 North Michigan Avenue
                         Suite 1500
                  Chicago, Illinois  60601
                       (312) 228-4500





  TSC (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 and (2) HAS BEEN subject to
  such filing requirements for the past 90 days.

  As of November 01, 1999, there were outstanding 42,893,218
  shares of TSC Common Stock, par value $.01.



<PAGE>

                  TECHNOLOGY SOLUTIONS COMPANY
                       Index to Form 10-Q
---------------------------------------------------------------


                             Part I
                                                          Page
                                                         Number
                                                         ------
FINANCIAL INFORMATION (UNAUDITED)

ITEM 1. FINANCIAL STATEMENTS

   Consolidated Balance Sheets as of
     September 30, 1999 and December 31, 1998                3

   Consolidated Statements of Income
     for the Three Months and Nine Months
     Ended September 30, 1999 and 1998                       4

   Consolidated Statements of Cash Flows
     for the Nine Months Ended September 30, 1999 and 1998   5

   Notes to Consolidated Financial Statements                6

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
        OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS    18


                             Part II

OTHER INFORMATION

   Item 2                                                   30

   Item 6                                                   30

SIGNATURES                                                  31

EXHIBIT INDEX                                               32




---------------------------------------------------------------
                               Page 2




<PAGE>

                      PART I.  FINANCIAL INFORMATION
===============================================================
ITEM 1.  Financial Statements
                       TECHNOLOGY SOLUTIONS COMPANY
                        CONSOLIDATED BALANCE SHEETS
              (In thousands, except share and per share data)
                                  ASSETS
                                  ------
                                                September 30,  December 31,
                                                        1999       1998
                                                    ----------  ----------
                                                    (Unaudited)
CURRENT ASSETS:
  Cash and cash equivalents                         $  84,068    $  59,473
  Marketable securities                                24,611       25,269
  Receivables, less allowance
   for doubtful receivables of $5,710 and $4,845       77,630       69,212
  Deferred income taxes                                18,279       15,297
  Other current assets                                 10,599       13,764
                                                      -------      -------
    Total current assets                              215,187      183,015

COMPUTERS, FURNITURE AND EQUIPMENT, NET                 7,069        9,372

COST IN EXCESS OF NET ASSETS OF ACQUIRED BUSINESSES    13,397       17,901

LONG-TERM RECEIVABLES AND OTHER                         6,639        8,811
                                                     --------     --------
    Total assets                                     $242,292     $219,099
                                                     ========     ========
                   LIABILITIES AND STOCKHOLDERS' EQUITY
                   ------------------------------------
CURRENT LIABILITIES:
  Accounts payable                                   $  2,766     $  3,263
  Accrued compensation and related costs               30,271       25,184
  Deferred compensation                                17,200       16,494
  Restructuring accrual                                 2,121          --
  Other current liabilities                             9,121        5,913
                                                      -------      -------
    Total current liabilities                          61,479       50,854
                                                      -------      -------
COMMITMENTS AND CONTINGENCIES                              --           --

STOCKHOLDERS' EQUITY:
  Preferred stock, $.01 par value; shares authorized--
     10,000,000; none issued                               --           --
  Common stock, $.01 par value; shares authorized--
     100,000,000; shares issued -- 42,858,978             429          412
  Capital in excess of par value                      103,915       94,886
  Retained earnings                                    77,539       76,938
  Accumulated other comprehensive loss:
     Unrealized holding loss, net                         (75)          (9)
     Cumulative translation adjustment                   (995)      (1,336)
                                                     --------     --------
                                                      180,813      170,891
Less: Treasury stock, at cost (0 and 275,911 shares)       --       (2,646)
                                                     --------     --------
      Total stockholders' equity                      180,813      168,245
                                                     --------     --------
      Total liabilities and stockholders' equity     $242,292     $219,099
                                                     ========     ========

The accompanying Notes to Consolidated Financial Statements are an integral
                    part of this financial information.

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                                 Page 3

<PAGE>

                       TECHNOLOGY SOLUTIONS COMPANY

                     CONSOLIDATED STATEMENTS OF INCOME
                   (In thousands, except per share data)



                                       For the Three        For the Nine
                                        Months Ended        Months Ended
                                       September 30,       September 30,
                                       ---------------     -----------------
                                        1999      1998       1999       1998
                                       -----     -----     ------      -----
                                         (Unaudited)        (Unaudited)

REVENUES                             $74,304   $84,493    $229,650  $241,240
                                     -------   -------    --------  --------

COSTS AND EXPENSES:
Project personnel                     35,601    39,013     114,043   111,453
Other project expenses                11,816    13,430      35,321    35,575
Management and
 administrative support               14,286    17,479      49,427    50,914
Goodwill amortization                  1,248     1,161       3,821     3,038
Costs related to
  eLoyalty transaction                 1,117        --       1,117        --
Restructuring charge                      --        --      10,522        --
Incentive compensation                 4,986     5,477      14,693     9,882
                                     -------    ------     -------   -------
                                      69,054    76,560     228,944   210,862
                                     -------    ------     -------   -------

OPERATING INCOME                       5,250     7,933         706    30,378
                                     -------    ------     -------   -------
OTHER INCOME (EXPENSE):
Net investment income                    907       802       2,534     2,171
Interest expense                         (63)      (33)       (132)      (73)
                                     -------    ------     -------   -------
                                         844       769       2,402     2,098
                                     -------    ------     -------   -------

INCOME BEFORE INCOME TAXES             6,094     8,702       3,108    32,476

INCOME TAX PROVISION                   2,742     3,593       2,507    13,510
                                     -------    ------      ------   -------

NET INCOME                           $ 3,352    $5,109      $  601   $18,966
                                     =======    ======      ======   =======

EARNINGS PER COMMON SHARE            $  0.08    $ 0.13      $ 0.01   $  0.48
                                     =======    ======      ======   =======

WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING           42,369    40,446      41,722    39,915
                                     =======    ======      ======   =======

EARNINGS PER COMMON SHARE
  ASSUMING DILUTION                   $ 0.08    $ 0.12      $ 0.01    $ 0.44
                                     =======    ======      ======   =======

WEIGHTED AVERAGE NUMBER
  OF COMMON AND COMMON EQUIVALENT
  SHARES OUTSTANDING                  44,422    43,347      43,239    43,352
                                     =======    ======      ======   =======


The accompanying Notes to Consolidated Financial Statements are an integral
part of this financial information.

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                                 Page 4

<PAGE>

                       TECHNOLOGY SOLUTIONS COMPANY

                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In thousands)
                                                        For the
                                                   Nine Months Ended
                                                      September 30,
                                                   -----------------
                                                     1999      1998
                                                   ------     ------
                                                      (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                       $   601   $ 18,966
 Restructuring charge                              10,522         --
 Adjustments to reconcile net income to net
  cash from operating activities:
   Depreciation and amortization                    7,631      7,082
   Provisions for receivable valuation
    allowances and reserves for
     possible losses                                4,413      1,720
   (Gain) loss on sale of investments                (102)        25
   Deferred income taxes                           (3,010)     1,410

   Changes in assets and liabilities:
    Receivables                                   (13,507)   (33,886)
    Purchases of trading securities
     related to deferred compensation program        (706)    (4,786)
    Refundable income taxes                            --      1,569
    Other current assets                            2,282     (7,687)
    Accounts payable                                 (446)     1,974
    Accrued compensation and related costs          5,202      4,298
    Deferred compensation funds from employees        706      4,786
    Other current liabilities                           9      2,909
    Other assets                                    1,905       (837)
                                                  -------    -------
     Net cash provided by
      (used in) operating activities               15,500     (2,457)
                                                  -------    -------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of available-for-sale securities         (1,500)    (7,675)
 Proceeds from available-for-sale securities        2,820      4,065
 Proceeds from held-to-maturity investments            --      2,520
 Capital expenditures, net                         (1,847)    (4,021)
 Net assets of acquired businesses                     --     (4,849)
 Capitalized lease obligation                          --        (70)
                                                  -------    -------
     Net cash used in investing activities           (527)   (10,030)
                                                  -------    -------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from exercise of stock options            5,990      4,282
 Proceeds from employee stock purchase plan         3,017      3,452
 Purchase of treasury stock                        (4,930)        --
 Investment by venture capital firms                4,506         --
                                                  -------    -------
     Net cash provided by financing activities      8,583      7,734
                                                  -------    -------

EFFECT OF EXCHANGE RATE CHANGES ON CASH
 AND CASH EQUIVALENTS                               1,039     (1,425)
                                                  -------    -------
INCREASE (DECREASE) IN
 CASH AND CASH EQUIVALENTS                         24,595     (6,178)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD     59,473     42,722
                                                  -------    -------
CASH AND CASH EQUIVALENTS, END OF PERIOD          $84,068    $36,544
                                                  =======    =======
The accompanying Notes to Consolidated Financial Statements are an
     integral part of this financial information.

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                                 Page 5



<PAGE>

                       TECHNOLOGY SOLUTIONS COMPANY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
=======================================================================

NOTE 1 -- BASIS OF PRESENTATION

The  consolidated financial statements include  the  accounts  of
Technology  Solutions Company and its subsidiaries  (TSC  or  the
Company).    The    consolidated    balance    sheet    as     of
September 30, 1999, the consolidated statements of income for the
three  months and nine months ended September 30, 1999  and  1998
and the consolidated statements of cash flows for the nine months
ended  September  30,  1999 and 1998 have been  prepared  by  the
Company  without  audit.  In  the opinion  of  management,  these
financial statements include all adjustments necessary to present
fairly  the  financial position, results of operations  and  cash
flows as of September 30, 1999 and for all periods presented. All
adjustments  made  have  been of a normal and  recurring  nature.
Certain information and footnote disclosures normally included in
the  financial  statements prepared in accordance with  generally
accepted  accounting principles have been condensed  or  omitted.
The  Company believes that the disclosures included are  adequate
and  provide  a  fair  presentation of  interim  period  results.
Interim  financial statements are not necessarily  indicative  of
financial position or operating results for an entire year. It is
suggested  that  these interim financial statements  be  read  in
conjunction with the audited financial statements and  the  notes
thereto included in the Company's Transition Report on Form  10-K
for  the  seven month transition period ended December  31,  1998
filed  with  the United States Securities and Exchange Commission
(SEC) on March 30, 1999.Certain  reclassifications have been made
to  prior  periods  to conform to the current period classification.

NOTE 2 -- THE COMPANY

TSC  delivers  business benefits through consulting  and  systems
integration   services  that  help  clients  transform   customer
relationships  and  improve  operations.  The  Company's  clients
generally are located throughout the United States and in Europe,
Latin America, Canada and Australia.

NOTE 3 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES   OF   CONSOLIDATION--The   accompanying   consolidated
financial statements include the accounts of the Company and  all
of  its  subsidiaries. All significant intercompany  transactions
have  been  eliminated. Acquired businesses are included  in  the
results   of   operations    since   their   acquisition   dates.

FISCAL  YEAR CHANGE--On November 22, 1998, the Company's Board  of
Directors voted to change the fiscal year of the Company  from  a
fiscal year ending on the thirty-first day of May in each year to
a  calendar  year ending on the thirty-first day of  December  in
each year.

REVENUE RECOGNITION--The Company derives substantially all of its
revenues from information technology (IT), strategic business and
management  consulting,  systems  integration,  programming,  and
packaged  software integration and implementation  services.  The
Company  recognizes  revenue on contracts as  work  is  performed
primarily  based on hourly billing rates. Out-of-pocket  expenses
are   presented  net  of  amounts  billed  to  clients   in   the
accompanying  consolidated statements of  income.  Contracts  are
performed in phases. Losses on contracts, if any, are reserved in
full  when  determined.  Revenue from licensing  of  software  is
recognized  upon  delivery of the product. The Company  does  not
presently  have any significant maintenance and support contracts
for software licensed to clients.

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                          Page 6


<PAGE>


                    TECHNOLOGY SOLUTIONS COMPANY

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
==================================================================

CASH AND CASH EQUIVALENTS--The Company considers all highly liquid
investments   readily  convertible  into  cash   (with   original
maturities of three months or less) to be cash equivalents. These
short-term investments are carried at cost plus accrued interest,
which approximates market.

MARKETABLE   SECURITIES--The  Company's   marketable   securities
primarily consist of preferred stocks and trading securities. The
preferred  stocks, all of which are classified as  available-for-
sale,  are  reported  at fair value, with  unrealized  gains  and
losses  excluded  from earnings and reported as a  net  after-tax
amount  in  a  separate component of stockholders'  equity  until
realized.  The  Company's investments related  to  the  executive
deferred  compensation plan are classified as trading securities,
with  unrealized  gains  and  losses included  in  the  Company's
consolidated statements of income. Realized gains or  losses  are
determined on the specific identification method.

COMPUTERS,  FURNITURE  AND  EQUIPMENT--Computers, furniture   and
equipment  are carried at cost and depreciated on a straight-line
basis  over their estimated useful lives. Useful lives  generally
are five years or less.

COST IN EXCESS OF NET ASSETS OF ACQUIRED BUSINESSES--The excess of
cost over the fair market value of the net identifiable assets of
businesses  acquired (goodwill) is amortized on  a  straight-line
basis, typically over a five-year period.

FOREIGN  CURRENCY  TRANSLATION--All  assets  and  liabilities   of
foreign  subsidiaries are translated to U.S. dollars  at  end  of
period exchange rates. The resulting translation adjustments  are
recorded  as  a  component of stockholders'  equity.  Income  and
expense items are translated at average exchange rates prevailing
during  the  period.  Gains  and  losses  from  foreign  currency
transactions   of   these  subsidiaries  are  included   in   the
consolidated statements of income. The functional currencies  for
the Company's foreign subsidiaries are their local currencies.

FAIR VALUE OF  FINANCIAL   INSTRUMENTS--The  carrying  values  of
current   assets   and  liabilities  and  long-term   receivables
approximated  their  fair  values  at  September  30,  1999   and
December 31, 1998. Investments pertaining to minor investments in
companies  for  which  fair value is not  readily  available  are
believed to approximate their carrying amount.

STOCK-BASED  COMPENSATION--The Company  accounts  for  stock-based
compensation  using  the  intrinsic value  method  prescribed  in
Accounting Principles Board (APB) Opinion No. 25, "Accounting for
Stock  Issued  to  Employees," and related  interpretations.  The
Company  recognizes no compensation expense for its stock  option
plan or employee stock purchase plan.


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                          Page 7


<PAGE>

                    TECHNOLOGY SOLUTIONS COMPANY

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
==================================================================

INCOME TAXES--The Company uses an asset and liability approach  to
financial  accounting  and reporting for income  taxes.  Deferred
income  taxes are provided when tax laws and financial accounting
standards differ with respect to the amount of income for a  year
and  the  basis of assets and liabilities. The Company  does  not
provide  U.S.  deferred  income  taxes  on  earnings  of  foreign
subsidiaries which are expected to be indefinitely reinvested.

ESTIMATES AND ASSUMPTIONS--The preparation of financial statements
in  conformity  with  generally  accepted  accounting  principles
requires  management to make assumptions that affect the reported
amounts  of  assets and liabilities at the date of the  financial
statements  and  the  reported amounts of revenues  and  expenses
during  the  reporting period. Actual results could  differ  from
those estimates.

NOTE 4 -- STOCK OPTIONS

As  of September 30, 1999, options to purchase 8.9 million shares
of  common  stock  were outstanding and options  to  purchase  an
additional 0.8 million shares of common stock were available  for
grant under the Technology Solutions Company 1996 Stock Incentive
Plan.

eLoyalty  Corporation,  a  wholly  owned subsidiary of the
Company, has adopted the eLoyalty Corporation 1999 Stock Incentive
Plan (the "eLoyalty Plan"). The number of eLoyalty Corporation common
shares initially available for all grants of awards over the term
of  the eLoyalty Plan is equal to approximately 12 percent of the
aggregate number of eLoyalty Corporation common shares that would
be  issued  and outstanding immediately after the Asset  Transfer
(defined  in  Note 9) and after giving effect to the purchase  of
eLoyalty  Corporation  common shares by the unaffiliated  venture
capital  firms  described in Note 9.  As of September  30,  1999,
options  to purchase approximately 96% of the number of  eLoyalty
Corporation common shares initially available for grant under the
eLoyalty  Plan  had been issued, all of which  have  an  exercise
price   representing  the  fair  market  value  of  an   eLoyalty
Corporation common share on the date of grant.

It  is expected that the eLoyalty Plan will be amended to provide
that,  in  the  event  of  a  spin-off of  eLoyalty  Corporation,
substitute options to purchase eLoyalty Corporation common shares
(Substitute Options) will be granted to those holders of  options
to  purchase  the Company's common shares (Company Options).  The
Substitute  Options  will  be granted  as  follows:  (a)  Company
Options  held by persons who either become employed  by  eLoyalty
Corporation or become directors of eLoyalty Corporation  (but  do
not  remain directors of the Company) immediately after the spin-
off  will  be  converted  solely  into  Substitute  Options.  The
Substitute  Options  will  preserve the  difference  between  the
market  value of the stock subject to the Company Option and  the
exercise  price of the Company Option by adjusting the number  of
shares  purchasable and the exercise price, based on a comparison
of the trading price of the Company's common stock, including the
value  of eLoyalty common stock and the trading price of eLoyalty
common stock on a "when-issued" basis. The Substitute Option will
take  into  account  all employment with  both  the  Company  and
eLoyalty  for  purposes of determining when  the  option  becomes
exercisable  and  when  it terminates. All  other  terms  of  the
Substitute Option will be the same as the current Company Option.

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                          Page 8

<PAGE>

                    TECHNOLOGY SOLUTIONS COMPANY

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
==================================================================

(b)  Company Options held by all other persons that were  granted
prior  to June 22, 1999 will be converted into Substitute Options
and  adjusted  Company  Options.  The  Company  Options  will  be
converted in a manner that preserves the aggregate exercise price
of  each  option,  which will be allocated between  the  adjusted
Company Option and the Substitute Option based on a comparison of
the  trading  price of the Company's common stock, excluding  the
value  of eLoyalty common stock and the trading price of eLoyalty
common  stock  on  a  "when-issued"  basis.  Both  options,  when
combined,  will  preserve the intrinsic  value  of  the  existing
option, and each will preserve the ratio of the exercise price to
the  fair  market value of the stock subject to the  option.  The
terms and conditions of each Substitute Option, such as the  term
and the schedule of exercisability, shall be the same as those of
the  Company  Option to which the Substitute Option relates.  (c)
Company Options that were granted after June 21, 1999 will not be
adjusted as described above, but instead will continue solely  as
an  option to purchase shares of the Company's common stock. Each
of  these options will be adjusted to reflect the spin-off, based
on  a  comparison  of the trading price of the  Company's  common
stock,  including  the value of eLoyalty common  stock,  and  the
trading price of the Company's common stock, excluding the  value
of eLoyalty common stock and will preserve the intrinsic value of
the option and the ratio of the exercise price to the fair market
value of the stock.

NOTE 5 -- CAPITAL STOCK

During  the quarter ended March 31, 1999, the Company repurchased
480,000 shares of the Company's outstanding Common Stock for $4.9
million  under a 2,000,000 share repurchase program announced  in
November  1998. As of September 30, 1999, 1,520,000  shares  were
available to be purchased under the share repurchase program.  No
shares  were repurchased during the quarters ended June 30,  1999
or September 30, 1999.

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                          Page 9

<PAGE>

                    TECHNOLOGY SOLUTIONS COMPANY

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
==================================================================

NOTE 6 -- EARNINGS PER COMMON SHARE

The Company discloses basic and diluted earnings per common share
in  the consolidated statements of income under the provisions of
SFAS No. 128, "Earnings Per Share." Earnings per common share  is
computed by dividing net income by the weighted average number of
common  shares outstanding during each period presented. Earnings
per  common  share assuming dilution is computed by dividing  net
income   by   the  weighted  average  number  of  common   shares
outstanding  during  each  period  presented,  including   common
equivalent  shares  arising from the assumed  exercise  of  stock
options, where appropriate. All share and per share amounts  have
been adjusted to reflect all of the Company's prior stock splits.


             Reconciliation of Basic and Diluted Earnings Per Share
                       (In thousands, except per share data)
            -------------------------------------------------------
             For the Three Months             For the Three Months
                   Ended                            Ended
              September 30, 1999               September 30, 1998
            -----------------------         ------------------------
                               Per                             Per
               Net            Common          Net             Common
             Income  Shares   Share          Income  Shares   Share
            -------  ------   ------         ------  ------  --------
Basic
Earnings
Per Share    $3,352  42,369    $0.08         $5,109  40,446    $0.13
                               =====                           =====
Effect of
Stock
Options          --   2,053                     --    2,901
             ------  ------                  ------  ------
Diluted
Earnings
Per Share    $3,352  44,422    $0.08         $5,109  43,347    $0.12
             ======  ======    =====         ======  ======    =====


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                          Page 10


<PAGE>

                    TECHNOLOGY SOLUTIONS COMPANY

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
=====================================================================




             Reconciliation of Basic and Diluted Earnings Per Share
                       (In thousands, except per share data)
            ---------------------------------------------------------
             For the Nine Months             For the Nine Months
                   Ended                            Ended
              September 30, 1999               September 30, 1998
            -----------------------         -------------------------
                               Per                             Per
               Net            Common          Net             Common
             Income   Shares   Share          Income  Shares   Share
            -------  -------   ------         ------  ------  -------
Basic
Earnings
Per Share     $601   41,722     $0.01        $18,966   39,915   $0.48
                                =====                           =====
Effect of
Stock
Options         --    1,517                       --    3,437
              ----   ------                  -------   ------
Diluted
Earnings
Per Share     $601   43,239     $0.01        $18,966   43,352   $0.44
              ====   ======     =====        =======   ======   =====

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                          Page 11


<PAGE>

                    TECHNOLOGY SOLUTIONS COMPANY

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
==================================================================

NOTE 7 -- COMPREHENSIVE INCOME

In  June  1997, the Financial Accounting Standards  Board  (FASB)
issued  SFAS  No.  130,  "Reporting  Comprehensive  Income."  The
Company  adopted SFAS No. 130 during the transition period  ended
December  31, 1998. This statement established new standards  for
reporting  and displaying comprehensive income and its components
in  the  financial statements. The Company's comprehensive income
was as follows:


                                                      For the Three
                                                       Months Ended
(In thousands)                                         September 30,
                                                   ------------------
                                                    1999        1998
                                                   ------      ------
Net Income                                         $3,352      $5,109

Accumulated Other Comprehensive Income (Loss):
 Unrealized Holding (Losses) Gains on
  Available-for-Sale Securities, Net of Tax           (14)         68

 Cumulative Translation Adjustment, Net of Tax        604      (1,562)
                                                   ------      ------
  Other Comprehensive Income (Loss)                   590      (1,494)
                                                   ------      ------
Total Comprehensive Income                         $3,942      $3,615
                                                   ======      ======


                                                       For the Nine
                                                       Months Ended
(In thousands)                                         September 30,
                                                   ------------------
                                                    1999        1998
                                                   ------      ------
Net Income                                        $   601     $18,966

Accumulated Other Comprehensive Income (Loss):
 Unrealized Holding (Losses) Gains on
  Available-for-Sale Securities, Net of Tax           (66)        133

  Cumulative Translation Adjustment, Net of Tax       341      (1,771)
                                                  -------     -------
   Other Comprehensive Income (Loss)                  275      (1,638)
                                                  -------     -------
Total Comprehensive Income                        $   876     $17,328
                                                  =======     =======


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                          Page 12



<PAGE>

                    TECHNOLOGY SOLUTIONS COMPANY

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
==================================================================

NOTE 8 -- BUSINESS SEGMENTS

The  Company is organized into two business segments  which  each
have  their  own business focus and service offering expertise  -
Enterprise Solutions (E-Solutions) and eLoyalty. Each serves  the
Company's  customers in the U.S. and international  markets.  The
Company believes that a structure based on these focused business
segments  addresses  its  clients'  needs  for  very  specialized
industry  and  systems  knowledge and allows  its  employees  the
flexibility  and opportunity to grow and develop.  Each  business
segment  develops its own specific methodologies, tools,  project
management  plans,  best practice and benchmark  information  and
templates.  The  E-Solutions  business  segment  has  specialized
expertise  in helping organizations access the ability  of  their
current systems to meet the changing and often increasing demands
of  business.  E-Solutions  is a recognized  leader  in  packaged
software implementation and integration, supply chain management,
e-business and knowledge management. The eLoyalty business  is  a
leading global information technology services company focused on
providing  enterprise-wide solutions across all  customer  access
channels, including the Internet, that are designed to result  in
lasting and profitable customer relations for its clients.

Segment  data  also includes disclosing corporate  infrastructure
costs  and  corporate  adjustments separately  as  corporate  and
Global Core Services (GCS). The objective of the GCS function  is
to  facilitate local decision-making and support the autonomy  of
the business segments, practice areas and project managers, while
maintaining  the  internal structure necessary to  support  TSC's
goals.  The  functional areas within this  area  include:  senior
corporate  management; accounting; financial reporting;  finance;
tax;   legal;  treasury;  human  resources;  employee   benefits;
marketing;  public  and  investor relations;  office  operations;
recruiting  support; training; internal communications;  internal
technology   applications;  planning;  quality   assurance;   and
insurance. GCS costs also include goodwill amortization.

There  are  no  intersegment revenues. The Company evaluates  the
performance of its segments and allocates resources to them based
on revenues, operating income and receivables.


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                          Page 13



<PAGE>

                    TECHNOLOGY SOLUTIONS COMPANY

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
================================================================================

The  table below presents information about the reported revenue,
operating income (loss) and receivables of TSC (in thousands) for
the  three  months and nine months ended September 30,  1999  and
1998.


                                                     Corporate and
Three Months Ended                                   Global Core   Consolidated
September 30, 1999       E-Solutions    eLoyalty      Services (a)      Total
------------------       -----------    --------    --------------  -----------
Revenues                    $36,278      $38,026      $    --        $  74,304
Operating income            $ 9,302      $10,168      $(14,220)(b)   $   5,250
Receivables                 $37,291      $46,049      $    --        $  83,340

                                                     Corporate and
Three Months Ended                                   Global Core   Consolidated
September 30, 1998       E-Solutions    eLoyalty      Services (a)      Total
------------------       -----------    --------    --------------  -----------
Revenues                    $57,260      $27,233      $    --        $  84,493
Operating income            $14,334      $ 5,695      $(12,096)      $   7,933
Receivables                 $53,222      $31,867      $    --        $  85,089

(a) Operating results include goodwill amortization of $1,248 and $1,161
    for the three months ended September 30, 1999 and 1998, respectively.

(b) Operating results include costs related to the eLoyalty
    transaction of $1,117.


                                                     Corporate and
Nine Months Ended                                    Global Core   Consolidated
September 30, 1999       E-Solutions    eLoyalty      Services (a)      Total
------------------       -----------    --------    --------------  -----------
Revenues                   $126,257     $103,393       $    --        $229,650
Operating income           $ 24,814     $ 25,934       $(50,042)(b)   $    706
Receivables                $ 37,291     $ 46,049       $    --        $ 83,340


                                                     Corporate and
Nine Months Ended                                    Global Core   Consolidated
September 30, 1998       E-Solutions    eLoyalty      Services (a)      Total
------------------       -----------    --------    --------------  -----------
Revenues                   $165,573      $75,667       $    --        $241,240
Operating income           $ 41,040      $15,895       $(26,557)      $ 30,378
Receivables                $ 53,222      $31,867       $    --        $ 85,089

(a) Operating results include goodwill amortization of $3,821 and $3,038
    for the nine months ended September 30, 1999 and 1998, respectively.

(b) Operating results includes a restructuring charge of $10,522
    and costs related to the eLoyalty transaction of $1,117.


-------------------------------------------------------------------------------
                          Page 14



<PAGE>

                    TECHNOLOGY SOLUTIONS COMPANY

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
======================================================================

The  following  is  revenue and long-lived asset  information  by
geographic area (in thousands):


Three Months Ended               United     Foreign     Consolidated
September 30, 1999               States   Subsidiaries      Total
-------------------             --------  ------------  ------------
Revenues                        $ 64,692     $ 9,612       $ 74,304
Identifiable assets             $206,334     $35,958       $242,292


Three Months Ended               United     Foreign     Consolidated
September 30, 1998               States   Subsidiaries      Total
-------------------             --------  ------------  ------------
Revenues                        $ 76,467     $ 8,026       $ 84,493
Identifiable assets             $186,564     $23,715       $210,279


Nine Months Ended                United     Foreign     Consolidated
September 30, 1999               States   Subsidiaries     Total
-------------------             --------  ------------  ------------
Revenues                        $201,641     $28,009       $229,650
Identifiable assets             $206,334     $35,958       $242,292


Nine Months Ended                United     Foreign     Consolidated
September 30, 1998               States   Subsidiaries      Total
-------------------             --------  ------------  ------------
Revenues                        $219,725     $21,515       $241,240
Identifiable assets             $186,564     $23,715       $210,279


Foreign  revenue  is  based on the country  in  which  the  legal
subsidiary is domiciled. No single foreign country's revenue  was
material  as defined by SFAS No. 131, "Disclosures about Segments
of  an  Enterprise and Related Information," to the  consolidated
revenues of the Company.

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                          Page 15



<PAGE>

                    TECHNOLOGY SOLUTIONS COMPANY

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
===================================================================

NOTE 9 -- OTHER EVENTS

On  March 30, 1999, the Company announced a number of changes  to
its business operations and, as a result, the Company recorded  a
restructuring  charge  of  $10.5 million  associated  with  those
changes  and the severance of approximately 300 people, primarily
consulting  personnel.  The restructuring charge  was  determined
based  on  a plan prepared at the time the restructuring  actions
were  approved  by management and the Board of Directors.  During
the  nine  months  ended  September 30, 1999,  the  Company  used
$8.4  million  of the restructuring accrual as a result  of  $6.8
million  of  costs associated with the severance of approximately
270  employees  and  $1.6 million in asset write-offs  and  other
costs.  The restructuring accrual balance is considered  adequate
to cover the remaining committed restructuring actions.

On  April  8,  1999,  the Company filed a private  letter  ruling
request  with  the  U.S.  Internal  Revenue  Service  (the   IRS)
regarding  the  proposed  spin-off  of  the  Company's   eLoyalty
business  segment as a non-taxable distribution for U.S.  federal
income tax purposes. On September 23, 1999, the Company announced
that  it  would accelerate the spin-off of its eLoyalty  business
segment  into a separate publicly traded company through  a  tax-
free  distribution  of all of the Company's eLoyalty  Corporation
shares to TSC's shareholders. The Company determined that it  was
not  necessary  for  eLoyalty Corporation to conduct  an  initial
public offering (IPO) prior to effecting the spin-off, which will
permit  the  spin-off to occur in the first quarter  of  calendar
year  2000, subject to the receipt of a favorable IRS tax  ruling
and  other  regulatory approvals. Accordingly, during the quarter
ended September  30,  1999,  the Company expensed $1.1 million in
legal and accounting  fees incurred in anticipation  of  the IPO.

During June 1999, the Company entered into an agreement with  two
venture  capital  firms  whereby  these  venture  capital   firms
purchased 500,000 shares of the Company's common stock. On August
13,  1999, Technology Crossover Ventures and Sutter Hill Ventures
funded to the Company cash proceeds of approximately $4.5 million
and  the  Company delivered 500,000 shares of Common  Stock  (the
"Company  Shares")  to the venture capital  firms.  The  purchase
price  of $9.013 per share was equal to the average last reported
sales  price for the ten consecutive trading days ended June  25,
1999 (the date of the agreement). Both venture capital firms have
a  single  demand registration right with respect to the  Company
Shares,  which  expires  twelve months  after  the  date  of  the
purchase.

In  addition,  Technology  Crossover  Ventures  and  Sutter  Hill
Ventures have committed to purchase from eLoyalty Corporation for
$8.4  million approximately 5 percent of the number  of  eLoyalty
Corporation common shares (the "eLoyalty Shares") that  would  be
issued  and outstanding after the Company completes the  proposed
transfer to eLoyalty Corporation of the assets and liabilities of
the  business  historically conducted as the  Company's  eLoyalty
business segment (the "Asset Transfer").  The agreement with  the


------------------------------------------------------------------
                          Page 16



<PAGE>

                    TECHNOLOGY SOLUTIONS COMPANY

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
===================================================================

venture capital firms provides that the proposed purchase of  the
eLoyalty Shares is subject to the receipt of a favorable  revenue
ruling  from the IRS with respect to the proposed tax-free  spin-
off  of  eLoyalty Corporation to the Company's stockholders,  the
consummation  of  the Asset Transfer and certain other  customary
conditions. The Company has agreed, pursuant to the agreement, to
use  commercially reasonable efforts to effect the Asset Transfer
as soon as is reasonably practicable after receipt of a favorable
revenue  ruling.  In  the  event the Asset  Transfer  is  not  so
consummated  and  the venture capital firms do not  purchase  the
eLoyalty  Shares, the Company could become obligated  to  make  a
liquidated damage payment of $1.2 million to the venture  capital
firms.  Alternatively, if the venture capital firms purchase  the
eLoyalty Shares and the proposed spin-off of eLoyalty Corporation
does  not  occur  by August 13, 2000, eLoyalty Corporation  could
become  obligated to repurchase the eLoyalty Shares then held  by
the venture capital firms at a premium totaling $1.2 million over
the  price paid by the venture capital firms for such shares. The
agreement  further  provides that,  after  the  purchase  of  the
eLoyalty  Shares,  a representative of each of  the  two  venture
capital   firms  groups  will  be  appointed  to   the   eLoyalty
Corporation Board of Directors.

------------------------------------------------------------------
                          Page 17



<PAGE>


                   TECHNOLOGY SOLUTIONS COMPANY

          ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS
        OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
===================================================================

RESULTS OF OPERATIONS

Three  Months Ended September 30, 1999 Compared With Three Months
Ended September 30, 1998

Consolidated  net  revenues for the quarter ended  September  30,
1999   decreased  12  percent  to  $74.3  million  compared  with
$84.5  million  for the same period last year. Net revenues  from
the Enterprise Solutions (E-Solutions) business contributed $36.3
million  during the quarter ended September 30, 1999 compared  to
$57.3 million in the prior period, a decrease of 37 percent. This
decrease  was mainly due to a decline in the demand  for  certain
services  of  the  E-Solutions business as a  result  of  clients
facing  budgetary restraints as they focus on Year  2000  issues.
This  has  been evidenced by a reduction in new license sales  by
the  package  software vendors such as PeopleSoft and  Baan.  Net
revenues  from  the eLoyalty business contributed  $38.0  million
during  the  quarter ended September 30, 1999 compared  to  $27.2
million  in  the  prior period, an increase of 40  percent.  This
improvement   was  due  to  an  increased  demand  for   eLoyalty
consulting services.

Project  personnel  costs,  which represent  mainly  professional
salaries and benefits, decreased to $35.6 million for the quarter
ended  September 30, 1999 from $39.0 million for the same  period
last  year, a decrease of 9 percent. The decrease was mainly  due
to   a   decrease  in  average  professional  headcount.  Project
personnel  costs  as  a percentage of net revenues  increased  to
48  percent  for  the  quarter ended  September   30,  1999  from
46 percent for the same period last year due to the decline in E-
Solutions revenues.

Other  project expenses consist of nonbillable expenses  directly
incurred  for  client  projects and business  development.  These
expenses  include recruiting fees, sales and marketing  expenses,
personnel  training and provisions for valuation  allowances  and
reserves  for  potential  losses on  continuing  projects.  Other
project  expenses for the quarter ended September  30, 1999  were
$11.8  million,  compared with $13.4 million  in  the  comparable
period last year, a decrease of $1.6 million, or 12 percent.  The
decrease  in  other  project  expenses  primarily  included   the
following:  a  decrease  of  $1.5  million  in  domestic  hiring,
training,  communication and computer expenses due to a  decrease
in  average  headcount;  a  decrease in  international  costs  of
$0.5  million  associated  with travel,  marketing  and  business
development expenses; and a decrease of $0.4 million  in  various
other  domestic  project expenses which  include  items  such  as
amortization  of software costs, depreciation expense  and  other
costs.  These  decreases  were  offset  by  an  increase  in  the
provision  for  valuation allowances and reserves  for  potential
losses of $0.8 million. Other project expenses as a percentage of
net revenues remained unchanged from the same period last year at
16 percent.

Management    and   administrative   support   costs    decreased
$3.2 million to $14.3 million for the quarter ended September 30,
1999 from $17.5 million for the same period last year, a decrease
of  18  percent. Approximately $0.1 million of this decrease  was

------------------------------------------------------------------
                          Page 18



<PAGE>

                   TECHNOLOGY SOLUTIONS COMPANY

               MANAGEMENT'S DISCUSSION AND ANALYSIS
        OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                              (Continued)
===================================================================

attributable to the decrease in Global Core Service  (GCS)  costs
over  last year. The decrease in GCS costs versus the same period
last  year  included  the following: decreased  expenses  in  the
internal  systems and human resources areas of  $0.5  million;  a
decrease  in corporate recruiting expenses of $0.3 million  as  a
result of a reduction in headcount; and a net decrease in various
other  costs  of  $0.3 million. These decreases  were  offset  by
higher  marketing  expenses  of  $1.0  million  as  a  result  of
increased  corporate marketing efforts. The Company  also  had  a
decrease  of  $3.1  million  in  practice  area  management   and
administrative   costs.  This  decrease  primarily   included   a
reduction  of international expenses of $0.6 million; a  decrease
in  regional  management and practice area support  personnel  of
$0.5   million;  and  a  reduction  in  various  other   domestic
management  and  administrative expenses of $2.0  million,  which
included  items such as practice area recruiting, sales, meetings
and other expenses.

Goodwill  amortization  remained  virtually  unchanged  for   the
quarter ended September 30, 1999 compared to the same period last
year at $1.2 million.

On  April  8,  1999,  the Company filed a private  letter  ruling
request  with  the  U.S.  Internal  Revenue  Service  (the   IRS)
regarding  the  proposed  spin-off  of  the  Company's   eLoyalty
business  segment as a non-taxable distribution for U.S.  federal
income tax purposes. On September 23, 1999, the Company announced
that  it  would accelerate the spin-off of its eLoyalty  business
segment  into a separate publicly traded company through  a  tax-
free  distribution  of all of the Company's eLoyalty  Corporation
shares to TSC's shareholders. The Company determined that it  was
not  necessary  for  eLoyalty Corporation to conduct  an  initial
public offering (IPO) prior to effecting the spin-off, which will
permit  the  spin-off to occur in the first quarter  of  calendar
year  2000, subject to the receipt of a favorable IRS tax  ruling
and  other regulatory  approvals. Accordingly, during the quarter
ended September  30, 1999, the Company expensed $1.1 million   in
legal and  accounting  fees incurred in anticipation of the  IPO.

Incentive  compensation of $5.0 million was  accrued  during  the
quarter ended September 30, 1999 compared to $5.5 million for the
same  period  last year. The decrease was primarily  due  to  the
reduction  in  headcount during the quarter ended  September  30,
1999   compared   to  the  same  period  last   year.   Incentive
compensation  as a percentage of net revenues increased  slightly
to 7 percent for the quarter ended September 30, 1999 compared to
6  percent for the same period last year. The Company expects  to
continue  to  accrue incentive compensation throughout  the  1999
calendar year.

Consolidated  operating income was $5.3 million for  the  quarter
ended  September  30,  1999 compared with consolidated  operating
income of $7.9 million in the prior period due to the decline  in
E-Solutions   revenues  and  the  costs  related  to the eLoyalty
transaction.  Operating  income from the E-Solutions business was

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                          Page 19



<PAGE>

                   TECHNOLOGY SOLUTIONS COMPANY

               MANAGEMENT'S DISCUSSION AND ANALYSIS
        OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                              (Continued)
===================================================================

$9.3 million during the quarter ended September 30, 1999 compared to
$14.3 million in the prior period, a decrease of 35 percent. This
decrease  was mainly due to a decrease in the demand for  certain
services  in  the  E-Solutions business and lower  billing  rates
partially offset by improved staff utilization. Operating  income
from  the eLoyalty business was $10.2 million during the  quarter
ended  September 30, 1999 compared to $5.7 million in  the  prior
period,  an  increase of 79 percent. This increase was  primarily
due to the increased demand for eLoyalty services, as well as  an
increase in staff utilization and was consistent with its  higher
revenues.

Corporate and GCS costs for the quarter ended September 30,  1999
were $14.2 million compared to $12.1 million in the prior period,
an increase of 18 percent. The increase in corporate and GCS costs
primarily represents the costs related to the eLoyalty transaction
as   well  as  an  increase  in the corporate adjustment for  the
provision  for receivable valuation allowances and  reserves  for
potential  losses.   (Note  that all  corporate  adjustments  are
included  in  the GCS category.) These increases  were  partially
offset by the slight decrease in GCS costs described above in the
discussion  of  management  and  administrative  support   costs.
Excluding the costs related to the eLoyalty transaction, GCS costs
were  $13.1 million for the quarter ended September 30, 1999,  an
increase of 8 percent over the prior period.

Other  income  and expense remained virtually unchanged  at  $0.8
million for the quarter ended September 30, 1999 compared to  the
same period last year.

The   Company's   effective  tax  rate  for  the  quarter   ended
September 30, 1999 was 45 percent compared to 41 percent for  the
same   period  a  year  ago.  The  rate  for  the  quarter  ended
September  30,  1999 was higher than the prior period  due  to  a
larger proportion of pre-tax earnings being generated in foreign,
high tax-rate jurisdictions.

Weighted average number of common shares outstanding and weighted
average number of common and common equivalent shares outstanding
increased  due to the exercise of stock options, the issuance  of
shares  under the Company's employee stock purchase plan and  the
investments by the venture capital firms (see Other Events).

RESULTS OF OPERATIONS

Nine  Months  Ended September 30, 1999 Compared With Nine  Months
Ended September 30, 1998

Consolidated net revenues for the nine months ended September 30,
1999  decreased 5 percent to $229.7 million compared with  $241.2
million for the same period last year. Net revenues from  the  E-
Solutions  business contributed $126.3 million  during  the  nine
months ended September 30, 1999 compared to $165.6 million in the
prior  period, a decrease of 24 percent. This decrease was mainly
due  to  a decline in the demand for certain services of  the  E-
Solutions  business  as  a  result of  clients  facing  budgetary
restraints  as  they focus on Year 2000 issues.   This  has  been

------------------------------------------------------------------
                          Page 20



<PAGE>

                   TECHNOLOGY SOLUTIONS COMPANY

               MANAGEMENT'S DISCUSSION AND ANALYSIS
        OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                              (Continued)
===================================================================

evidenced  by  a  reduction in new license sales by  the  package
software  vendors such as PeopleSoft and Baan. Net revenues  from
the  eLoyalty business contributed $103.4 million during the nine
months ended September 30, 1999 compared to $75.7 million in  the
prior period, an increase of 37 percent. This improvement was due
to an increased demand for eLoyalty consulting services.

Project  personnel  costs,  which represent  mainly  professional
salaries  and benefits, increased to $114.0 million for the  nine
months ended September 30, 1999 from $111.5 million for the  same
period  last  year, an increase of 2 percent.  The  increase  was
mainly  due  to  an  increase  in average  domestic  professional
salaries,   partially  offset  by  a  decrease  in   professional
headcount.  Project  personnel  costs  as  a  percentage  of  net
revenues  increased  to  50 percent for  the  nine  months  ended
September 30, 1999 from 46 percent for the same period last  year
due  to  the  decline in E-Solutions revenues.  To  reduce  these
costs  and  improve  utilization,  the  Company  streamlined  and
refocused   the  E-Solutions  business,  which  resulted   in   a
restructuring  charge of $10.5 million (as discussed  further  in
this section).

Other  project expenses consist of nonbillable expenses  directly
incurred  for  client projects and business  development.   These
expenses  include recruiting fees, sales and marketing  expenses,
personnel  training and provisions for valuation  allowances  and
reserves  for  potential  losses on  continuing  projects.  Other
project  expenses  for the nine months ended September  30,  1999
were $35.3 million, compared with $35.6 million in the comparable
period  last year, a decrease of $0.3 million, or 1 percent.  The
decrease  in  other  project  expenses  primarily  included   the
following:  a decrease of $1.2 million in domestic practice  area
development including marketing, business development, travel and
sales commissions; a decrease of $1.3 million in domestic hiring,
training,  communication and computer expenses due to a  decrease
in  average headcount; and a decrease of $0.7 million in  various
other  domestic expenses which include items such as amortization
of  software costs, depreciation expense and other costs.   These
decreases  were  offset  by  an increase  in  the  provision  for
valuation  allowances and reserves for potential losses  of  $2.7
million  and  an increase in international costs of $0.2  million
associated   with  travel,  marketing  and  business  development
expenses. Other project expenses as a percentage of net  revenues
remained virtually unchanged from the same period last year at 15
percent.

Management    and   administrative   support   costs    decreased
$1.5   million  to  $49.4  million  for  the  nine  months  ended
September  30, 1999 from $50.9 million for the same  period  last
year,  a  decrease of 3 percent. Included in the net $1.5 million
decrease  was  a  $3.0 million decrease attributable  to  reduced
practice area management and administrative costs.  This decrease
primarily  resulted from a decline in international  expenses  of
$1.0  million and a decrease in various other domestic management
and  administrative expenses of $2.3 million, which include items
such as practice area recruiting, sales, amortization of software

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                          Page 21



<PAGE>

                   TECHNOLOGY SOLUTIONS COMPANY

               MANAGEMENT'S DISCUSSION AND ANALYSIS
        OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                              (Continued)
===================================================================

costs,  travel and other expenses partially offset by an increase
in  practice area support personnel of $0.3 million.   Offsetting
this  improvement was an increase of $1.5 million in Global  Core
Service  (GCS) costs over last year. The increase  in  GCS  costs
versus  the same period last year included the following:  higher
marketing  expenses  of  $1.9 million as a  result  of  increased
corporate  marketing efforts and a net increase in various  other
costs  of $0.2 million. These increases were offset by a decrease
in corporate recruiting expenses of $0.6 million as a result of a
reduction in headcount.

Goodwill  amortization increased to $3.8  million  for  the  nine
months ended September 30, 1999 compared to $3.0 million for  the
same  period last year. This increase reflects the effect of  the
earn-out  payments made during the seven month transition  period
ended  December  31,  1998  related to the  acquisitions  of  The
Bentley Company, Inc. and Aspen Consultancy Ltd.

On  April  8,  1999,  the Company filed a private  letter  ruling
request  with  the  IRS regarding the proposed  spin-off  of  the
Company's eLoyalty business segment as a non-taxable distribution
for  U.S. federal income tax purposes. On September 23, 1999, the
Company  announced that it would accelerate the spin-off  of  its
eLoyalty business segment into a separate publicly traded company
through  a tax-free distribution of all of the Company's eLoyalty
Corporation shares to TSC's shareholders. The Company  determined
that it was not necessary for eLoyalty Corporation to conduct  an
initial  public offering (IPO) prior to effecting  the  spin-off,
which  will permit the spin-off to occur in the first quarter  of
calendar year 2000, subject to the receipt of a favorable IRS tax
ruling  and  other  regulatory approvals. Accordingly, during the
quarter ended September 30, 1999, the Company expensed $1.1 million
in legal and accounting fees incurred in anticipation of the IPO.

In addition, on March 30, 1999, the Company announced that it was
making a number of changes to its business operations and,  as  a
result,  the  Company recorded a restructuring  charge  of  $10.5
million  associated  with  those changes  and  the  severance  of
approximately  300  people, primarily consulting  personnel.  The
restructuring charge was determined based on a plan  prepared  at
the  time  the restructuring actions were approved by  management
and  the  Board  of  Directors.  During  the  nine  months  ended
September  30,  1999,  the  Company  used  $8.4  million  of  the
restructuring  accrual  as  a result of  $6.8  million  of  costs
associated with the severance of approximately 270 employees  and
$1.6   million   in  asset  write-offs  and  other   costs.   The
restructuring accrual balance is considered adequate to cover the
remaining committed restructuring actions.

Incentive  compensation of $14.7 million was accrued  during  the
nine months ended September 30, 1999 compared to $9.9 million for
the   same  period  last  year.   Incentive  compensation  as   a
percentage  of net revenues increased to 6 percent for  the  nine

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                          Page 22



<PAGE>

                   TECHNOLOGY SOLUTIONS COMPANY

               MANAGEMENT'S DISCUSSION AND ANALYSIS
        OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                              (Continued)
===================================================================

months  ended  September 30, 1999 compared to 4 percent  for  the
same  period  last year.  The increase was primarily  due  to  an
increase  in vice president incentive compensation expense  as  a
result  of  the Company meeting its internal performance  targets
for  the  nine  months ended September 30, 1999, as  well  as  an
increase  in the bonus accrual for non-vice president  personnel.
The  Company expects to continue to accrue incentive compensation
throughout the 1999 calendar year.

Consolidated  operating  income was $0.7  million  for  the  nine
months  ended  September  30,  1999  compared  with  consolidated
operating income of $30.4 million in the prior period, due to the
reasons  outlined above. Excluding the restructuring  charge  and
the   costs   related  to the eLoyalty transaction,  consolidated
operating  income was $12.3 million during the nine months  ended
September  30,  1999.   Operating  income  from  the  E-Solutions
business   was  $24.8  million  during  the  nine  months   ended
September 30, 1999 compared to $41.0 million in the prior period,
a  decrease  of  40 percent. This decrease was mainly  due  to  a
decrease  in  the demand for certain services in the  E-Solutions
business  and  lower  billing rates. Operating  income  from  the
eLoyalty business was $25.9 million during the nine months  ended
September 30, 1999 compared to $15.9 million in the prior period,
an increase of 63 percent. This increase was primarily due to the
increased  demand  for eLoyalty services, as  well  as  increased
staff utilization and was consistent with its higher revenues.

Corporate  and GCS costs for the nine months ended September  30,
1999  were  $50.0 million compared to $26.6 million in the  prior
period, an increase of 88 percent. The increase in corporate  and
GCS costs includes the restructuring charge and the costs related
to the eLoyalty transaction. The increase also included an increase
in  the  corporate adjustment for receivable valuation allowances
and  reserve  for potential losses, as well as a  change  in  the
corporate  adjustment for incentive compensation.  For  the  nine
months ended September 30, 1998, the Company did not meet certain
internal   performance  targets  and,  accordingly,  recorded   a
corporate   adjustment  to  reduce  the  consolidated   incentive
compensation  accrual.   However,  the  Company  fully  met   its
internal  performance  targets in the corresponding  1999  period
and,  therefore, no incentive compensation adjustment was needed.
In  addition,  goodwill amortization for the  nine  months  ended
September  30, 1999 increased from the prior period  due  to  the
earn-out  payments  related to the acquisitions  of  The  Bentley
Company, Inc. and Aspen Consultancy Ltd.  Finally, GCS costs also
increased  due  to  an increase in management and  administrative
support   costs,   as   previously  described.    Excluding   the
restructuring  charge  and  the  costs  related  to  the eLoyalty
transaction, GCS costs were  $38.4  million  for  the nine months
ended  September 30, 1999,  an  increase  of 45 percent over the
prior period.

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                          Page 23



<PAGE>

                   TECHNOLOGY SOLUTIONS COMPANY

               MANAGEMENT'S DISCUSSION AND ANALYSIS
        OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                              (Continued)
===================================================================

Other income and expense for the nine months ended September  30,
1999  was  $2.4  million compared to $2.1 million  for  the  same
period  a  year ago. The increase is a result of higher cash  and
cash equivalent balances for the nine months ended September  30,
1999 compared to the same period a year ago.

The  Company's  effective  tax rate for  the  nine  months  ended
September 30, 1999 was 81 percent compared to 42 percent for  the
same  period a year ago.  The tax rate for the nine months  ended
September  30,  1999 was unusually high since a  portion  of  the
restructuring   charge  was  taken  in  foreign  lower   tax-rate
jurisdictions, thereby reducing the effective tax benefit of this
charge.   Conversely, foreign taxable earnings were generated  in
higher  foreign  tax-rate jurisdictions  thereby  increasing  the
impact  of  the foreign tax rates on the overall tax  charge.  In
addition, lower taxable earnings during this period, as a  result
of the restructuring charge and the costs related to the eLoyalty
transaction, resulted in non-tax deductible expenses being  a
large component of the overall tax charge.

Weighted  average  number of common shares outstanding  increased
due  to  the  exercise of stock options, the issuance  of  shares
under  the  Company's  employee  stock  purchase  plan  and   the
investment  by  the  venture capital firms  (see  Other  Events),
partially  offset  by  the  repurchase  of  outstanding   shares.
Weighted  average  number of common and common equivalent  shares
outstanding  remained virtually unchanged for the  quarter  ended
September 30, 1999 compared to the same period last year.

LIQUIDITY AND CAPITAL RESOURCES

Net  cash provided by operating activities was $15.5 for the nine
months  ended  September 30, 1999 compared to net  cash  used  in
operating  activities of $2.5 million for the nine  months  ended
September 30, 1998. Operating cash flow for the nine months ended
September  30, 1999 included the restructuring charge  and  other
favorable working capital activities.  This benefit was offset by
an increase in net receivables of $13.5 million mainly due to the
growth in eLoyalty's revenues as well as cash outlays related  to
the  restructuring charge and the costs related to  the  eLoyalty
transaction.

The  Company's significant amounts of cash, cash equivalents  and
marketable  securities  provide ample  liquidity  to  handle  the
Company's current cash requirements.

Net  cash used in investing activities was $0.5 million  for  the
nine  months  ended  September 30, 1999.  The  Company  purchased
$1.5   million  of  available-for-sale  securities  and  received
$2.8 million from the sale of available-for-sale securities.  The
proceeds  from available-for-sale securities were transferred  to
cash  and  cash  equivalents and reinvested in  ongoing  business
activities.

Capital expenditures for the nine months ended September 30, 1999
were  $1.8  million.  Capital expenditures may  continue  at  the
current  rate  throughout  the 1999 calendar  year.  The  Company
currently has no material commitments for capital expenditures.

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                          Page 24



<PAGE>

                   TECHNOLOGY SOLUTIONS COMPANY

               MANAGEMENT'S DISCUSSION AND ANALYSIS
        OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                              (Continued)
===================================================================

The Company has a $10.0 million unsecured line of credit facility
(the  "Facility") with Bank of America National Trust and Savings
Association   (Bank   of   America).   The   agreement    expires
October 4, 2000. At the Company's election, loans made under  the
Facility  bear  interest at either the Bank of America  reference
rate   or   the   applicable  Eurodollar   interest   rate   plus
0.75  percent. The unused line fee is 0.125 percent of the unused
portion  of  the commitment. The Facility requires,  among  other
things, the Company to maintain certain financial ratios.  As  of
September  30,  1999,  the Company was in compliance  with  these
financial  ratio  requirements. As  of  September  30,  1999,  no
borrowings had been made under the Facility.

NEW ACCOUNTING STANDARDS

On June 15, 1998, the Financial Accounting Standards Board (FASB)
issued  Statement  of Financial Accounting Standards  (SFAS)  No.
133,   "Accounting   for  Derivative  Instruments   and   Hedging
Activities."  SFAS  No.  133,  as  amended  by  SFAS   No.   137,
"Accounting  for Derivative Instruments and Hedging Activities  -
Deferral  of  the Effective Date of FASB Statement No.  133,"  is
effective  for  financial statements issued  for  periods  ending
after  June  15, 2000. SFAS No. 133 requires that all  derivative
instruments be recorded on the balance sheet at their fair value.
Changes in the fair value of derivatives are recorded each period
in  current earnings or other comprehensive income, depending  on
whether a derivative is designated as part of a hedge transaction
and,  if  it  is,  the  type  of hedge transaction.  The  Company
anticipates   that,  due  to  its  limited  use   of   derivative
instruments,  the  adoption of SFAS  No.  133  will  not  have  a
significant effect on the Company's results of operations or  its
financial position.

OTHER EVENTS

During June 1999, the Company entered into an agreement with  two
venture  capital  firms  whereby  these  venture  capital   firms
purchased 500,000 shares of the Company's common stock. On August
13,  1999, Technology Crossover Ventures and Sutter Hill Ventures
funded to the Company cash proceeds of approximately $4.5 million
and  the  Company delivered 500,000 shares of Common  Stock  (the
"Company  Shares")  to the venture capital  firms.  The  purchase
price  of $9.013 per share was equal to the average last reported
sales  price for the ten consecutive trading days ended June  25,
1999 (the date of the agreement). Both venture capital firms have
a  single  demand registration right with respect to the  Company
Shares,  which  expires  twelve months  after  the  date  of  the
purchase.

In  addition,  Technology  Crossover  Ventures  and  Sutter  Hill
Ventures have committed to purchase from eLoyalty Corporation for
$8.4  million approximately 5 percent of the number  of  eLoyalty
Corporation common shares (the "eLoyalty Shares") that  would  be
issued  and outstanding after the Company completes the  proposed
transfer to eLoyalty Corporation of the assets and liabilities of
the  business  historically conducted as the  Company's  eLoyalty
business segment (the "Asset Transfer").  The agreement with  the
venture capital firms provides that the proposed purchase of  the
eLoyalty Shares is subject to the receipt of a favorable  revenue
ruling  from the IRS with respect to the proposed tax-free  spin-
off  of  eLoyalty Corporation to the Company's stockholders,  the

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                          Page 25



<PAGE>

                   TECHNOLOGY SOLUTIONS COMPANY

               MANAGEMENT'S DISCUSSION AND ANALYSIS
        OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                              (Continued)
===================================================================

consummation  of  the Asset Transfer and certain other  customary
conditions. The Company has agreed, pursuant to the agreement, to
use  commercially reasonable efforts to effect the Asset Transfer
as soon as is reasonably practicable after receipt of a favorable
revenue  ruling.  In  the  event the Asset  Transfer  is  not  so
consummated  and  the venture capital firms do not  purchase  the
eLoyalty  Shares, the Company could become obligated  to  make  a
liquidated damage payment of $1.2 million to the venture  capital
firms.  Alternatively, if the venture capital firms purchase  the
eLoyalty Shares and the proposed spin-off of eLoyalty Corporation
does  not  occur  by August 13, 2000, eLoyalty Corporation  could
become  obligated to repurchase the eLoyalty Shares then held  by
the venture capital firms at a premium totaling $1.2 million over
the  price paid by the venture capital firms for such shares. The
agreement  further  provides that,  after  the  purchase  of  the
eLoyalty  Shares,  a representative of each of  the  two  venture
capital   firms  groups  will  be  appointed  to   the   eLoyalty
Corporation Board of Directors.

OTHER MATTERS

The Year 2000 issue is a general term used to address a class  of
problems  which  are  caused by the inability  of  some  computer
programs to recognize various date values around January 1, 2000.
This  class  of  problems could result in  a  system  failure  or
miscalculations causing disruptions of operations such as,  among
others,  a  temporary  inability to  process  transactions,  send
invoices, or engage in similar normal business activities.

The   Company  has  conducted  an  assessment  of  its   computer
information systems by inventorying related hardware and software
systems  and  has determined the nature and extent  of  the  work
required  to  ensure  that its internal  systems  are  Year  2000
compliant.  The majority of the software used by the Company  has
been  purchased  as  packaged software. A  minimal  customization
practice  has  been followed to support a more direct  transition
from  an  older version of a packaged software application  to  a
newer  version  of  the same application. The Company's  internal
systems  can  be  grouped into three principal categories  -  its
accounting and human resources software, its legacy systems  that
perform  a  variety  of  processes,  and  its  office  automation
software products. With respect to the suite of software products
licensed by the Company and relied upon in the administration  of
accounting  and human resources functions, which was licensed  by
the  Company  in the first quarter of its 1997 fiscal  year,  the
licensor  has indicated that the version previously  employed  by
the  Company  was  not  Year 2000 compliant and,  therefore,  the
Company has replaced the production and development versions with
newer  ones  that are Year 2000 compliant. The Company  plans  to
apply  future patches to address the Year 2000 issue as they  are
made  available.  Based on currently available  information,  the
Company  believes the expense associated with these efforts  will
not  be  material.  The  Company expects that  additional  issues
concerning Year 2000 compliance will be reported by the  licensor
to  the Company and updates will be provided by the licensor. The

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                          Page 26



<PAGE>

                   TECHNOLOGY SOLUTIONS COMPANY

               MANAGEMENT'S DISCUSSION AND ANALYSIS
        OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                              (Continued)
===================================================================

Company  has  received the most recent updates  and  enhancements
pursuant  to  a software support service agreement  presently  in
place with the licensor, an agreement which is in effect and that
the Company does not currently intend to terminate. Provided that
the  licensor  gives such assurances concerning the  updates  and
enhancements to its software product suite, the Company does  not
expect that it will incur additional expense aside from the  cost
of  the software support service agreement in order to bring  its
accounting  and human resources software package into  Year  2000
compliance.

Other important internal business processes of the Company,  such
as  time and expense reporting and labor distribution (and  their
associated  back-office  functions),  are  performed  by   legacy
systems that have been re-written to be Year 2000 compliant.  The
remaining  office automation products have been  inventoried  and
each  vendor  has  been  contacted for the  product's  Year  2000
status.   All identified products have either been upgraded  with
patches, entirely replaced, determined to be Year 2000 compliant,
or  shown  to  possess  no date-associated functions  within  the
product.  The Company estimates that it is nearly completed  with
the  compliance  project effort, and expects that the  identified
systems  will be compliant as of December 31, 1999.  The  Company
estimates that the cost associated with replacing/upgrading these
systems,  excluding labor costs, will be less than $0.3  million,
and  has  provided for the replacement of these  systems  in  its
operating and capital budgets for calendar year 1999.

Vendors of the standard office automation software packages  have
been   contacted  and  patches  and/or  newer  versions  of   the
applications have been secured. Distribution of the  patches  and
newer  versions of the software occurred during the third quarter
of  the  calendar  year 1999 and will continue to  occur  in  the
fourth quarter of calendar year 1999.

Based  on  presently available information, the Company  believes
that  any  necessary compliance efforts concerning  its  internal
systems  will not have a material adverse effect on its business,
operating results and financial condition. However, if compliance
efforts  of which the Company is not currently aware are required
and  are  not  completed on time, or if the cost of any  required
updating,   modification   or  replacement   of   the   Company's
information  systems  exceeds the Company's estimates,  the  Year
2000  issue could have a material adverse impact on the Company's
business, operating results and financial condition.

In addition to the Company's internal systems, the Company relies
on  third  party  vendors in the conduct  of  its  business.  For
example, third party vendors handle the payroll function for  the
Company,  and  the  Company  also  relies  on  the  services   of
telecommunication  companies, banks,  utilities,  and  commercial
airlines,  among  others. The Company has sought assurances  from
its  material  vendors  and  suppliers  that  there  will  be  no
interruption of service as a result of the Year 2000  issue,  and
to the extent such assurances have not been given, the Company is
finalizing  contingency  plans to mitigate  the  effects  on  the

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                          Page 27



<PAGE>

                   TECHNOLOGY SOLUTIONS COMPANY

               MANAGEMENT'S DISCUSSION AND ANALYSIS
        OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                              (Continued)
===================================================================

conduct  of  the Company's business in the event  the  Year  2000
issue results in the unavailability of services. There can be  no
assurance  that  any contingency plans developed by  the  Company
will prevent any such service interruption on the part of one  or
more  of  the  Company's  third party  suppliers  from  having  a
material  adverse  effect  on the Company's  business,  operating
results and financial condition. In addition, the failure on  the
part  of the accounting systems of the Company's clients  due  to
the  Year  2000 issue could result in a delay in the  payment  of
invoices  issued  by  the Company for services  and  expenses.  A
failure of the accounting systems of a significant number of  the
Company's  clients would have a material adverse  effect  on  the
Company's business, operating results and financial condition.

The  Company  has generally refrained from performing  Year  2000
remediation  services for its clients. It is  possible,  however,
that former, present and future clients could assert that certain
services  performed by the Company from time to time involve,  or
are related to, the Year 2000 issue. The Company has recommended,
implemented and customized various third party software  packages
for  its  clients, and to the extent that such software  programs
may not be Year 2000 compliant, the Company could be subjected to
claims  as  a  result thereof. Since the Company's  inception  in
1988, it also has designed and developed software and systems for
its  clients.  Due  to  the  large  number  of  such  engagements
undertaken  by  the  Company over the  years,  there  can  be  no
assurance  that  all such software programs and systems  will  be
Year 2000 compliant, which could also result in the assertion  of
claims against the Company.

The Company's policy has been to endeavor to secure provisions in
its  client contracts that, among other things, disclaim  implied
warranties,   limit   the  duration  of  the  Company's   express
warranties, relate the Company's liability to the amount of  fees
paid by the client to the Company in connection with the project,
and disclaim any liability arising from third party software that
is implemented, customized or installed by the Company. There can
be  no  assurance  that  the  Company  will  be  able  to  secure
contractual protections in agreements concerning future projects,
or  that  any contractual protections secured by the  Company  in
agreements governing pending and completed projects will dissuade
the other party thereto from asserting claims against the Company
with respect to the Year 2000 issue.

Due to the complexity of the Year 2000 issue, upon any failure of
critical  client  systems or processes that may  be  directly  or
indirectly connected or related to systems or software  designed,
developed, customized or implemented by the Company as  described
above,  the  Company  may be subjected to claims,  regardless  of
whether  the failure is related to the services provided  by  the
Company. There can be no assurance that the Company would be able
to  establish that it did not cause or contribute to the  failure
of  a  critical client system or process. There also  can  be  no
assurance  that the contractual protections, if any,  secured  by
the  Company  in  connection with any  past,  present  or  future
clients  will operate to insulate the Company from, or limit  the
amount of, any liability arising from claims asserted against the
Company.  If  asserted, the resolution of such  claims  (and  the
associated defense costs) could have a material adverse effect on
the   Company's   business,  operating  results   and   financial
condition.

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                          Page 28



<PAGE>

                   TECHNOLOGY SOLUTIONS COMPANY

               MANAGEMENT'S DISCUSSION AND ANALYSIS
        OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                              (Continued)
===================================================================

This  Form  10-Q  includes or may include certain forward-looking
statements that involve risks and uncertainties. This  Form  10-Q
contains   certain  forward-looking  statements  concerning   the
Company's   financial  position,  business   strategy,   budgets,
projected costs and plans and objectives of management for future
operations  as well as other statements including words  such  as
"anticipate," "believe," "plan," "estimate," "expect,"  "intend,"
and  other similar expressions. Although the Company believes its
expectations  reflected  in such forward-looking  statements  are
based  on reasonable assumptions, readers are cautioned  that  no
assurance can be given that such expectations will prove  correct
and  that  actual results and developments may differ  materially
from those conveyed in such forward-looking statements. Important
factors that could cause actual results to differ materially from
the  expectations reflected in the forward-looking statements  in
this  Form  10-Q include, among others, the pace of technological
change,  the  Company's ability to manage growth and attract  and
retain employees, general business and economic conditions in the
Company's  operating regions, market conditions  and  competitive
and  other  factors, all as more fully described in the Company's
Transition  Report on Form 10-K for the transition  period  ended
December  31, 1998 under Management's Discussion and Analysis  of
Financial   Condition  and  Results  of  Operations  "Assumptions
Underlying  Certain Forward-Looking Statements and  Factors  that
May Affect Future Results" and elsewhere from time to time in the
Company's  other  SEC  reports. Such  forward-looking  statements
speak  only as of the date on which they are made and the Company
does  not  undertake any obligation to update any forward-looking
statement  to reflect events or circumstances after the  date  of
this Form 10-Q. If the Company does update or correct one or more
forward-looking  statements,  investors  and  others  should  not
conclude  that  the  Company  will  make  additional  updates  or
corrections with respect thereto or with respect to other forward-
looking statements. Actual results may vary materially.

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                          Page 29



<PAGE>

                  TECHNOLOGY SOLUTIONS COMPANY

                   PART II.  OTHER INFORMATION
===================================================================

ITEM 2--CHANGES IN SECURITIES AND USE OF PROCEEDS

During June 1999, the Company entered into an agreement with two
venture capital firms whereby these venture capital firms
purchased 500,000 shares of the Company's common stock. On
August 13, 1999, Technology Crossover Ventures and Sutter Hill
Ventures funded to the Company cash proceeds of approximately
$4.5 million and the Company delivered 500,000 shares of Common
Stock (the "Company Shares") to the venture capital firms. The
purchase price of $9.013 per share was equal to the average last
reported sales price for the ten consecutive trading days ended
June 25, 1999 (the date of the agreement). Both venture capital
firms have a single demand registration right with respect to the
Company Shares, which expires twelve months after the date of the
purchase. The purchase and sale of the Company Shares to the
venture capital firms were exempt from registration under the
Securities Act pursuant to Section 4(2) thereof on the basis that
the transactions did not involve a public offering.  The venture
capital firms represented their intention to acquire the Company
Shares for investment and not with a view toward the distribution
thereof, and appropriate legends have been affixed to the share
certificates issued to the venture capital firms.


ITEM 6--EXHIBITS AND REPORT ON FORM 8-K

    (a) See Exhibit Index







        All other items in Part II are either not applicable
        to    the   Company   during   the   quarter   ended
        September  30,  1999, the answer is negative,  or  a
        response  has  been  previously  reported   and   an
        additional   report  of  the  information   is   not
        required, pursuant to the instructions to Part II.

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                          Page 30



<PAGE>


                           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 on the 12th day of November 1999.

                            TECHNOLOGY SOLUTIONS COMPANY





Date:  November 12, 1999    By:    /s/ TIMOTHY P. DIMOND
       -----------------           -----------------------
                                      Timothy P. Dimond
                                   Chief Financial Officer





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                          Page 31




<PAGE>


                  TECHNOLOGY SOLUTIONS COMPANY




                          EXHIBIT INDEX




EXHIBIT
NUMBER                 DESCRIPTION
-------                -----------------------
   27                  Financial Data Schedule










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                          Page 32