<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)
[X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange
    Act of 1934

                   For the fiscal year ended    December 31, 1999
                                              ---------------------

                                       or

[ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange
    Act of 1934
           For the transition period from ____________ to ___________

                         Commission File Number 0-20807

                                 ICT GROUP, INC.
             (Exact name of registrant as specified in its charter.)

           Pennsylvania                              23-2458937
  (State or other jurisdiction of                (I.R.S. Employer
   incorporation or organization)               Identification No.)

          800 Town Center Drive
         Langhorne, Pennsylvania                       19047
(Address of principal executive offices)            (Zip Code)

        Registrant's telephone number, including area code: 215-757-0200

   Title of each class:              Name of each exchange on which registered:
          None                                  None

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

           Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock, par value $.01
              -------------------------------------------------

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

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

The aggregate market value of the voting stock held by non-affiliates of the
registrant is approximately $42,401,800. Such aggregate market value was
computed by reference to the closing price of the Common Stock as reported on
the National Market of The Nasdaq Stock Market on March 15, 2000. For purposes
of this calculation only, the registrant has defined affiliates as including all
directors and executive officers. In making such calculation, registrant is not
making a determination of the affiliate or non-affiliate status of any holders
of shares of Common Stock.

The number of shares of the registrant's Common Stock outstanding as of March
15, 2000 was 11,820,025.

                       DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's definitive Proxy Statement relating to the 2000 Annual
Meeting of Shareholders are incorporated by reference into Part III hereof.
<PAGE>
                                 ICT GROUP, INC.

                             FORM 10-K ANNUAL REPORT
                     For Fiscal Year Ended December 31, 1999

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I
                                                                                                                          Page
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<S>      <C>                                                                                                                   <C>
Item 1.  Business...........................................................................................................1

Item 2.  Properties.........................................................................................................9

Item 3.  Legal proceedings..................................................................................................9

Item 4.  Submission of Matters to a Vote of Security Holders................................................................9


PART II

Item 5.  Market for registrant's common equity and related stockholder matters.............................................10

Item 6.  Selected financial data...........................................................................................11

Item 7.  Management's discussion and analysis of financial condition and results of operations.............................12

Item 7A. Qualitative and quantitative disclosure about market risk.........................................................14

Item 8.  Financial statements and supplementary data.......................................................................15

Item 9.  Changes in and disagreements with accountants on accounting and financial disclosure..............................15


PART III

Item 10. Directors and executive officers of the registrant................................................................15

Item 11. Executive compensation............................................................................................15

Item 12. Security ownership of certain beneficial owners and management....................................................15

Item 13. Certain relationships and related transactions....................................................................15


PART IV

Item 14. Exhibits, financial statement schedules, and reports on form 8-K..................................................15
</TABLE>
                                       -i-

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This document contains certain forward-looking statements that are subject to
risks and uncertainties. Forward-looking statements include certain information
relating to outsourcing trends as well as other trends in the CRM services and
the overall domestic economy, the Company's business strategy including the
markets in which it operates, the services it provides, its ability to attract
new clients and the customers it targets, the benefits of certain technologies
the Company has acquired or plans to acquire and the investment it plans to make
in technology, the Company's plans regarding international expansion, the
implementation of quality standards, the seasonality of the Company's business,
variations in operating results and liquidity, as well as information contained
elsewhere in this document where statements are preceded by, followed by or
include the words "believes," "plans," "intends," "expects," "anticipates" or
similar expressions. For such statements, the Company claims the protection of
the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. The forward-looking statements in this
document are subject to risks and uncertainties that could cause the assumptions
underlying such forward-looking statements and the actual results to differ
materially from those expressed in or implied by the statements.

The most important factors that could prevent the Company from achieving its
goals--and cause the assumptions underlying the forward-looking statements and
the actual results of the Company to differ materially from those expressed in
or implied by those forward-looking statements--include, but are not limited to,
the following: (i) the competitive nature of the CRM services industry and the
ability of the Company to continue to distinguish its services from other CRM
service companies and other marketing activities on the basis of quality,
effectiveness, reliability and value; (ii) economic conditions which could alter
the desire of businesses to outsource certain sales and service functions and
the ability of the Company to obtain additional contracts to manage outsourced
sales and service functions; (iii) the ability of the Company to offer
value-added services to businesses in its targeted industries and the ability of
the Company to benefit from its industry specialization strategy; (iv) risks
associated with investments and operations in foreign countries including, but
not limited to, those related to relevant local economic conditions, exchange
rate fluctuations, relevant local regulatory requirements, political factors,
generally higher telecommunications costs, barriers to the repatriation of
earnings and potentially adverse tax consequences; (v) technology risks
including the ability of the Company to select or develop new and enhanced
technology on a timely basis, anticipate and respond to technological shifts and
implement new technology to remain competitive; (vi) the ability of the Company
to successfully identify, complete and integrate strategic acquisitions that
expand or complement its business; and (vii) the results of operations which
depend on numerous factors including, but not limited to, the timing of clients'
teleservices campaigns, the commencement and expiration of contracts, the timing
and amount of new business generated by the Company, the Company's revenue mix,
the timing of additional selling, general and administrative expenses and the
general competitive conditions in the CRM services industry and the overall
economy.

                                     PART I

ITEM 1.  BUSINESS

         ICT Group, Inc. (the "Company" or "ICT") is a global supplier of
customer relationship management (CRM) services. The Company provides integrated
telesolutions, e-solutions and market solutions helping its clients identify,
acquire, retain, service, measure, and maximize the lifetime value of their
customer relationships. ICT's telesolutions offering includes outbound telesales
and inbound customer support for sales and service applications, domestically
and internationally. Its e-solutions offering provides real-time
interaction-driven customer support for Internet sales and service applications
through Web-enabled customer contact center services, e-mail management and
processing, and multi-channel CRM services. Market research, database marketing,
and data mining capabilities are available through its market solutions
offering, including questionnaire design, telephone interviewing, and data
coding, tabulating, and analysis services.

The Company's customer management services experience, Internet and CRM
technology capabilities and expertise in select target industries enables it to
provide its clients with high quality cost-effective customer management
services. While these solutions are available on an outsourced basis, using
ICT's customer contact centers, the Company believes that there is also a trend
by businesses to purchase them on a hosted or co-sourced basis. Accordingly, ICT
intends to offer these services through a hosted arrangement, using the client's
facility, or co-sourced arrangement, using both the client's facility and ICT's
technologically compatible customer contact centers.

                                       1
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Industry Overview:

The CRM services market includes traditional teleservices activities such as
outbound and inbound customer support, Internet-based sales and service support,
and marketing services including database marketing, market research, and data
mining. Teleservices and other customer contact center outsourcing services have
evolved significantly in recent years, with the expansion of e-business and
Internet sales and service programs. Dot.com companies, click-and-mortar
e-commerce companies, Internet service providers (ISPs) and application service
providers (ASPs) are becoming increasingly focused on providing real-time,
customer support for business and consumer-based Internet applications. The
Company believes that this trend will continue and anticipates expanded demand
for its services.

The Company believes that there are two shifts in the way businesses interact
with customers in today's Internet enhanced marketplace. E-commerce has grown
dramatically and with the addition of this new channel comes an increasing need
for businesses to optimize the value of their customer relationships. To remain
competitive in today's e-business marketplace, companies are realizing the
importance of implementing an integrated CRM solution to effectively attract,
acquire, retain, service, and measure customer satisfaction, at every touchpoint
in the customer communication cycle in order to maximize the lifetime value of
each customer.

ICT believes that the industries it has traditionally served will expand their
CRM programs to include e-solutions and market solutions. The vertical markets
ICT has traditionally served include: insurance, financial services,
telecommunications/utilities, pharmaceutical and health care services, and
information technology. In addition to these vertical markets, the Company also
believes that new dot.com companies, ISPs and ASPs outside its traditional
targeted markets will also embrace these trends.

The Company believes that the growing trend for integrated global CRM services
by its traditional vertical markets as well as dot.com's, click-and-mortar
e-commerce companies, and ISPs and ASPs presents attractive opportunities for
companies such as ICT that provide a full range of CRM technology powered
services through sophisticated telesolutions, e-solutions, and market solutions.

ICT Approach:

ICT believes that it has distinguished itself in the CRM services industry by
providing a range of integrated telesolutions, e-solutions and market solutions
for domestic and international clients to identify, acquire, retain, service,
measure and maximize the lifetime value of their customers. With extensive
experience in customer management services as well as strategic relationships
with technology leaders, the Company's management team has emphasized its CRM
experience, economies of scale, technology leadership and expertise in target
industries as a means of establishing ICT as a global supplier of integrated CRM
services.

The convergence of the Internet customer's demand for personal
interaction-driven service and the embrace of CRM by dot.com companies,
click-and-mortar e-commerce companies, ISPs and ASPs, and direct marketing
companies that have added an Internet channel for distribution has presented a
significant growth business opportunity for ICT. The Company's aggressive
technology and business development initiatives differentiate ICT from
traditional contact center competitors. Additionally, ICT's scalability,
customer service experience and international capabilities differentiate the
Company from newly established dot.com customer service providers.

Strategy

         With the growth of the Internet as a means of transacting business and
the poor customer service experienced by many on-line buyers, ICT believes
significant opportunities exist to expand its business. The Company's growth
strategy includes the following key elements:

         o Pursue E-Commerce Opportunities. The Company plans to pursue
opportunities presented by the growth in demand for consistent, personalized
customer support for e-commerce sales and service. By aggressively building our
Internet support sales, marketing, and advanced technology initiatives while
concurrently leveraging our existing management, operations, systems, and sales
infrastructure, ICT can offer cost-effective, multi-channel CRM services to a
wide array of customers domestically and internationally.

                                       2
<PAGE>
         o Expand Value-Added Services. The Company will continue to complement
its core telesolutions expertise with additional value-added services, such as
marketing, research and consulting services, as well as a complete suite of
comprehensive CRM services. The Company's goal is to offer an integrated suite
of telesolutions, e-solutions and market solutions to help its clients identify,
acquire, retain, service, measure and maximize the lifetime value of their
customer relationships.

         o Develop Strategic Alliances and Acquisitions. ICT intends to continue
pursuing strategic alliances with, and acquisitions of, domestic and
international businesses that provide complementary CRM services. The Company is
currently utilizing state-of-the-art CRM software and Internet platform
technologies from leading edge partners such as Aspect Communications
Corporation, Siebel Systems, Inc., Oracle and Mustang.com.

         o Increase International Presence. The Company plans to broaden its
geographic reach and further develop its expertise in CRM services in
international markets by focusing on businesses with multinational operations.
ICT currently provides multilingual services in the United States, Europe, Latin
America, Canada and Australia. ICT intends to expand its operations in these
areas.

           o Focus on Industry Specialization. The Company believes it has
gained a competitive advantage by concentrating on servicing businesses in a
limited number of targeted industries and intends to maintain its industry
specialization. In addition, the Company believes that industry specialization
will enable it to attract new clients because of its industry expertise. At the
same time the Company intends to broaden its marketing efforts to target the
rapidly expanding needs of dot.com's click-and-mortar companies and application
service providers in a variety of industry sectors.

         o Maintain Technology Investment. The Company intends to continue
making substantial investments in technology to maintain its technological
strength within the CRM services industry. ICT has been an industry leader in
the implementation of innovative CRM technologies to lower its effective cost
per contact and to improve its sales and customer service. The Company has made
significant investments in information and communications technologies and
believes it was among the first to offer fully automated CRM services,
collaborative web browsing services and to implement predictive dialing
equipment that it believes is now recognized industry-wide to be essential in
handling consumer outbound telemarketing.

         o Continue Commitment to Quality Service. ICT has consistently
emphasized quality service and extensive employee training by investing in
quality assurance personnel and procedures. The Company intends to continue its
commitment to providing quality service, as illustrated by its achieving ISO
9002 certification in all its domestic and international sales and service
focused business units by December 31, 1999.

ICT's Services

         ICT delivers its telesolution, e-solution and market solution CRM
services through three business segments which are supported by the Company-wide
marketing, sales, systems and corporate units. ICT's domestic sales force is
organized into a series of industry sectors focused on selling the full range of
the Company's services to clients in their respective target industries. ICT
believes this organizational structure allows the Company to provide
comprehensive solutions to its clients' CRM service needs, since it enables
ICT's sales and customer service personnel to develop in-depth knowledge of the
needs of businesses in their designated industries.

         In February 2000, ICT announced the formation of iCT
ConnectedTouch.com, LLC a new wholly owned subsidiary formed to provide highly
focused innovative E-solutions designed to maximize the value of customer
relationships for business-to-business and business-to-consumer e-business sales
and service operations. iCT ConnectedTouch.comsm is focused on supporting 1)
dot.com companies and bricks-and-mortar e-commerce companies, 2) Internet
support service companies including ISPs and ASPs, as well as 3) traditional
direct marketing service companies that have added an Internet channel for sales
and service.

                                       3
<PAGE>
         Domestic TeleServices

         Traditional teleservices are offered in the United States through the
Company's Domestic TeleServices segment, which is comprised of the TeleDirect
and TeleSolutions business units.

         ICT TeleDirect. ICT TeleDirect provides teleservices support activities
primarily for the insurance and financial products and services, credit card and
endorsed products sectors.

         ICT TeleSolutions. ICT TeleSolutions provides teleservices support
activities primarily for the telecommunications, information services, energy
services and consumer goods industries.

         International Services

         The Company offers domestic and international multilingual teleservices
and customer care services through four business units comprising ICT
International Services. The growth of multinational corporations and the
increase in non-English speaking residents in the United States has increased
the demand for the multilingual capabilities that ICT provides. The segment
currently consists of the following units:

         ICT Eurotel. Eurotel provides pan-European, multilingual teleservices
and customer care services to Europe from its contact centers in Dublin, Ireland
and London, England.

         ICT Spantel. Spantel provides bi-lingual English and Spanish
teleservices from its Miami, Florida contact center to the rapidly growing
marketplace of Spanish-speaking American and Latin American consumers and
businesses.

         ICT Canada. The Company opened its first Canadian contact center in
January 1996 with service representatives who are fluent in French and English.
As of December 31, 1999, ICT Canada has contact centers located in Moncton and
Riverview, New Brunswick, Canada and in Halifax and Sydney, Nova Scotia, Canada.

         ICT Australia. This unit was formed in the first quarter of 1999 to
provide telemarketing services for North American and European multinational
companies in the Pacific Rim.

         Customer Management Services

          ICT provides businesses in its target industries with marketing,
research and consulting services, and ongoing customer care services, through
its Customer Management Services segment. This segment presently consists of the
following business units:

         ICT Financial Marketing Services. This business unit's management team
consists of professionals who have client-side banking experience in branch
management and operations, marketing, advertising, research, electronic funds
transfer, home and branchless banking, customer service and systems support. As
of December 31, 1999, ICT Financial Marketing Services operated dedicated
inbound/outbound contact centers in Amherst, New York and Morrilton, Arkansas.

         ICT Medical Marketing Services. Through this business unit, ICT
provides service for the increasingly complex needs of healthcare and
pharmaceutical clients. ICT's dedicated contact center is equipped with computer
and telecommunications software and hardware to service both outbound and
inbound client applications. Work stations are staffed by dedicated staff to
meet the sophisticated product and customer profiles of specific clients. As of
December 31, 1999, ICT Medical Marketing Services operated a dedicated contact
center in Langhorne, Pennsylvania.

         ICT Research Services. This business unit provides businesses with
value added market research survey design, data collection and consulting
services. ICT's Research Services makes extensive use of advanced technology,
including integrated predictive dialing and Computer Assisted Telephone
Interviewing software, to obtain market and customer data cost effectively. As
of December 31, 1999, ICT Research Services conducted surveys from centers in
Depew, New York and Langhorne, Pennsylvania.

                                       4
<PAGE>
         Customer Care Management Services business unit was established in
mid-1996 to pursue outsourcing opportunities for customer care management. This
division offers services such as site and system equipment consultation,
facility launch, program planning and implementation, staffing, technical
support and ongoing customer care management. Depending on client needs, ICT
will assume sole or shared responsibilities for the management of a client's
customer care operations. As of December 31, 1999 this business unit operated
contact centers in Lakeland, Florida and Langhorne, Pennsylvania.

Contact Center Facilities

         The following table lists the Company's contact center facilities as of
December 31, 1999:

        -------------------------------------------------------------
                              Locations
        -------------------------------------------------------------
        Morrilton, AR; New Castle, DE; Fort Lauderdale, FL; Lakeland,
        FL; Miami, FL; Louisville, KY; Lewiston, ME; Oxford, ME;
        Pittsfield, ME; Wilton, ME; Amherst, NY; Depew, NY;
        Lancaster, OH; Sharonville, OH; Allentown, PA; Burnham, PA;
        Dubois, PA; Langhorne, PA(3); Trevose, PA; Chesapeake, VA;
        Norfolk, VA; Martinsburg, WV; Parkersburg, WV; Westover, WV;
        Halifax, Nova Scotia, Canada; Moncton, New Brunswick, Canada;
        Riverview, New Brunswick, Canada; Sydney, Nova Scotia,
        Canada; Dublin, Ireland; and London, U.K.
        -------------------------------------------------------------

Target Industries

         ICT's domestic sales force is assigned to specific industry sectors,
which enables its sales personnel to develop in-depth industry and product
knowledge. Several of the industries that ICT serves are undergoing deregulation
and consolidation, which provides the Company with additional opportunities as
businesses search for low cost solutions for their marketing, sales and customer
support needs. In 1999, business within the insurance and financial services
industries accounted for 65% of the Company's revenues. The industries targeted
by the Company and the principal services provided are described below.

         Insurance

         ICT works with large consumer insurance companies to market and provide
customer support services for products such as life, accident, health, and
property and casualty insurance. The Company's insurance group operates numerous
dedicated contact centers and in 1999, the Company sold approximately 1.5
million insurance policies on behalf of its clients. ICT employs approximately
410 agents collectively holding over 8,500 state or Canadian provincial
insurance licenses. The Company has a full-service agent licensing and a
continuing education department, which enables its agents to obtain licenses in
47 states and eight Canadian provinces and to maintain their compliance with
insurance regulations. Clients include, but are not limited to, JCPenney Life
Insurance Company, Progressive and American Security Group.

           Financial Services

         ICT provides banks and other financial services clients with a wide
range of services, including card-holder acquisition, active account generation,
account balance transfer, account retention and customer service. With the
acquisition in 1995 of its Financial Marketing Services operations, ICT began
offering additional banking services, such as marketing and servicing home
equity loans, lines of credit, loan-by-phone, checking and deposit account
acquisition, mortgage loans and other traditional banking products. Among ICT's
financial services clients in 1999 are Advanta, Fleet Boston, Discover, Banc
One, MBNA, and Metris.

                                       5
<PAGE>
           Telecommunications/Utilities

         ICT provides teleservices and customer care management services for
major telecommunications companies for long distance, cellular and cable
products and services, regional telecommunications companies marketing advanced
telephone features, and companies which provide billing support services to
telecommunications carriers. Within the telecommunications/utilities industry,
ICT clients in 1999 include, but are not limited to, Bell Atlantic, Integretel,
and Green Mountain.com.

         Pharmaceuticals and Health Care Services

         Leveraging ICT's insurance market position into the managed care
industry, the Company, through its ICT Medical Marketing Services business unit,
serves pharmaceutical manufacturers, medical advertising agencies, health
insurance companies, hospitals and other health care related suppliers, for the
sale and marketing of products to both health care professionals (hospitals,
physicians, pharmacists and nurses) and health care consumers (patients and
prospective patients). The applications the Company offers in this market
segment consist of business-to-business, business-to-professional and
business-to-consumer, utilizing inbound and outbound services to sell products,
to conduct market research, develop marketing databases and provide customer
service. Clients in this category in 1999 include, but are not limited to,
SmithKline Beecham, Roche, Aetna/U.S. Healthcare and Pacificare.

         Information Technology

         ICT provides sophisticated marketing resources for both outbound and
inbound applications on behalf of clients in the computer software and hardware
industries. Outbound applications include, but are not limited to, new customer
acquisition, customer retention and sales lead generation. Inbound applications
include, but are not limited to, customer service, first-level customer
technical support and the sale of personal computer-related products. ICT's
clients frequently integrate outbound and inbound call campaigns, seeking to
achieve favorable compounding results. Information technology clients in 1999
include, but are not limited to, Sony Computer Entertainment and AOL Canada.

Technology

         ICT invests heavily in system and software technologies designed to
improve contact center production thereby lowering the effective cost per
contact made or received, and to improve sales and customer service
effectiveness by providing its sales and service representatives with real-time
access to customer and product information. Since January 1995, the Company has
invested over $51 million in information and communications systems and software
enabling it to use state-of-the-art contact center technology. ICT believes it
was one of the first fully automated teleservices company and among the first to
implement predictive dialing equipment, for outbound telemarketing and market
research and to provide collaborative web browsing services. ICT realizes
significant cost savings through the use of innovative contact handling
technology, automatic call distributors ("ACD") and advanced scripting software,
all of which optimize agent utilization. An ACD is a phone switch that accepts
an inbound call from the public network and routes that call to the most
advantageous, available resource to handle the call. Scripting software is used
in contact centers to provide the agent with the appropriate information to use
during the contact and to specify the content and sequence of the information
captured from the customer.

         The Company utilizes a scalable set of UNIX processors to support its
outbound and inbound contact center operations. The term scalable in the
computer industry generally means that a system or product line is configured to
work cost-effectively at both low and high volume. Dedicated UNIX processors are
used for inbound contact centers while predictive dialing systems, networked to
UNIX processors at the Company's corporate data center, are used at each
outbound contact center. The predictive dialing systems support local call and
data management: the UNIX processors provide centralized list management, data
consolidation, report generation and interfaces with client order processing
systems.

         ICT Group uses a series of Customer Relationship Management (CRM)
software to prepare outbound and inbound scripts, manage, update and reference
client data files, collect statistical transaction and performance data and
assist in the preparation of internal and client reports. This CRM software
includes ICT Group's proprietary call transaction management system ("CTMS") as
well as IMA's Edge TeleBusiness Software and Siebel's Contact Management
systems. The use of the Edge and Siebel systems as well as Oracle's database
management system provides a scalable and robust suite of applications to
support our client's business needs.

                                       6
<PAGE>
         ICT introduced several technology solutions in 1999 to support
multi-channel customer contacts. These solutions include ICT Net2tel.com(sm),
giving ICT the ability to interact with Internet users via text chat, voice over
the Internet, or two line call back. In addition, ICT introduced high-volume
email handling capabilities in 1999. The Company intends to take advantage of
these technologies to provide an integrated solution to support multi-channel
contact management.

Quality Assurance, Personnel and Training

         ICT emphasizes quality service and extensive employee training as a way
to compete effectively and invests heavily in quality assurance personnel and
practices. ICT's quality assurance and training departments are responsible for
the development and enforcement of contact center policies and procedures, the
selection and training of telephone service representatives, the training and
professional development of contact center management personnel, monitoring of
calls and verification and editing of all sales. Through the Company's quality
assurance department, both the Company and its clients are able to perform real
time on-site and remote call monitoring to maintain quality and efficiency.
Sales confirmations are recorded (with the customer's consent) in order to
verify the accuracy and authenticity of transactions. Additionally, ICT is able
to provide to its clients immediate updates on the progress of an ongoing
telemarketing effort. Access to this data allows ICT and its clients to identify
potential campaign shortfalls and to immediately modify or enhance a
telemarketing effort. In 1998 the Company completed the installation of digital
recording technology in all US outbound centers. This installation allows the
consolidation of all verification activities into a centralized location and
effectively created a "third party" verification center. Verification results
are now available to Operations and Client Services by the end of the calling
day. Also, each center can access the recordings for review with supervisory
staff or the service representative. The Company's commitment to providing
quality service is further illustrated by its current effort toward
certification with ISO 9002 standards, which are administered by the
International Organization for Standardization and represent an international
consensus on the essential features of a quality system to ensure the effective
operation of a business. All domestic and international sales and service
focused business units are ISO 9002 registered as of December 31, 1999.

         Management believes that a key driver of ICT's success is the quality
of its employees. The Company tailors its recruiting and training techniques
toward the industries it serves. Service representatives receive a detailed
review of each program in which they are to participate along with training
regarding the background, structure and philosophy of the client that is
sponsoring the program. As is typical in the teleservices industry, over 90% of
the Company's service representatives are part-time employees. As of February
24, 2000, ICT employed approximately 6,000 persons, of which more than 5,200
were service representatives. None of ICT's employees are currently represented
by a labor union. The Company considers its relations with its employees to be
good.

Clients

         The Company generally operates under month-to-month contractual
relationships with its teleservices clients. The pricing component of a contract
is often comprised of an initial fee, a base service charge and separate charges
for ancillary services. Service charges are usually based upon an hourly rate
for outbound calls and per-minute rates for inbound calls. On occasion, the
Company performs services for which it is paid commissions based on completed
sales under contracts terminable by the Company with 30 or fewer days notice.
ICT's Customer Management Services typically enter into longer term, contractual
relationships that may contain provisions for early contract terminations. The
Customer Management Services segment's revenues represented approximately $45.1
million, or 29%, of the Company's consolidated revenues in 1999.

         ICT targets those companies which it believes have the greatest
potential to generate recurring revenues to the Company based on their ongoing
direct sales and customer service needs. At December 31, 1999, ICT provided
direct sales and customer service to approximately 75 clients. The Company's
largest clients in recent years have been MMIG and JCPenney Life Insurance
Company, which together accounted for approximately 17% of the Company's net
revenues in 1999. No other client accounted for more than 10% of the Company's
net revenues in 1999.

Competition

         The CRM services industry is intensely competitive and the Company's
principal competition in its primary markets comes from large service
organizations, including, but not limited to, Convergys Corporation, SITEL
Corporation, TeleTech Holdings, Inc., APAC TeleService, Inc. and West
Telemarketing Corporation. The Company competes with numerous independent firms,
some of which are as large or larger than ICT, as well as the in-house



                                       7
<PAGE>

operations of many of its clients or potential clients. In addition, most
businesses that are significant consumers of these services utilize more than
one teleservice firm at a time and reallocate work among various firms from time
to time. Some of this work is contracted on an individual project basis, with
the effect that the Company and other firms seeking such business are required
to compete with each other frequently as individual projects are initiated.
Furthermore, the Company believes there is a trend among businesses with in
house contact center operations toward outsourcing the management of those
operations to others and that this trend may attract new competitors, including,
but not limited to, competitors that are substantially larger and better
capitalized than ICT, into the Company's market. Additionally, ICT faces
competitors in its CRM ASP offerings. This competition is primarily separated
into two categories: Software only ASPs and ASPs that provide both software and
services (Hybrid ASPs). The Company competes with several competitors in each of
these categories. Software only ASP companies that compete with ICT include:
LivePerson, FaceTime and eConvergent. Hybird ASP competitors would include:
PeopleSupport, Brigade Solutions and SafeHarbor.com. While the Company believes
it has more customer service experience and a broader technological offering
then its current competitors, new competition may be attracted into ICT's
e-solutions market.

Government Regulation

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

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

         The FTC also administers the Federal Telemarketing and Consumer Fraud
and Abuse Prevention Act of 1994 (the "TCFAPA"). Under the TCFAPA, the FTC has
issued regulations prohibiting deceptive, unfair or abusive practices in
telemarketing sales. Generally, these rules prohibit misrepresentations of the
cost, quantity, terms, restrictions, performance or characteristics of products
or services offered by telephone solicitation or of refund, cancellation or
exchange policies. The regulations also regulate the use of prize promotions in
telemarketing to prevent deception and require that a telemarketer identify
promptly and clearly the seller on whose behalf the telemarketer is calling, the
purpose of the call, the nature of the goods or services offered and, if
applicable, that no purchase or payment is necessary to win a prize. The
regulations also require that telemarketers maintain records on various aspects
of their business. Analogous restrictions apply to industries regulated by the
SEC. The Company believes that it is in compliance with the TCPA and its
implementing regulations, as well as with the regulations promulgated pursuant
to the TCFAPA. Failure to comply with either the TCPA or the TCFAPA could
adversely affect or limit the Company's current or future operations.

         Most states have enacted statutes similar to the FTC Act generally
prohibiting unfair or deceptive acts and practices. Additionally, some states
have enacted laws and others are considering enacting laws targeted directly at
telemarketing practices. For example, telephone sales in certain states are not
final until a written contract is delivered to and signed by the buyer, and such
a contract often may be canceled within three business days. At least one state
also prohibits telemarketers from requiring credit card payment, and several
other states require certain telemarketers to obtain licenses, post bonds or
submit sales scripts to the state's attorney general. Under the more general
statutes, depending on the willfulness and severity of the violation, penalties
can include imprisonment, fines and a range of equitable remedies such as
consumer redress or the posting of bonds before continuing in business. Many of
the statutes directed specifically at telemarketing practices provide for a
private right of action for the recovery of damages or provide for enforcement
by state agencies permitting the recovery of significant civil or criminal
penalties, costs and attorneys' fees. There can be no assurance that any such
laws, if enacted, will not adversely affect or limit the Company's current or
future operations.

                                       8
<PAGE>
ITEM 2. PROPERTIES

         The Company's corporate headquarters are located in Langhorne,
Pennsylvania in leased facilities consisting of approximately 29,500 square feet
of office space rented under leases that expire in April 2001. The Company also
leases all of the facilities used in its contact center operations, as well as
office space in Chicago, Illinois, and Seattle, Washington for its sales
offices. The leases for the Company's facilities expire generally between July
2000 and May 2009 and typically contain renewal options. The Company believes
that its existing facilities are suitable and adequate for its current
operations, but additional facilities will be required to support growth. The
Company believes that suitable additional or alternative space will be available
as needed on commercially reasonable terms.

ITEM 3. LEGAL PROCEEDINGS

         From time to time, the Company is involved in litigation incidental to
its business. In the opinion of management, no litigation to which the Company
is currently a party is likely to have a material adverse effect on the
Company's results of operations, financial condition or liquidity, if decided
adversely to the Company.

         As previously reported by the Company, on October 23, 1997, a
shareholder, purporting to act on behalf of a class of ICT shareholders filed a
complaint in the United States District Court for the Eastern District of
Pennsylvania against the Company and certain of its directors. The complaint
alleges that the defendants violated the federal securities laws, and seeks
compensatory and other damages, including rescission of stock purchases made by
the plaintiff and other class members in connection with the Company's initial
public offering effective June 14, 1996. The defendants believe the complaint is
without merit, deny all of the allegations of wrongdoing and are vigorously
defending the suit. On February 2, 1998, the defendants filed a motion to
dismiss the complaint. On May 19, 1998, the complaint was dismissed by a judge
for the United States District Court for the Eastern District of Pennsylvania
with leave to plaintiff to file an amended complaint on narrow accounting
allegations. On June 22, 1998, plaintiffs filed a First Amended Class Action
Complaint purporting to bring negligence claims in connection with the Company's
initial public offering. The defendants continue to deny all allegations of
wrongdoing, believe the amended complaint is without merit and are vigorously
defending the suit. On November 3, 1998, the court granted a motion appointing
Rowan Klein and Michael Mandat as lead plaintiffs. On February 2, 1999, the
court dismissed the case without prejudice, directing that the case remain in
status quo, that the statute of limitations be tolled and that the parties
continue with discovery and advise the court if assistance by the court is
needed. Since that time the defendants filed a motion for summary judgement
seeking to have the case dismissed on the grounds that there is no material
issue of fact. Plaintiffs filed a response in opposition to defendant's motion
and discovery was conducted by the parties. The court has not ruled as yet on
defendants' motion.

         On July 12, 1996, Main Street Marketing of America Incorporated ("Main
Street Marketing") brought a demand for arbitration against the Company in the
Commonwealth of Pennsylvania claiming damages as a result of the Company's
alleged breach of a service agreement under which the Company agreed to provide
Main Street Marketing with various data entry and data processing services
relating to Main Street Marketing's magazine subscription program. Main Street
Marketing alleges that the Company committed various breaches of the service
agreement and has demanded an award in excess of $15 million. The Company has
responded to this demand for arbitration by denying liability and
counterclaiming in an amount in excess of $125,000. Discovery has progressed in
this matter, but has not yet been completed. It is not possible at this stage of
the proceeding to evaluate the probable outcome of this litigation.

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

         None.


                                       9
<PAGE>
                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The Company's Common Stock trades on the National Market segment of The
Nasdaq Stock Market under the symbol "ICTG." The following table sets forth, for
the periods indicated, the high and low sales prices as quoted on The Nasdaq
Stock Market.

         Period                                    High             Low
         ------                                    ----             ---
         Fiscal 1998:
                  First Quarter                    5 5/8            3 3/4
                  Second Quarter                   5 1/2            3 3/4
                  Third Quarter                    4 3/8                2
                  Fourth Quarter                   2 7/8            1 7/8

         Fiscal 1999:
                  First Quarter                    4 1/2            2 5/8
                  Second Quarter                   5 3/8          2 11/16
                  Third Quarter                    9 5/8            4 1/2
                  Fourth Quarter                  15 5/8           6 1/16


         As of March 15, 2000, there were 43 holders of record of the Company's
Common Stock. On March 15, 2000, the closing sale price of the Common Stock as
reported by The Nasdaq Stock Market was $8.00.

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

                                       10
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA

         The following selected financial data are derived from the financial
statements of the Company. The data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in Item 7 and the consolidated financial statements and related
notes thereto included in Item 8.
<TABLE>
<CAPTION>
                                                                         For Year Ended December 31,
                                                     ------------------------------------------------------------------
                                                          1995           1996          1997        1998         1999
                                                     ------------------------------------------------------------------
                                                                 (In thousands, except per share amounts)
<S>                                                   <C>            <C>            <C>         <C>         <C>
Statement of Operations Data:
Net revenues                                          $  52,116       $ 71,599      $ 91,653    $ 120,982    $ 153,049
                                                      ---------       --------      --------    ---------    ---------
Operating expenses:
  Cost of services                                       28,639         38,537        50,662       69,588       84,390
  Selling, general and administrative                    21,073         30,708        37,009       47,012       60,080
  Nonrecurring compensation expense                          --         12,689            --           --           --
                                                      ---------       --------      --------    ---------    ---------
    Total operating expenses                             49,712         81,934        87,671      116,600      144,470
                                                      ---------       --------      --------    ---------    ---------
    Operating income (loss)                               2,404        (10,335)        3,982        4,382        8,579
Interest expense (income), net                              834            180          (398)         406          801
                                                      ---------       --------      --------    ---------    ---------
Income (loss) before taxes                                1,570        (10,515)        4,380        3,976        7,778
Income taxes (benefit)                                       --         (2,998)        1,708        1,550        3,033
                                                      ---------       --------      --------    ---------    ---------
Net income (loss)                                     $   1,570       $ (7,517)     $  2,672    $   2,426    $   4,745
                                                      =========       ========      ========    =========    =========
Diluted earnings (loss) per share                     $     .17       $   (.72)     $    .22    $     .20    $    0.39
                                                      =========       ========      ========    =========    =========
Shares used in computing diluted
    earnings per share                                    9,490         10,407        12,044       12,023       12,261
                                                      =========       ========      ========    =========    =========
Pro Forma data:
    Historical income (loss) before income taxes      $   1,570       $(10,515)

    Pro forma income tax expense (benefit) (1)              667         (3,767)
                                                      ---------       --------
    Pro forma net income (loss) (1)                   $     903       $ (6,748)
                                                      =========       ========
    Pro forma diluted earnings (loss) per share (1)   $     .10       $   (.65)
                                                      =========       ========
    Shares used in computing pro forma
        diluted earnings (loss) per share                 9,490         10,407
                                                      =========       ========


                                                                              As of December 31,
                                                     --------------------------------------------------------------------
                                                             1995           1996          1997        1998         1999
                                                     --------------------------------------------------------------------
                                                                               (In thousands)
Balance Sheet Data:
Cash and cash equivalents                                  $  447        $ 18,298      $ 17,711     $14,225      $12,239
Working capital (deficit)                                  (1,601)         27,066        25,530      27,093       26,767
Total assets                                               18,481          49,112        61,578      75,876       78,073
Long-term debt, less current maturities                       881           1,057         4,799      14,000       10,000
Capitalized lease obligations,
    less current maturities                                 1,632           1,296         1,498         833          308
Shareholders' equity                                        3,843          41,020        43,368      45,785       50,340
</TABLE>
-----------
(1) A pro forma provision for income taxes for periods prior to the effective
    date of the Company's offering has been computed as if the Company had been
    fully subject to federal and state income taxes.

                                       11
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Results of Operations

         The following table sets forth statement of operations data as a
percentage of net revenues for the periods indicated:
<TABLE>
<CAPTION>
                                                                                  Year Ended December 31,
                                                                ----------------------------------------------------------
                                                                        1999                 1998              1997
                                                                ----------------------------------------------------------
<S>                                                             <C>                     <C>                <C>
Net revenues                                                           100.0%               100.0%            100.0%
                                                                       ------               ------            ------
Operating expenses
         Cost of services                                               55.1                 57.5              55.3
         Selling, general and administrative                            39.3                 38.9              40.4
                                                                        ----                 ----              ----

                  Total operating expense                               94.4                 96.4              95.7
                                                                        ----                 ----              ----

                  Operating income                                       5.6                  3.6               4.3

Interest expense                                                          .8                   .8                .5
Interest income                                                          (.3)                 (.5)             (1.0)
                                                                        ----                 ----             -----

                  Income before income taxes                             5.1                  3.3               4.8

Income tax expense                                                       2.0                  1.3               1.9
                                                                        ----                 ----              ----

Net income                                                               3.1%                 2.0%              2.9%
                                                                        ====                 ====              ====
</TABLE>
Years Ended December 31, 1999 and 1998

         Net Revenues. Net revenues increased 27% to $153.0 million from $121.0
million in 1998 primarily due to strong revenue growth from customers in the
insurance, telecommunications, and health care industries and our expansion into
Internet Support Services. Domestic TeleServices revenues grew 6% to $83.9
million from $79.0 million in 1998. Growth in this segment was restrained by a
slowdown in telesales campaigns which utilized credit card files. This low
growth rate resulted in reduced profitability for the Domestic TeleServices
segment. International Services (formerly International TeleServices) revenues
grew 80% to $24.0 million in 1999 from $13.4 million in 1998 due to our rapid
growth in Europe, Canada, Spantel and the Company's expansion into Australia.
Customer Management Services (previously reported separately as Marketing
Services and Management Services) revenues increased 58% to $45.1 million from
$28.6 million in 1998 reflecting the addition and expansion of several customer
care contracts.

         Cost of Services. Cost of services, which consist primarily of direct
labor and telecommunications costs, increased 21% to $84.4 million in 1999 from
$69.6 million in 1998, resulting from increased business activity in each of the
business units. The increase was primarily due to the increased direct labor
required to support the increased revenue volume. As a percentage of revenues,
cost of services decreased to 55% in 1999 from 58% in 1998, primarily due to
telecommunication costs per hour decreasing 19% through reductions in rates paid
to our domestic and international carriers combined with the increased ability
to pass through telecommunication costs on many of our customer care contracts.

         Selling, General and Administrative. Selling, general and
administrative expenses increased 28% to $60.1 million in 1999 from $47.0
million in 1998 largely due to the addition of facilities, contact center
personnel and other infrastructure to support increased calling volumes, as well
as our investment in marketing and systems to support our Internet Support
Services initiatives. As a percentage of revenues, selling, general and
administrative expenses were 39% in both 1999 and 1998.

                                       12
<PAGE>
         Interest Expense, net. Net interest expense reflects the interest
expense related to capital leases and term debt partially offset by investment
income. Net interest expense increased $395,000 to $801,000 in 1999 from
$406,000 in 1998 due to higher average outstanding debt and lower average
invested funds in 1999.

         Income Taxes. Income taxes increased $1.5 million to $3.0 million in
1999 from $1.5 million in 1998. In both 1999 and 1998, the provision for income
taxes was approximately 39% of income before taxes.

Years Ended December 31, 1998 and 1997

         Net Revenues. Net revenues increased 32% in 1998 to $121.0 million from
$91.7 million in 1997 primarily due to growth in TeleServices and Customer
Management Services revenues. Combined TeleServices segment revenues increased
29% to $92.4 million in 1998 from $71.4 million in 1997 resulting from continued
strong growth in the domestic market. International Services segment revenues
grew 4% to $13.4 million in 1998 from $12.9 million in 1997. Domestic
TeleServices segment revenues grew 35% to $79.0 million in 1998 from $58.5
million in 1997 as a result of growth in the financial services and
telecommunications industries. Customer Management Services revenues increased
41% to $28.6 million in 1998 from $20.3 million in 1997 reflecting the addition
and expansion of several customer care contracts.

         Cost of Services. Cost of services increased 37% to $69.6 million in
1998 from $50.7 million in 1997, resulting from increased business activity in
each of the business units. As a percentage of revenues, cost of services
increased to 58% in 1998 from 55% in 1997 primarily due to lower average prices
and increased labor costs the Company incurred as a result of the favorable
economic climate and historically low unemployment levels. These conditions made
it more difficult for the Company to attract sufficient contact center staff.

         Selling, General and Administrative. Selling, general and
administrative expenses increased 27% to $47.0 million in 1998 from $37.0
million in 1997 due to an increased number of contact centers and related
workstation capacity and additional sales and systems support. As a percentage
of revenues, selling, general and administrative expenses declined to 39% in
1998 from 40% in 1997 as the Company has consolidated certain contact centers
into larger centers, spread fixed costs of operations over the larger centers
and generally managed fixed expenses to support a larger revenue base.

         Interest Expense (Income), Net. Net interest expense of $406,000 versus
net interest income of $398,000 in 1998 and 1997, respectively, reflects the
interest expense related to capital leases and borrowings against the Company's
line of credit for capital expansion partially offset by investment income. The
increase in net interest expense is the result of increased average outstanding
balances on the line of credit and decreased average invested funds in 1998 as
compared to 1997. In 1998, the Company financed capital equipment purchases
under its line of credit. In 1998, the Company borrowed approximately $12.2
million under its line of credit which was converted to term debt.

         Income Taxes. Income taxes decreased $159,000 to $1.5 million for 1998
from $1.7 million in 1997. In both 1998 and 1997, the provision for income taxes
was approximately 39% of income before income taxes.

Quarterly Results and Seasonality

         The Company has experienced and expects to continue to experience
significant quarterly variations in operating results, principally as a result
of the timing of client programs, the commencement and expiration of contracts,
the timing and amount of new business generated by the Company, the Company's
revenue mix, the timing of additional selling, general and administrative
expenses to support the growth and development of existing and new business
units and competitive industry conditions.

                                       13
<PAGE>
         The Company's business tends to be strongest in the second and fourth
quarters due to the high level of client sales activity in the spring and prior
to the holiday season. In the first quarter, business generally levels off or
slows from the previous quarter as a result of reduced client sales activity and
client transitions to new marketing programs during the first quarter of the
calendar year. In addition, the Company typically expands its operations in the
first quarter to support anticipated business growth beginning in the second
quarter. As a result, selling, general and administrative costs typically
increase in the first quarter without a commensurate increase in revenues which
results in decreased profitability for the first quarter versus the previous
fourth quarter. Also, demand for the Company's services typically slows or
decreases in the third quarter as the volume of business decreases during the
summer months. In addition, the Company's operating expenses increase during the
third quarter in anticipation of higher demand for its services during the
fourth quarter.

Liquidity and Capital Resources

         Cash provided by operations in 1999 was $11.5 million compared to
$292,000 in 1998. The increase of approximately $11.2 million resulted from
higher net income and non-cash charges, as well as strong collection of accounts
receivable.

         Cash used in investing activities in 1999 was $8.6 million compared to
$14.8 million in 1998. The Company added 752 workstations in 1999 versus adding
896 in 1998, and financed approximately half of its capital expenditures in 1999
under operating leases.

         Cash used in financing activities was $4.6 million in 1999 as compared
to $11.1 million provided by financing activities in 1998. In 1999, the Company
repaid $4.0 million of term debt and made no borrowings under its line of
credit.

         The Company's operations will continue to require significant capital
expenditures. Historically, equipment purchases have been financed through the
Company's equipment line of credit, operating leases, and through capitalized
lease obligations with various equipment vendors and lending institutions. The
capital lease obligations are payable in varying installments through 2001.
Outstanding obligations under capitalized leases at December 31, 1999 were
$833,000.

      In 1998, the Company signed a three-year, $45.0 million credit agreement
with BankBoston, N.A. and Summit Bancorp. At December 31, 1999, outstanding
obligations under the credit agreement were $14.0 million, leaving $27.0 million
available to the Company. Repayments of termed out amounts permanently reduce
the amount available to borrow under the Line of Credit.

         The Company believes that cash on hand, together with cash flow
generated from operations and funds available under the credit agreement will be
sufficient to finance its current operations and planned capital expenditures at
least through 2000.

ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK

         The Company's operations are exposed to market risks primarily as a
result of changes in interest rates and foreign currency exchange rates. The
Company does not use derivative financial instruments for speculative or trading
purposes.

         Interest Rate Risk

                  The Company's exposure to market risk for changes in interest
         rates relates to its long term debt obligations. The fixed rate of 7%
         on the Company's long term debt at December 31, 1999 approximates
         market rates; thus, the fair value of the debt approximates its
         reported value. In the past the Company has not entered into financial
         instruments such as interest rates swaps or interest rate lock
         agreements. However, it may consider these instruments to manage the
         impact of changes in interest rates based on management's assessment of
         future interest rates, volatility of the yield curve and the Company's
         ability to access the capital markets in a timely manner.

         Foreign Currency Risk

                  The Company does not use foreign currency exchange contracts
         or purchase currency options to hedge local currency cash flows. The
         Company has operations in Canada, Ireland, the United Kingdom, and
         Australia which are subject to foreign currency fluctuations. As
         currency rates change, translation of income statements of these
         operations from local currencies to US dollars affects year-to-year
         comparability of operating results. The Company's foreign operations
         represent 12.4% of the Company's consolidated revenues for the year
         ended December 31, 1999. In addition, foreign operations produced 15.0%
         of the business associated with domestic revenues. Management does not
         expect the risk of foreign currency fluctuations to be material.


                                       14
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The financial statements of the Company being filed under this Item 8
can be found beginning on page F-1 of this report.

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

         None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Information with respect to this item will be contained in the
Registrant's Proxy Statement for the 2000 Annual Meeting of Shareholders (the
"Proxy Statement"), which is hereby incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

         Information with respect to this item will be contained in the Proxy
Statement, which is hereby incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information with respect to this item will be contained in the Proxy
Statement, which is hereby incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information with respect to this item will be contained in the Proxy
Statement, which is hereby incorporated herein by reference.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K


Financial Statements and Financial Statement Schedules

         See Index to Financial Statements at page F-1.


Reports on Form 8-K

         The Company did not file any reports on Form 8-K during the last
quarter of the period covered by this report.

Exhibits

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

                                       15
<PAGE>
<TABLE>
<CAPTION>
<S>               <C>
     3.1          Articles of Incorporation. (2)
     3.2          Bylaws. (2)
     9.1          Voting Trust Agreement among John J. Brennan, Donald P. Brennan and the Company, dated
                  February 2, 1996. (1) (Exhibit 10.11)
     9.2          Amendment No. 1 to Voting Trust Agreement among John J. Brennan,  Donald P. Brennan and the Company,  dated May 9,
                  1996. (2) (Exhibit 10.17)
     9.3          Form of Voting Agreement between the Company and certain option holders. (1) (Exhibit 10.13)
    10.1          ICT Group, Inc. 1987 Stock Option Plan. (1) (2)+
    10.2          ICT Group, Inc. Equity Incentive Plan. (1)+
    10.3          ICT Group, Inc. Equity Compensation Plan. (2)+
    10.4          ICT Group, Inc. 1996 Non-Employee Directors Plan. (2)+
    10.5          Employment Agreement between John J. Brennan and the Company, dated May 8, 1996.(2)+
    10.7          Employment Agreement between John L. Magee and the Company, dated April 1, 1987. (1)+
    10.8          Employment Agreement between John D. Campbell and the Company, dated October 1, 1987. (1)+
    10.9          Employment Agreement between Maurice J. Kerins and the Company, dated April 1, 1987. (1)+
    10.10         Employment Agreement between Robert F. Small and the Company, dated April 1, 1987. (1)+
    10.11         Shareholders  Agreement among John J. Brennan,  Donald P. Brennan and the Company,  dated February 2,
                  1996. (1) (Exhibit 10.12)
    10.13         $45,000,000  Credit  Agreement  dated as of April 21,  1998 among the  Company,  Eurotel  Marketing  Limited,
                  Yardley Enterprises,  Inc., Harvest Resources,  Inc., ICT/Canada Marketing, Inc., the Lenders referred to therein,
                  BankBoston, N.A. as Administrative Agent and Summit Bank as Co-Agent (3) (Exhibit 10.13)
    10.14         Employment Agreement between Vincent A. Paccapaniccia and the Company, dated August 24, 1998.
    10.15         First Amendment to Credit Agreement among the Company,  Eurotel  Marketing  Limited,  Yardley  Enterprises,  Inc.,
                  Harvest  Resources,  Inc.,  ICT/Canada  Marketing,  Inc.,  the Lenders  referred to therein,  BankBoston,  N.A. as
                  Administrative Agent and Summit Bank as Co-Agent (3) (Exhibit 10.13) dated December 22, 1998.
    10.16         Employment Agreement between John P. McCabe and the Company, dated April 18, 1997*
    10.17         Employment Agreement between Timothy F. Kowalski and the Company, dated July 7, 1997*
    10.18         Employment Agreement between Vincent M. Dadamo and the Company, dated May 29, 1999*
    10.19         ICT Group, Inc. Non-Qualified Deferred Compensation Plan*
    21            List of Subsidiaries*
    23            Consent of Independent Public Accountants*
    27            Financial Data Schedule*
</TABLE>
---------
*  Filed herewith.
+  Compensation plans and arrangements for executives and others.
   (1)  Filed as an exhibit to the Company's Registration Statement on Form S-1
        on April 26, 1996 (Registration No. 333-4150).
   (2)  Filed as an exhibit to Amendment No. 2 to the Company's Registration
        Statement on Form S-1 on June 4, 1996 (Registration No. 333-4150).
   (3)  Filed as an exhibit to the Company's Quarterly Report on Form 10-Q on
        May 13, 1998.

                                       16
<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.

                                            ICT GROUP, INC.
                                            (Registrant)

Dated:  March 27, 2000

                                            By:/s/ John  J. Brennan
                                               --------------------------------
                                               John J. Brennan
                                               Chairman, President and Chief
                                               Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
             Signature                                     Title                                         Date
             ---------                                     -----                                         ----
<S>                                                <C>                                               <C>
By: /s/ John J. Brennan                            Chairman, President, Chief                        March 27, 2000
    --------------------------------------         Executive Officer and Director
    John J. Brennan                                (principal executive officer)


By: /s/ Vincent A. Paccapaniccia                   Senior Vice President, Finance and                March 27, 2000
    --------------------------------------         Administration, Chief Financial Officer
    Vincent A. Paccapaniccia                       and Asst. Secretary (principal financial and
                                                   accounting officer)


By: /s/ Donald P. Brennan                          Director                                          March 27, 2000
    --------------------------------------
    Donald P. Brennan

By: /s/ Bernard Somers                             Director                                          March 27, 2000
    --------------------------------------
    Bernard Somers

By: /s/ John Stoops                                Director                                          March 27, 2000
    --------------------------------------
    John Stoops
</TABLE>

                                       17
<PAGE>


                                  EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No.                Description
-----------                -----------
<S>           <C>

    10.16     Employment Agreement between John P. McCabe and the Company, dated April 18, 1997*

    10.17     Employment Agreement between Timothy F. Kowalski and the Company, dated July 7, 1997*

    10.18     Employment Agreement between Vincent M. Dadamo and the Company, dated May 29, 1999*

    10.19     ICT Group, Inc. Non-Qualified Deferred Compensation Plan*

    21        List of Subsidiaries*

    23        Consent of Independent Public Accountants*

    28        Financial Data Schedule*
</TABLE>


                                       18
<PAGE>
                        ICT GROUP, INC. AND SUBSIDIARIES


                 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND

                          FINANCIAL STATEMENT SCHEDULE




                                                               Page
                                                               ----

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS                        F-2

CONSOLIDATED BALANCE SHEETS                                     F-3

CONSOLIDATED STATEMENTS OF OPERATIONS                           F-4

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY                 F-5

CONSOLIDATED STATEMENTS OF CASH FLOWS                           F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                      F-7

FINANCIAL STATEMENT SCHEDULE:
    II. VALUATION AND QUALIFYING ACCOUNTS                      F-18



                                       F-1
<PAGE>



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To ICT Group, Inc.:

We have audited the accompanying consolidated balance sheets of ICT Group, Inc.
(a Pennsylvania corporation) and subsidiaries as of December 31, 1999 and 1998,
and the related consolidated statements of operations, shareholders' equity and
cash flows for each of the three years in the period ended December 31, 1999.
These financial statements and schedule referred to below are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and schedule based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of ICT Group, Inc.
and subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the Index to
Consolidated Financial Statements and Financial Statement Schedule is presented
for purposes of complying with the Securities and Exchange Commission's rules
and is not a required part of the basic financial statements. This schedule has
been subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, fairly states in all material respects
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.




                                                  ARTHUR ANDERSEN LLP

Philadelphia, Pa.,
  February 11, 2000

                                      F-2
<PAGE>
                        ICT GROUP, INC. AND SUBSIDIARIES


                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                            December 31,
                                                                                 --------------------------------
                                    ASSETS                                             1999             1998
                                    ------                                       ---------------  ---------------
<S>                                                                              <C>              <C>
CURRENT ASSETS:
    Cash and cash equivalents                                                    $    12,239,021  $    14,255,253
    Accounts receivable, net of allowance for doubtful accounts
       of $804,588 and $514,897                                                       28,796,353       26,343,681
    Prepaid expenses and other                                                         2,599,418        1,557,915
    Deferred income taxes                                                                556,456          194,739
                                                                                 ---------------  ---------------
              Total current assets                                                    44,191,248       42,351,588

PROPERTY AND EQUIPMENT, net                                                           29,420,635       28,634,260

DEFERRED INCOME TAXES                                                                  2,858,145        3,155,279

OTHER ASSETS                                                                           1,602,721        1,735,191
                                                                                 ---------------  ---------------
                                                                                 $    78,072,749  $    75,876,318
                                                                                 ===============  ===============

                     LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
    Current portion of long-term debt                                            $     4,000,000  $     4,000,000
    Current portion of capitalized lease obligations                                     524,642          665,487
    Accounts payable                                                                   7,868,817        6,884,079
    Accrued expenses                                                                   5,031,018        3,708,736
                                                                                 ---------------  ---------------
              Total current liabilities                                               17,424,477       15,258,302
                                                                                 ---------------  ---------------
LONG-TERM DEBT                                                                        10,000,000       14,000,000
                                                                                 ---------------  ---------------
CAPITALIZED LEASE OBLIGATIONS                                                            308,289          832,931
                                                                                 ---------------  ---------------

COMMITMENTS AND CONTINGENCIES (Note 8)

SHAREHOLDERS' EQUITY:
    Preferred stock, $.01 par value, 5,000,000 shares authorized,
      none issued                                                                             --               --
    Common stock, $.01 par value, 40,000,000 shares authorized, 11,810,025 and
      11,642,475 shares issued and outstanding                                           118,100          116,425
    Additional paid-in capital                                                        49,402,416       49,334,130
    Deferred compensation                                                                     --          (53,716)
    Retained earnings (accumulated deficit)                                            1,554,005       (3,191,000)
    Accumulated other comprehensive loss                                                (734,538)        (420,754)
                                                                                 ---------------  ---------------
              Total shareholders' equity                                              50,339,983       45,785,085
                                                                                 ---------------  ---------------
                                                                                 $    78,072,749  $    75,876,318
                                                                                 ===============  ===============

</TABLE>
        The accompanying notes are an integral part of these statements.


                                      F-3
<PAGE>


                        ICT GROUP, INC. AND SUBSIDIARIES


                      CONSOLIDATED STATEMENTS OF OPERATIONS



<TABLE>
<CAPTION>
                                                                               For the Year Ended
                                                                                  December 31,
                                                              ---------------------------------------------
                                                                   1999           1998              1997
                                                              ------------   ---------------  -------------
<S>                                                           <C>            <C>               <C>
NET REVENUES                                                  $153,049,467   $120,981,890      $ 91,652,978
                                                              ------------   ------------      ------------
OPERATING EXPENSES:
    Cost of services                                            84,390,236     69,587,985        50,662,062
    Selling, general and administrative                         60,079,796     47,011,939        37,008,848
                                                              ------------   ------------        ----------
                                                               144,470,032    116,599,924        87,670,910
                                                              ------------   ------------      ------------
           Operating income                                      8,579,435      4,381,966         3,982,068

INTEREST EXPENSE                                                 1,261,652      1,019,511           478,726

INTEREST INCOME                                                   (460,684)      (613,682)         (876,668)
                                                              ------------   ------------      ------------
           Income before income taxes                            7,778,467      3,976,137         4,380,010

INCOME TAXES                                                     3,033,462      1,549,309         1,708,204
                                                              ------------   ------------      ------------
NET INCOME                                                    $  4,745,005   $  2,426,828      $  2,671,806
                                                              ============   ============      ============
EARNINGS PER SHARE:
     Basic earnings per share                                 $       0.40   $       0.21      $       0.23
                                                              ============   ============      ============
     Diluted earnings per share                               $       0.39   $       0.20      $       0.22
                                                              ============   ============      ============
     Shares used in computing basic earnings
        per share                                               11,748,776     11,569,931        11,542,234
                                                              ============   ============      ============
     Shares used in computing diluted earnings
        per share                                               12,261,075     12,023,152        12,044,341
                                                              ============   ============      ============
</TABLE>



        The accompanying notes are an integral part of these statements.


                                      F-4
<PAGE>



                        ICT GROUP, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                         Accumulated
                                                  Common Stock     Additional  Deferred    Retained     Other Comp-      Total
                                            ---------------------    Paid-in     Compen-    Earnings     Rehensive     Shareholders'
                                               Shares     Amount     Capital     sation     (Deficit)   Income (loss)     Equity
                                            -----------  --------  -----------  ---------  -----------  -------------  ------------

<S>               <C> <C>                   <C>          <C>       <C>          <C>        <C>            <C>          <C>
BALANCE, DECEMBER 31, 1996                  11,538,300   $115,383  $49,338,490  $(161,140) $(8,289,634)   $  17,245    $41,020,344
    Cancellation of stock options                   --         --      (84,648)        --           --           --        (84,648)
    Amortization of deferred compensation           --         --           --     53,712           --           --         53,712
    Exercise of stock options                    4,000         40        4,037         --           --           --          4,077
                                                                                                                       -----------
    Comprehensive income:
        Net income                                  --         --           --         --    2,671,806           --      2,671,806
        Currency translation adjustment             --         --           --         --           --     (297,092)      (297,092)
                                                                                                                       -----------
                Total comprehensive income                                                                               2,374,714
                                           -----------   --------  -----------  ---------  -----------    ---------    -----------
BALANCE, DECEMBER 31, 1997                  11,542,300    115,423   49,257,879   (107,428)  (5,617,828)    (279,847)    43,368,199
    Amortization of deferred compensation           --         --           --     53,712           --           --         53,712
    Exercise of stock options                  100,175      1,002       76,251         --           --           --         77,253
                                                                                                                       -----------
    Comprehensive income:
       Net income                                   --         --           --         --    2,426,828           --      2,426,828
       Currency translation adjustment              --         --           --         --           --     (140,907)      (140,907)
                                                                                                                       -----------
               Total comprehensive income                                                                                2,285,921
                                           -----------   --------  -----------  ---------  -----------    ---------    -----------
BALANCE, DECEMBER 31, 1998                  11,642,475    116,425   49,334,130    (53,716)  (3,191,000)    (420,754)    45,785,085
    Amortization of deferred compensation           --         --           --     53,716           --           --         53,716
    Exercise of stock options                  167,550      1,675       68,286         --           --           --         69,961
                                                                                                                       -----------
    Comprehensive income:
       Net income                                   --         --           --         --    4,745,005           --      4,745,005
       Currency translation adjustment              --         --           --         --           --     (313,784)      (313,784)
                                                                                                                       -----------
               Total comprehensive income                                                                                4,431,221
                                           -----------   --------  -----------  ---------  -----------    ---------    -----------
BALANCE, DECEMBER 31, 1999                  11,810,025   $118,100  $49,402,416         --  $ 1,554,005    $(734,538)   $50,339,983
                                           ===========   ========  ===========  =========  ===========    =========    ===========
</TABLE>


        The accompanying notes are an integral part of these statements.


                                      F-5
<PAGE>



                        ICT GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                   For the Year Ended
                                                                                      December 31,
                                                                   ----------------------------------------------
                                                                        1999             1998             1997
                                                                   --------------    -----------     ------------
<S>                                                                <C>               <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                     $   4,745,005     $ 2,426,828     $  2,671,806
    Adjustments to reconcile net income to
       net cash provided by operating activities-
         Depreciation and amortization                                 8,003,889       5,667,166        3,859,914
         Deferred income tax expense (benefit)                           (64,583)        143,857         (242,216)
         (Increase) decrease in-
           Accounts receivable                                        (2,452,672)     (8,659,610)      (4,144,986)
           Prepaid expenses and other                                 (1,041,503)        309,612         (985,159)
           Other assets                                                   42,587        (406,491)         (38,438)
         Increase (decrease) in-
           Accounts payable                                              984,738       1,061,441        3,015,999
           Accrued expenses                                            1,322,282        (250,466)       2,036,003
                                                                   -------------     -----------     ------------
                Net cash provided by operating activities             11,539,743         292,337        6,172,923
                                                                   ------------      -----------     ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property and equipment                               (8,646,665)    (14,755,145)     (10,585,839)
                                                                   -------------     -----------     ------------
                Net cash used in investing activities                 (8,646,665)    (14,755,145)     (10,585,839)
                                                                   -------------     -----------     ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from long-term debt                                              --      12,161,222        5,515,066
    Payments on long-term debt                                        (4,000,000)       (346,202)        (671,444)
    Payments on capitalized lease obligations                           (665,487)       (744,333)        (724,694)
    Proceeds from exercise of stock options                               69,961          77,253            4,077
                                                                   -------------     -----------     ------------
                Net cash provided by (used in) financing
                   activities                                         (4,595,526)     11,147,940        4,123,005
                                                                   -------------     -----------     ------------

EFFECT OF FOREIGN EXCHANGE RATE CHANGES
   ON CASH AND CASH EQUIVALENTS                                         (313,784)       (140,907)        (297,092)
                                                                   -------------     -----------     ------------

NET DECREASE IN CASH AND
   CASH EQUIVALENTS                                                   (2,016,232)     (3,455,775)        (587,003)

CASH AND CASH EQUIVALENTS, BEGINNING
   OF YEAR                                                            14,255,253      17,711,028       18,298,031
                                                                   --------------    -----------     ------------

CASH AND CASH EQUIVALENTS, END OF YEAR                             $  12,239,021     $14,255,253     $ 17,711,028
                                                                   =============     ===========     ============

</TABLE>

        The accompanying notes are an integral part of these statements.


                                      F-6
<PAGE>



                        ICT GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1. BACKGROUND:

ICT Group, Inc. and subsidiaries (the "Company") is a global supplier of
Customer Relationship Management (CRM) services - consisting of integrated
telesolutions, e-solutions and market solutions - which help its clients
identify, acquire, retain, service, measure and maximize the lifetine value of
their customer relationships. The Company manages 32 customer contact centers in
the U.S., Europe, Canada and Australia from which it supports outbound and
inbound telesales, customer management services, Web-enabled center services and
e-mail management processing for domestic and multinational corporations and
institutions, primarily in the insurance, financial,
telecommunications/utilities, pharmaceutical and healthcare and information
technology industries.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

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

Pursuant to Statement of Financial Accounting Standards ("SFAS") No. 52,
substantially all assets and liabilities of the Company's foreign subsidiaries
are translated at the period-end currency exchange rate and revenues and
expenses are translated at an average currency exchange rate for the period. The
resulting translation adjustment is accumulated in a separate component of
shareholders' equity.

Use of Estimates

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

Revenue Recognition

The Company recognizes revenues on programs as services are performed, generally
based on hours of work incurred. Amounts collected from customers prior to the
performance of services are recorded as deferred revenues.

Cash and Cash Equivalents

Cash and cash equivalents include cash and highly liquid investments purchased
with an original maturity of three months or less. Cash equivalents at December
31, 1999 consist of an overnight repurchase agreement, money market accounts and
investment-grade commercial paper.





                                      F-7
<PAGE>


Property and Equipment
                                                         December 31,
                                                -----------------------------
                                                    1999            1998
                                                -----------     -------------
       Communications and computer equipment    $41,969,697     $  37,269,157
       Furniture and fixtures                     9,556,467         7,257,311
       Leasehold improvements                     4,678,383         3,031,414
                                                -----------     -------------
                                                 56,204,547        47,557,882
       Less -  Accumulated depreciation and
                  amortization                  (26,783,912)      (18,923,622)
                                                -----------     -------------
                                                $29,420,635     $  28,634,260
                                                ===========     =============

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

        Communications and computer equipment                      5 years
        Furniture and fixtures                                     5-7 years
        Leasehold improvements                                     Lease term

Depreciation expense was $7,860,290, $5,564,496 and $3,721,321 for the years
ended December 31, 1999, 1998 and 1997, respectively. Repairs and maintenance
are charged to expense as incurred. Additions and betterments are capitalized.

Equipment under capital leases included in property and equipment is $5,946,468,
with related accumulated amortization of $5,072,021 and $4,315,682 at December
31, 1999 and 1998, respectively.

Other Assets
                                                              December 31,
                                                      --------------------------
                                                           1999         1998
                                                      -------------   ----------

        Deposits                                      $     866,021   $  867,701
        Goodwill, net of accumulated amortization of
          $278,427 and $217,941                             629,508      689,994
        Other                                               107,192      177,496
                                                      -------------   ----------
                                                      $   1,602,721   $1,735,191
                                                      =============   ==========


Goodwill is amortized over 15 years on a straight-line basis. The Company
evaluates the realizability of goodwill based on estimates of undiscounted
future cash flows over the remaining useful life of the assets acquired. If the
amount of such estimated undiscounted future cash flows is less than the net
book value of the assets acquired, the assets are written down to the amount of
the estimated undiscounted cash flows. Management believes that there has been
no impairment of goodwill as of December 31, 1999.




                                      F-8
<PAGE>


Accrued Expenses

                                                        December 31,
                                                  ------------------------
                                                     1999          1998
                                                  -----------   ----------

       Payroll and related benefits               $ 2,977,313   $1,786,945
       Telecommunications expense                     900,192      871,761
       Income tax payable                                  --      103,367
       Interest                                        24,500      325,646
       Other                                        1,129,013      621,017
                                                  -----------   ----------
                                                  $ 5,031,018   $3,708,736
                                                  ===========   ==========

Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes," the objective of which is to recognize the amount
of current and deferred income taxes payable or refundable at the date of the
financial statements as a result of all events that have been recognized in the
financial statements as measured by enacted tax laws.

Supplemental Cash Flow Information

For the years ended December 31, 1999, 1998 and 1997, the Company paid interest
of $1,562,798, $736,473, and $440,660, respectively. Capital lease obligations
of $947,208, were incurred on equipment leases entered into in 1997. For the
years ended December 31, 1999, 1998 and 1997, the Company paid income taxes of
$3,529,584, $1,968,387 and $919,637, respectively.

Major Customers and Concentration of Credit Risk

In 1999, 1998 and 1997, two customers accounted for approximately 17%, 22% and
31% of net revenues, respectively. In 1999, 1998 and 1997, net revenues from
customers within the insurance industry accounted for 35%, 34% and 42% of total
net revenues, respectively, and customers within the financial services industry
accounted for 30%, 33% and 24% of total net revenues, respectively. The loss of
the Company's major customers or a downturn in the insurance or financial
services industries could have a material adverse effect on the Company's
business.

Concentration of credit risk is limited to trade receivables and is subject to
the financial conditions of certain major customers. The Company does not
require collateral from its customers.


Earnings Per Share

The Company has presented earnings per share pursuant to SFAS No. 128, "Earnings
Per Share," and the Securities and Exchange Commission Staff Accounting Bulletin
No. 98.

Basic earnings per share ("Basic EPS") is computed by dividing the net income
for each year by the weighted average number of shares of Common stock
outstanding for each year. Diluted earnings per share ("Diluted EPS") is
computed by dividing net income for each year by the weighted average number of
shares of Common stock and the dilutive effect of Common stock equivalents
during each year. For the years ended December 31, 1999, 1998 and 1997, the
dilutive effect of Common stock equivalents used in computing Diluted EPS was
512,299, 453,221 and 502,107, respectively. For the years ended December 31,
1999, 1998 and 1997, options to purchase 68,500, 782,429 and 618,418 shares of
Common stock were outstanding but not included in the computation of Diluted
EPS as the result would be antidilutive.


                                      F-9
<PAGE>


Comprehensive Income (Loss)

The Company follows SFAS No. 130, "Reporting Comprehensive Income". This
statement requires companies to classify items of other comprehensive income by
their nature in a financial statement and display the accumulated balance of
other comprehensive income separately from retained earnings and additional
paid-in capital in the equity section of the balance sheet.


3. DEBT:

                                                             December 31,
                                                       ------------------------
                                                           1999         1998
                                                       -----------  -----------
     Term loan, interest at 7%, principal payments of
       $333,333 per month through June 2003            $14,000,000  $18,000,000

     Less - Current portion                             (4,000,000)  (4,000,000)
                                                       -----------  -----------
                                                       $10,000,000  $14,000,000
                                                       ===========  ===========

Future maturities of long-term debt are as follows at December 31, 1999:


                  2000                              $  4,000,000
                  2001                                 4,000,000
                  2002                                 4,000,000
                  2003                                 2,000,000
                                                    ------------
                                                    $ 14,000,000
                                                    ============

In April 1998, the Company entered into an agreement with two banks under which
the Company obtained a line of credit for an aggregate of $45.0 million (the
"Line of Credit"). Upon execution of the agreement, all principal amounts
outstanding under prior agreements, plus accrued interest and fees incurred in
connection with the new agreement, were rolled into the Line of Credit. This
agreement was amended in December 1998 to allow for an annual calendar year term
out. Borrowings may be used for acquisitions, working capital, capital
expenditures, and other corporate purposes. The Line of Credit can be drawn upon
through April 2001, at which time all amounts outstanding are repayable, unless
the Company has elected to term out eligible borrowings as described below.
Interest on borrowings is calculated at a variable rate and payable quarterly.

Under the terms of the amended agreement, the Company has the option, once each
year, to convert amounts borrowed for capital expenditures to term loans.
Amounts converted to term loans are repayable monthly in fifty-four equal
principal payments plus interest. Interest on the term loans is variable at a
base rate, as defined, minus .5%. The Company may elect to convert such variable
rate to a fixed rate, as defined, plus 1.50%. In December 1998, the Company
elected to convert borrowings under the Line of Credit into a term loan. The
term loan is repayable in 54 monthly installments of $333,333 plus interest at a
fixed rate of 7%, commencing January 1999. Repayments of termed out amounts
permanently reduce the amount available to borrow under the Line of Credit.

The Company must pay a commitment fee of .25% on the average daily balance of
any unused amount of the Line of Credit, payable quarterly. The amount of the
unused Line of Credit at December 31, 1999 totaled $27,000,000. The Company
incurred interest expense of $0 and $650,908 under the Line of Credit for the
years ended December 31, 1999 and December 31, 1998, respectively. The weighted
average interest on borrowings under the Line of Credit for the year ended
December 31, 1998 was 7.4%.

Borrowings under the Line of Credit are secured by substantially all of the
Company's assets. The Company is required to maintain certain financial ratios
and a specified level of net worth, as defined, and payments of dividends and
repurchases of stock are limited.


                                      F-10
<PAGE>

4. CAPITALIZED LEASE OBLIGATIONS:

The Company leases certain equipment under capital leases. Future minimum lease
payments as of December 31, 1999, are as follows:


               2000                                              $    599,824
               2001                                                   308,107
                                                                 ------------
               Total minimum lease payments                           907,931
               Less- Amount representing interest                     (75,000)
                                                                 ------------
               Present value of minimum lease payments                832,931
               Less- Current portion                                 (524,642)
                                                                 ------------
                                                                 $    308,289
                                                                 ============



5. INCOME TAXES:

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


                                              Year Ended December 31,
                                     ----------------------------------------
                                         1999           1998          1997
                                     -----------   ------------  ------------
      Domestic                       $ 7,519,791   $  4,038,383  $  3,192,559
      Foreign                            258,676        (62,246)    1,187,451
                                     -----------   ------------- ------------
                                     $ 7,778,467   $  3,976,137  $  4,380,010
                                     ===========   ============  ============


The components of the provision (benefit) for income taxes are as follows:

                                          Year Ended December 31,
                        -------------------------------------------------------
                              1999                1998                1997
                        --------------      --------------      ---------------
      Current:
        Federal         $    2,680,365      $    1,271,126      $    1,339,098
        State                       --               9,746              10,540
        Foreign                417,680             124,580             462,831
                        --------------      --------------      --------------
                             3,098,045           1,405,452           1,812,469
                        --------------      --------------      --------------
      Deferred:
        Federal                123,445             121,725             (90,898)
        State                  (38,548)             22,132             (13,367)
        Foreign               (149,480)                 --                  --
                        --------------      --------------      --------------
                               (64,583)            143,857            (104,265)
                        --------------      --------------      --------------
                        $    3,033,462      $    1,549,309      $    1,708,204
                        ==============      ==============      ==============




                                      F-11
<PAGE>



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


                                                            December 31,
                                                -------------------------------
                                                      1999             1998
                                                --------------   --------------
           Gross deferred tax assets:
           Nonrecurring compensation expense    $    3,526,358   $    4,006,203
           Accruals and reserves not currently
             deductiible for tax                       556,456          301,059
           Deferred compensation                            --           83,791
           Other                                       192,034               --
                                                --------------   --------------
                                                $    4,274,848   $    4,391,053
                                                ==============   ==============

           Gross deferred tax liabilities:
           Cash basis of accounting             $           --   $     (287,364)
           Depreciation methods                       (755,433)        (619,265)
           Other                                      (104,814)        (134,406)
                                                --------------   --------------
                                                $     (860,247)   $  (1,041,035)
                                                ==============   ==============

The Company has recorded no valuation reserve for deferred tax assets as of
December 31, 1999. Although realization is not assured, management believes it
is more likely than not that all of the deferred tax assets will be realized.
The amount of the deferred tax asset considered realizable, however, could be
reduced in the near-term if estimates of future taxable income are reduced.

In June 1996, the Company recorded a nonrecurring compensation charge of $12.7
million relating to the extension of stock options. In connection with the
compensation charge, the Company recorded a deferred tax benefit of $4.7 million
based on the then excess of the Company's stock price ($16 per share) over the
exercise price of the extended options. To the extent the stock price is below
$16 per share when the options are exercised, the actual tax deduction the
Company will receive will be less than the carrying amount of the deferred tax
asset. Based on the Company's stock price at December 31, 1999 of $12.25 per
share, an impairment of $717,000 would have occurred had all of the extended
options been exercised. To the extent non-extended options are exercised that
result in a tax deduction the potential impairment of the deferred tax asset
would be reduced.

The reconciliation of the statutory federal income tax rate to the Company's
effective income tax rate is as follows:

                                                       Year Ended December 31,
                                                      -------------------------
                                                        1999     1998      1997
                                                        ----     ----      ----

  Federal statutory tax rate                            34.0%    34.0%     34.0%
  State income taxes, net of federal tax benefit          .2      1.3       4.0
  Other                                                  4.8      3.7       1.0
                                                      --------------------------

                                                        39.0%    39.0%     39.0%
                                                      =======  =======   =======



                                      F-12
<PAGE>

6. PROFIT SHARING PLAN:

The Company maintains a trusteed profit sharing plan (Section 401(k)) for all
qualified employees, as defined. The Company matches 50% of employee
contributions, up to a maximum of 6% of the employee's compensation; however, it
may also make additional contributions to the Plan based upon profit levels and
other factors. No such additional contributions were made in 1999, 1998 or 1997.
Employees are fully vested in their contributions, while full vesting for the
Company's contributions occurs upon death, disability, retirement or completion
of five years of service. In 1999, 1998 and 1997, the Company's contributions
were $446,050, $323,060 and $296,529, respectively. The Plan's trustees are the
management of the Company.

In 1999, the Company adopted a Non-Qualified Deferred Compensation Plan for
certain employees, with deferrals to commence in April 2000. This plan will
allow these employees to defer a portion of their compensation on a pre-tax
basis. Currently, there is no employer match on any amounts deferred. Employees
are fully vested in their deferred amounts, but withdrawals are not permitted
until the plan is terminated, the employee attains age 65, or the employee
terminates, becomes disabled, or dies. Other withdrawals are permitted for
unforeseeable emergencies only.


7. EQUITY PLANS:

Stock Option Plans

The Company's 1996 Equity Compensation Plan authorizes up to 1,120,000 shares of
Common Stock for issuance in connection with the granting to employees and
consultants of incentive and nonqualified stock options, restricted stock, stock
appreciation rights and other awards based on the Company's Common Stock. The
options to be granted and the option prices are established by the Board of
Directors or a committee composed of two or more of its members. Incentive stock
options are granted at prices not less than fair market value. Options are
exercisable for periods not to exceed ten years, as determined by the Board of
Directors or its committee. As of December 31, 1999, 449,625 shares of Common
Stock were available for grant under the plan.

The Company's 1996 Non-Employee Director Plan authorizes up to 30,000 shares of
Common Stock for issuances of nonqualified stock options to non-employee
directors. As of December 31, 1999, 22,000 shares of Common Stock are available
for grant under this plan.

As of December 31, 1999, there were options to purchase 574,675 shares of Common
Stock outstanding in connection with the Company's 1987 Stock Option Plan. No
future grants will be made under this plan.

Equity Incentive Plan

In December 1995, the Company adopted an Equity Incentive Plan that provided for
the issuance of up to 270,000 Equity Incentive Units ("Units"). In December
1995, the Company awarded 159,300 Units with a purchase price of $1.02 per Unit.
Each Unit allows the holder the right to purchase one share of Common Stock at a
specified price. Units are exercisable for a period not to exceed ten years from
the date of grant. As of December 31, 1999, there were 85,500 Units outstanding.
No more Units will be granted under the Equity Incentive Plan.


                                      F-13
<PAGE>




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


                                                                   Weighted
                                                    Exercise    Average Exercise
                                     Shares          Price           Price
                                    ----------  --------------  ----------------
    Outstanding, December 31, 1996  1,010,877      .04 - 16.25         .81
           Granted                    148,500     4.13 - 16.00        6.48
           Exercised                   (4,000)        1.02            1.02
           Canceled                   (38,852)    1.02 -  1.57        1.09
                                    ---------   --------------  ----------
    Outstanding, December 31, 1997  1,120,525      .04 - 16.25        1.55
           Granted                    235,200     4.75 -  4.88        4.87
           Exercised                 (100,175)     .04 -  1.57         .77
           Canceled                   (19,900)    1.57 -  4.88        3.08
                                    ---------   --------------  ----------

   Outstanding, December 31, 1998   1,235,650      .04 - 16.25        2.22
           Granted                    300,800     3.40 - 11.00        3.91
           Exercised                 (167,550)     .04 -  4.75         .45
           Canceled                   (40,475)    1.02 - 16.00        6.30
                                    ---------   --------------  ----------

    Outstanding, December 31, 1999  1,328,425  $   .04 - 16.25        2.71
                                    =========  ===============  ==========


The following table summarizes information about stock options and units
outstanding at December 31, 1999:


<TABLE>
<CAPTION>
                            Options Outstanding                        Options Exercisable
                            -------------------                        -------------------
                         Weighted     Weighted
                          Average     Average
       Range of           Number     Remaining      Exercise         Number      Weighted Average
    Exercise Price     Outstanding     Life          Price        Exercisable    Exercise Price
    --------------     -----------   ---------    ----------    -------------    ----------------
<S>           <C>          <C>          <C>       <C>                <C>            <C>
  $ .04 to  $ 1.63         660,175      4         $      .27         657,475        $     .26
  $1.64 to  $ 4.88         508,250      9               4.10         169,825             4.42
  $4.89 to  $ 8.13         106,500      8               5.35          41,850             5.18
  $9.75 to  $16.25          53,500      7              14.36          34,900            14.70
                       -----------   ---------    ----------    ------------   --------------
  $ .04 to  $16.25       1,328,425      6         $     2.71         904,050        $    1.83
                       ===========   =========    ==========    ============   ==============
</TABLE>


Company Option Plans

The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," and the related interpretations in accounting for
its stock option plans. The disclosure requirement of SFAS No. 123, "Accounting
for Stock-Based Compensation," was adopted by the Company in 1996. Had
compensation cost for the Company's stock-based compensation plans been
determined under SFAS No. 123, the Company's net income would have been
decreased to the pro forma amounts indicated below. Because the SFAS No. 123
method of accounting is not required to be applied to options granted prior to
January 1, 1995, the resulting pro forma compensation charge may not be
representative of that to be expected in future years.


                                      F-14
<PAGE>

                                            Year Ended December 31,
                               -----------------------------------------------
                                    1999             1998              1997
                               ------------     ------------      ------------
  Net income, as reported      $  4,745,005     $  2,426,828      $  2,671,806
  Pro forma net income         $  4,131,810     $  2,175,662      $  2,497,235

  Diluted EPS, as reported     $        .39     $        .20      $        .22
  Pro forma Diluted EPS        $        .34     $        .18      $        .21

The weighted average fair value of the options granted in 1999, 1998 and 1997 is
estimated at $2.05, $2.12 and $3.64 per share, respectively, on the date of
grant using the Black-Scholes option pricing model with the following
assumptions: no expected dividend yield, volatility of 85%, weighted average
risk-free interest rate of 5% in 1999, 5% in 1998 and 6% in 1997, and an
expected life of 2 years in 1999 and 1998 and 7 years in 1997.

8. COMMITMENTS AND CONTINGENCIES:
   ------------------------------

The Company leases office facilities and certain equipment under operating
leases. Rent expense was $9,716,388, $7,087,136 and $4,951,149 for the years
ended December 31, 1999, 1998 and 1997, respectively. Future minimum rentals for
all operating leases are as follows:

                         2000                            $9,633,524
                         2001                             8,275,244
                         2002                             6,932,559
                         2003                             5,490,704
                         2004                             3,272,424
                         2005 and thereafter              3,992,859

The Company enters into agreements with its telephone long-distance carriers
ranging from one to three years, which provide for, among other things, annual
minimum purchases and termination penalties.

From time to time, the Company is involved in certain legal actions arising in
the ordinary course of business. In management's opinion, the outcome of such
actions will not have a material adverse effect on the Company's financial
position or results of operations.

In October 1997, a shareholder, purporting to act on behalf of a class of ICT
shareholders filed a complaint in the United States District Court for the
Eastern District of Pennsylvania against the Company and certain of its
directors. The complaint alleges that the defendants violated the federal
securities laws, and seeks compensatory and other damages, including rescission
of stock purchases made by the plaintiff and other class members in connection
with the Company's Offering in June 1996. The defendants believe the complaint
is without merit, deny all of the allegations of wrong doing and are vigorously
defending the suit. In February 1998, the defendants filed a motion to dismiss
the complaint. In May 1998, the complaint was dismissed by a judge for the
United States District Court for the Eastern District of Pennsylvania with leave
to plaintiff to file an amended complaint on narrow accounting allegations. In
June 1998, plaintiffs filed a First Amended Class Action Complaint purporting to
bring negligence claims in connection with the Company's Offering. The
defendants continue to deny all allegations of wrongdoing, believe the amended
complaint is without merit and are vigorously defending the suit. In November
1998, the court granted a motion appointing Rowan Klein and Michael Mandat as
lead plaintiffs. In February 1999, the court dismissed the case without
prejudice, directing that the case remain in status quo, that the statute of
limitations be tolled and that the parties continue with discovery and advise
the court if assistance by the court is needed. Since that time the defendants
filed a motion for summary judgement seeking to have the case dismissed on the
grounds that there is no material issue of fact. Plaintiffs filed a response in
opposition to defendant's motion and discovery was conducted by the parties. The
court has not ruled as yet on defendants' motion.

In July 1996, Main Street Marketing of America Incorporated ("Main Street
Marketing") brought a demand for arbitration against the Company claiming
damages as a result of the Company's alleged breach of a service agreement under
which the Company agreed to provide Main Street Marketing with various data
entry and data processing services relating to Main Street Marketing's magazine
subscription program. Main Street Marketing alleges that the Company committed
various breaches of the service agreement and has demanded an award in excess of
$15 million. The Company has responded to this demand for arbitration by denying
liability and counterclaiming in an amount in excess of $125,000. Discovery has
progressed in this matter, but has not yet been completed. It is not possible at
this stage of the proceeding to evaluate the probable outcome of this
litigation.


                                      F-15
<PAGE>

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

9. OPERATING AND GEOGRAPHIC INFORMATION:
   -------------------------------------

Under the disclosure requirements of SFAS No. 131, the Company classifies its
operations into three business segments: Domestic TeleServices, International
Services, and Customer Management Services. Previously, the Company reported
disclosure for four operating segments. The Company reassessed its operating
segments and determined that three operating segments more appropriately reflect
the Company's business operations. Specifically, the Company has combined the
previously reported Marketing Services and Management Services segments of its
business into a single segment called Customer Management Services. The
operating segments are managed separately because each operating segment
represents a strategic business unit that offers different services. The
accounting policies of the operating segments are the same as described in the
summary of significant accounting policies (see Note 2). Segment assets include
amounts specifically identified to each segment. Corporate assets consist
primarily of property and equipment. The Domestic TeleServices segment provides
inbound and outbound telemarketing services. The International Services segment
provides international multilingual inbound and outbound telemarketing services,
customer management services, marketing, research and other value-added services
and includes business conducted by Spantel for the US Hispanic market. The
Customer Management Services segment provides marketing, research, consulting
teleservices, and ongoing customer care management in behalf of customers
operating on the Company's target industries.


                                             For the Year Ended December 31,
                                     ------------------------------------------
                                          1999           1998            1997
                                     -------------   ------------   -----------
                                                       (In thousands)
Revenues:
  Domestic TeleServices              $      83,896   $     79,030   $  58,480
  International Services                    24,008         13,373      12,867
  Customer Management Services              45,145         28,579      20,306
                                     -------------   ------------   ---------
                                     $     153,049   $    120,982   $  91,653
                                     =============   ============   =========

Operating income (loss):
  Domestic TeleServices              $       3,958   $      5,791   $   4,306
  International Services                       (99)        (1,263)        161
  Customer Management Services               4,720           (146)       (485)
                                     -------------   ------------   ---------
                                     $       8,579   $      4,382   $   3,982
                                     =============   ============   =========

Total Assets:
  Domestic TeleServices              $      41,408   $     41,786   $  37,662
  International Services                    15,777         13,356       9,777
  Customer Management Services              15,853         15,996      10,288
  Corporate                                  5,035          4,738       3,851
                                     -------------   ------------   ---------
                                     $      78,073   $     75,876   $  61,578
                                     =============   ============   =========

Depreciation and Amortization:
  Domestic TeleServices              $       3,242   $      2,583   $   2,177
  International Services                     1,793          1,005         563
  Customer Management Services               1,602          1,110         352
  Corporate                                  1,367            969         768
                                     -------------   ------------   ---------
                                     $       8,004   $      5,667   $   3,860
                                     =============   ============   =========

Capital Expenditures:
  Domestic TeleServices              $       1,625   $      4,496   $   4,106
  International Services                     5,036          4,046       3,276
  Customer Management Services               1,444          4,327       1,007
  Corporate                                    542          1,886       2,197
                                     -------------   ------------   ---------
                                     $       8,647   $     14,755   $  10,586
                                     =============   ============   =========


                                      F-16
<PAGE>




The following table represents information about the Company by geographic area:


                                For the Year Ended December 31,
                           ----------------------------------------
                              1999           1998            1997
                           ----------     ----------      ---------
                                       (In thousands)
Revenues:
  United States            $  134,018     $  111,067      $  81,248
  Canada                        9,155          4,676          5,902
  Europe                        8,391          5,239          4,503
  Australia                     1,485             --             --
                           ----------     ----------      ---------
                           $  153,049     $  120,982      $  91,653
                           ==========     ==========      =========

Operating income (loss):
  United States            $    9,395     $    5,655      $   3,513
  Canada                        1,186          1,463          1,151
  Europe                       (1,650)        (2,736)          (682)
  Australia                      (352)           --              --
                           ----------     ----------      ---------
                           $    8,579     $    4,382      $   3,982
                           ==========     ==========      =========

Identifiable assets:
  United States            $   62,496     $   68,107      $  55,107
  Canada                        6,388          3,078          1,955
  Europe                        8,516          4,691          4,516
  Australia                       673             --             --
                           ----------     ----------      ---------
                           $   78,073     $   75,876      $  61,578
                           ==========     ==========      =========


                                      F-17
<PAGE>


                        ICT GROUP, INC. AND SUBSIDIARIES

                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS




<TABLE>
<CAPTION>
                                     Balance,
                                   Beginning of    Charged to                     Balance,
         Description                   Year         Expense      Deductions    End of Year
--------------------------------   ------------   -----------    ----------    -----------
<S>      <C>                       <C>             <C>           <C>           <C>
Allowance for doubtful accounts:
         1999                      $    514,897    $1,145,177    $ (855,486)   $   804,588
         1998                           345,897       456,697      (287,697)       514,897
         1997                           354,524       315,539      (324,166)       345,897
</TABLE>



                                      F-18